@Stephen Fryer that makes perfect sense! Seems like the best way to leverage the team that you have! So since you leverage your team during the rehab process, do you leverage them when you purchase a place? Aka are you having them help you with your due diligence and inspection? Also how often are you physically there throughout the project (if you're even there at all?)
Hey Kevin.
I feel that real estate, like life, is a team sport. I try to make certain that the people implicated in the outcome are involved in the process. That way we are all on the same page. The following is a high level example of my process for a fix and flip:
A) When a property is put under contract, I always include a 15 day due diligence/inspection period. During this time I will have my broker provide a CMA to ensure that the ARV that I have established is accurate.
B) I will then have my contractor and broker walk the property together and do a video call, so that we can discuss repairs required and the extent of the rehab necessary to maximize returns for the neighborhood that the property is in. No point in putting in granite counter tops and gold toilets if you're never going to realize a return on those investments.
C) If the numbers are still good we can proceed. If not, I am now armed with more precise information to go back to the seller and renegotiate.
D) Assuming that the everything is a go, I will use the scope of work that I received from my contractor to create a project plan. That way I know what work is supposed to be completed by a specific date and I can use this to manage the scope, budget and schedule of the project.
Payments to the contractor are completed in three draws; the first to get his team started and buy materials, the second to keep the project rolling and ensure that work has been completed on time, and the third when the final punch list has been satisfied.
E) I've been working with my contractor for a while now and we know how the other thinks. We speak twice a week as a rule. Monday we meet to discuss the project plan and the deliverables for the week. Friday we connect again to review progress and any challenges encountered during the week. I expect a video walk through at this time so the I can have a record of what's going on.
F) I've discovered through experience that third party oversight is a must, so I have my broker walk the property at the end of the week as well and report back on any issues that she sees. She has a vested interest in ensuring that the work proceeds smoothly, as she will be selling the property and doesn't want any unforeseen challenges at closing. As mentioned previously, final payment is only made after the punch list has been satisfied, so if we can limit surprises, the contractor can receive payment more smoothly.
G) As I mentioned previously, the process is similar for a buy and hold, but I have my property manger perform the third party oversight. They have a vested interest ensuring that things run smoothly, as they will be managing the property going forward and don't want any issues at city inspection.
I have been investing in South Bend since 2016 and have done the majority of my deals where I have never visited in person. Over the course of the last 6 months I have been visiting regularly, not to check out properties, but to meet with my stakeholders to build relationships. Those relationships have been essential in managing during the pandemic. Lucky break.