You have the keys. What do you do first w/ rehab property??

You have the keys. What do you do first w/ rehab property??

Property Manager · Richmond, VA · Member since 2013 · 34 posts · 5 votes

Situation - You've just closed on a new property. It needs significant repair / renovation work. Your goal is to fix it up and have it rented or on the market as soon as possible.

What is the very first thing you do when you get inside the building, ready to get the work started?

Begin demo, start creating a punch list, pat yourself on the back with a celebratory cocktail? All of the above?

What else?

Describe your process when you first get the keys.

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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
12y

I change the locks. I don't know who else had a copy of the keys I was given.

See this reply in the discussion

29 Replies

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  • Property Manager · Richmond, VA · Member since 2013 · 34 posts · 5 votes
    12y

    Here is one article that has some helpful advice.

    http://voices.yahoo.com/how-demo-home-plan-flip-profit-2421820.html?cat=6

    Here is the order in which I like to pull a house apart:

    1. Remove Trash, Rubbish and Appliances
    2. Remove Carpet As Needed
    3. Make Sure Water Is Turned Off
    4. Pull Countertops
    5. Demo Cabinetry
    6. Demo Bathrooms
    7. Remove Any Doors That Are Going to Be Replaced
    8. Remove Any Trim It Is Going to Be Replaced or Is Damaged
    9. Remove Any Windows That Are Being Replaced
    10. Remove Any Sheetrock That Is Damaged or in the Way
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    I change the locks. I don't know who else had a copy of the keys I was given.

  • Peoria, IL · Member since 2011 · 365 posts · 182 votes
    12y

    I start my rehabs well before I have the keys.

    By the time I have keys in hand, I would have had several cocktails (not the celebratory kind though that's reserved for when it's rented , a rough budget, a rough timeline and a rough plan.

    When I get the keys, I pace around the house, plan the reno, then think about the plan and plan a bit more.

    I refine the budget and timeline, then get to work.

    Spend about 2x longer planning than you think you need. It will help in the end.

  • Lakewood, OH · Member since 2013 · 193 posts · 60 votes
    12y

    I just got done reading two rehab and flipping books, the one is J Scott's and the other is called FLIP. BOTH have great processes for rehabing, all tye stages, prerequisites etc. If you buy J's book (found on BP) he throws in his other book, estimating rehab costs which I have already started. Very informative...

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Greg -

    By the time I get the keys, I've already done a lot of work:

    - I've done inspections to determine what needs to be addressed

    - I've created my Scope of Work (SOW)

    - I've created my budget

    - I've created my schedule

    - I've done walk throughs with contractors

    - I've gotten bids

    - I've signed contracts with contractors to do the work

    - I've made material lists and in some cases, I've ordered materials

    So, once the keys are in my hands, the contractors are in the property within 24 hours getting started on the rehab.

    I save patting myself on the back until the house sells and I'm cashing the check... :-)

    Now if you're asking about the order of the rehab once the contractors get in there, here is how I do it (CLICK TO ENLARGE):

    I go into a couple dozen pages of more detail in my book...

  • Wholesaler · Downers Grove, IL · Member since 2010 · 108 posts · 26 votes
    12y

    @Gregory Montalto I have a process similar to @Michael Herr Before I close on a property, I have a budget (this happens before I even bid), a timeline, as many trades as I can get in there to give me formal bids, and the permit process started. If I'm lucky I will have permits the day I close.

    Once I close bring in the dumpster, and have the plumber on call (the demo crews always seem to identify, or create a plumbing leak).

  • Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
    12y

    @Ryan O. If not creating additions what type of things do you need permits for on a rehab? I'm sure this is different depending on the state/ city, but generally speaking?

  • Wholesaler · Downers Grove, IL · Member since 2010 · 108 posts · 26 votes
    12y

    @Kyle Doney Yes you are correct it depends on the municipality, but generally speaking any time you open up the walls to do anything you need a permit.

    Here is a list of what we have needed to pull permits for on past projects:

    Electrical, plumbing, moving/removing walls, new roof, decks, patios, new furnace, hot water heaters, install fence, new driveway, new siding, new windows, retaining walls.

    If your not opening up the walls and just replacing the finishes in the house generally you will not need a permit.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Ryan O.:

    If your not opening up the walls and just replacing the finishes in the house generally you will not need a permit.

    This is going to be highly dependent on the particular jurisdiction.

    I work in several areas where -- if you plan to do roofing, siding, putting up a fence, replacing light fixtures, replacing plumbing fixtures, replacing a dishwasher, doing a large amount of demo, etc. -- a permit will be required.

    And then I work in other jurisdictions where you practically need to be doing an addition before they require permits.

  • Investor · PA · Member since 2013 · 1k+ posts · 602 votes
    12y

    1) fill up truck and trailer with trash if there is any and take it to the landfill

    2) replace exterior doors if any are broken and/or change locks

    3) fix the roof if it's leaking and fix damage caused by water to structural elements

    4) check out the electrical and plumbing and fix as needed

    5) fix drywall

    6) paint

    7) refinish or paint existing hardwood floors or put down HDF laminate

    8) put in cabinets, toilets, sinks, appliances, etc if what is there is not easily restorable

    9) replace windows that are boarded up or broken through both panes

    10) check the HVAC system if one exists and fix or replace as necessary

    11) add/replace interior doors, toilet paper holder, outlet covers, etc

    12) clean, stage, advertise

  • Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
    12y

    Do the contractors handle the permits? Also I'm sure its more time consuming to hire your own plumbers/ electricians etc, but would it be more cost effective than having a contractor outsource certain jobs and mark it up? What is your take on finding your own plumber, electrician, tile guy, etc?

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y
    If you don't have time it is better to hire a GC to pull permits and do the work and yes that is how GC makes their money by adding a little mark up on their work and materials same as you when you sell you will mark up your property to make a profit.

    Joe Gore
  • Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
    12y
    Originally posted by @Kyle Doney:
    Do the contractors handle the permits? Also I'm sure its more time consuming to hire your own plumbers/ electricians etc, but would it be more cost effective than having a contractor outsource certain jobs and mark it up? What is your take on finding your own plumber, electrician, tile guy, etc?

    If you hire your own plumbers/electricians/carpenters/roofers...you are acting as a GC.

    GC does more than outsourcing and mark up, they schedule and stage the jobs that subs do, they handle the permits and they are basically your QA/QC. That's why if you use a GC you need someone you trust and can manage the job for you, not an absentee GC who just hands out keys to the subs.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Kyle Doney:
    Do the contractors handle the permits?

    In many jurisdictions, you can only pull permits on your primary residence. For investment properties, you are required to have licensed contractors pull the permits. Do some research on what your area requires.

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    12y

    Great Post. Very insightful...

    Kudos,

    Mary

  • Real Estate Broker · Houston, TX · Member since 2013 · 187 posts · 111 votes
    12y

    - List it on the MLS

    - Re-key

    - Turn on all utilities in my name

    - Pull up the carpet and padding if any (this is the cocktail for me, it's more ceremonial than anything.

    - Start pre-op demo (make sure pre-plannning is still viable)

    - Bring lockable trailer pod with any materials/installs

    - Take several deep breaths

  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    I second @J Scott 's comments about having your inspections, plan, workers, everything lined up before you close. 2 days before close, I start buying the materials I need that I won't be ordering (actually, have my handyman do it) because I've already inventoried all the jobs and timelines. I use the kwikset smartkey locks so i can give contractors keys, then change it again anytime at my leisure, match security door to front door, etc. My last seller got mad at me, the buyer, because *someone* did some light landscaping work on the property before close (when close got pushed back a couple days due to title..) Must have been a miscommunication with the push-back of close.. :-/

    Then confirm/finalize inventory of everything to be done/performed now that you have the place empty. Then get started as laid out above.. Time is money! Don't rush to the point you blow it on something. But it's all about pre-planning..

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y
  • Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
    12y

    Thanks guys. Very good info on how the GC and permits work on starting a rehab. My rehab is about an hour away, so now to decide whether to do it myself and save money (if I can pull permits) or get a GC and save time.. As @Jmartin said, time is money.. Got to weigh it out.

  • Investor · Deerfield Beach Florida and Tupper Lake, N.Y. · Member since 2013 · 307 posts · 118 votes
    12y

    Very interesting thread, thanks all.

    @ check to make sure if you can pull the permits, there may be a time delay before you can sell/rent the property. Here in my area, as an owner/builder, you have to wait one year after final inspection before you can sell or rent the property.

    The first thing I tend to do after I get the keys is to find the worst area of the house and "poke it with a stick", then change the locks, then usually the celebratory cocktail. Sometimes 2. : )

  • CT · Member since 2010 · 135 posts · 100 votes
    12y

    As many have mentioned, your budget, rough schedule, and the contractors you're using should already be lined up. From there, depending on what the outside looks like, that's where I would start. If the house needs a roof, windows, or siding, do that before you touch anything inside. What would be the point of fixing all the electrical and sheetrock to later find out you have a roof leak.

  • Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
    12y

    I know this sounds funny, but as soon as I have the keys in my hand, the first thing I do is start looking for buyers...

  • Denver, CO · Member since 2013 · 9 posts · 2 votes
    12y

    1. Remove trash and any other debris.

    2. Surface clean and inspect for any health / sanitation issues.

    3. Make a prioritized list and execute in order:

    A. Modifications needed for safety or code - foundation, structure, electrical, plumbing, HVAC.

    B. Fix any moisture leaks, pest control problems, rotting.

    C. Modify walls and floor plan where appropriate.

    D. Prime and paint.

    E. Tile in bathroom and kitchen?

    F. Remove carpet to expose wood floors, or add wood flooring / new carpet.

    G. Upgrade bathroom fixtures if needed.

    H. Replace kitchen cabinets and counters. Sometimes cabinets can be refaced or cleaned.

    I. Update light fixtures.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Michael Lemieux:
    Here in my area, as an owner/builder, you have to wait one year after final inspection before you can sell or rent the property.

    Really? I almost find that hard to believe...

    Does that mean that a spec builder needs to let his new property sit empty for a year before a buyer can buy it? Do whole subdivisions sit empty for a year after they're completed?

    And if you do a rehab on what will be a rental property, the property has to sit vacant for a year before you can rent it? How are there any landlords?

    Can you be more specific about the laws, or is it really that crazy?

  • Investor · Deerfield Beach Florida and Tupper Lake, N.Y. · Member since 2013 · 307 posts · 118 votes
    12y

    @ I find it very strange as well. I believe a lot of our laws changed after hurricane Andrew exposed a lot of poor construction. I'm sure that any spec builders or subdivisions have a GC involved.

    section 4 below is the specific part about not selling or leasing

    OWNER/BUILDER DISCLOSURE STATEMENT

    SECTION 489.103, FLORIDA STATUTES

    1. I understand that state law requires construction to be done by a licensed contractor and have applied for an owner-builder permit under an exemption from the law. The exemption specifies that I, as the owner of the property listed, may act as my own contractor with certain restrictions even though I do not have a license.

    2. I understand that building permits are not required to be signed by a property owner unless he or she is responsible for the construction and is not hiring a licensed contractor to assume responsibility.

    3. I understand that, as an owner-builder, I am the responsible party of record on a permit. I understand that I may protect myself from potential financial risk by hiring a licensed contractor and having the permit filed in his or her name instead of my own name. I also understand that a contractor is required by law to be licensed in Florida and to list his or her license numbers on permits and contracts.

    4. I understand that I may build or improve a one-family or two-family residence or a farm outbuilding. I may also build or improve a commercial building if the costs do not exceed $75,000. The building or residence must be for my own use or occupancy. It may not be built or substantially improved for sale or lease. If a building or residence that I have built or substantially improved myself is sold or leased within 1 year after the construction is complete, the law will presume that I built or substantially improved it for sale or lease, which violates the exemption.

    5. I understand that, as the owner-builder, I must provide direct, onsite supervision of the construction.

    6. I understand that I may not hire an unlicensed person to act as my contractor or to supervise persons working on my building or residence. It is my responsibility to ensure that the persons whom I employ have the licenses required by law and by county or municipal ordinance.

    7. I understand that it is a frequent practice of unlicensed persons to have the property owner obtain an owner-builder permit that erroneously implies that the property owner is providing his or her own labor and materials. I, as an owner-builder, may be held liable and subjected to serious financial risk for any injuries sustained by an unlicensed person or his or her employees while working on my property. My homeowner's insurance may not provide coverage for those injuries. I am willfully? acting as an owner-builder and am aware of the limits of my insurance coverage for injuries to workers on my property.

    8. I understand that I may not delegate the responsibility for supervising work to a licensed contractor who is not licensed to perform the work being done. Any person working on my building who is not licensed must work under my direct supervision and must be employed by me, which means that I must comply with laws requiring the withholding of federal income tax and social security contributions under the Federal Insurance Contributions Act (FICA) and must provide workers' compensation for the employee. I understand that my failure to follow these laws may subject me to serious financial risk.

    9. I agree that, as the party legally and financially responsible for this proposed construction activity, I will abide by all applicable laws and requirements that govern owner-builders as well as employers. I also understand that the construction must comply with all applicable laws, ordinances, building codes, and zoning regulations.

    10. I understand that I may obtain more information regarding my obligations as an employer from the Internal Revenue Service, the United States Small Business Administration, the Florida Department of Financial Services, and the Florida Department of Revenue. I also understand that I may contact the Construction Industry Licensing Board at 561-233-5525 or at their website http://www.pbcgov.com/pzb/Contractors/ for more information about licensed contractors.

    11. I am aware of, and consent to an owner-builder building permit applied for in my name and understand that I am the party legally and financially responsible for the proposed construction activity at the following address ___________________________________________________.

    12. I agree to notify The City of West Palm Beach Construction Services Department immediately of any additions, deletions, or changes to any of the information that I have provided on this disclosure.

    Licensed contractors are regulated by laws designed to protect the public. If you contract with a person who does not have a license, the Construction Industry Licensing Board and Department of Business and Professional Regulation may be unable to assist you with any financial loss that you sustain as a result of a complaint. Your only remedy against an unlicensed contractor may be in civil court. It is also important for you to understand that, if an unlicensed contractor or employee of an individual or firm is injured while working on your ? property, you may be held liable for damages. If you obtain an owner-builder permit and wish to hire a licensed contractor, you will be responsible for verifying whether the contractor is properly licensed and the status of the contractor's workers' compensation coverage. Before a building permit can be issued, this disclosure statement must be completed and signed by the property owner and returned to the local permitting agency responsible for issuing the permit. A copy of the property owner's driver license, the notarized signature of the property owner, or other type of verification acceptable to the local permitting agency is required when the permit is issued.

    ________________________________ ____________________________________

    Signature of Property Owner /Date Printed Name of Property Owner

    State of ___________________________ County of __________________________

    Sworn to and subscribed before me this ______day of _________________ 20___ by _____________________________

    who is personally known to me or has produced ______________________as identification.

    __________________________________ __________________________________

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