Got my first house...what can I be doing to prepare for closing?

Question

I close on July 5th on my first rehab project, what are some things that I can be doing in order to be ready to hit the ground running come July 5th?  What do you typically do to prepare yourself for the rehab?

I have already established a preliminary schedule, I would like to walk some subcontractors through the house and get some quotes.  Can I do this or do I have to wait until closing to walk the house with subs?

Thanks.

James Vermillion · Answer

As long as the current owner does not mind you can (and should) take contractors through the property and start getting quotes (we have done this for every property).  By the time closing rolls around you should be fully prepared to start the rehab (but I would not start any work earlier as some people might suggest).

I would make sure that you have a timeline setup, a list of contractors you are going to use, a very specific budget, a method to track and account for expenses, etc.

I would have a dumpster scheduled to go in place the afternoon of the closing and my demo guys scheduled for that afternoon or the next morning.  You want to get started in an organized, well thought way...nothing is worse than a bad start.

Account Closed · Answer

Are you using your own money or hard money? A few things you'll need if you are using a hard money loan:
1. Preliminary Title Report
2. Insurance
3. Corporate Docs or LLC docs if under contract as a business entity

Account Closed · Answer

A few other things:

Order faucets, door knobs/handles and shower kits online. Your save a bundle
Check local rebates on improvements, low flow toilets etc.

I save close to 1k on my last flip from doing these few things. Overstock and ebay are good

Bill Gulley · Answer

Good point on closing docs, we might be getting off topic, but with your Articles of Oragnization, you should take a copy of the Minutes showing that at a meeting (or special meeting as applicable) the company authorized the purchase and you to act as representative in doing so. This will not be filed but put in the closing file at the title company/closer. This is one of the issues to be attacked in court that the property is under the corporate umbrella.

Steve Babiak · Answer

You will be needing to put together a good "scope of work", basically a list of things that need to be completed by the contractors you are considering.  You can go room by room, for example, listing what each room needs.  This allows for comparisons to be made more readily.

I'm not sure that you will be in a good position to produce a schedule before having chosen a contractor, given this is your first rehab effort; get input from the contractors and subs as to what would be a reasonable timeframe given the scope of work you have.

Steve Babiak · Answer

If you are operating as a business, you'll need #3 in that list regardless of using HML; the closing agent will want to see that you are an authorized representative for the business entity.

James Vermillion · Answer

I use QuickBooks for all of our bookkeeping.  It is very easy to use once you get it setup and get used to using it.  A lot of people simply use an excel sheet which is free and also easy to use.  However, I like the ability to print reports and track all my accounts with ease.

David Robertson · Answer

James,

What accounting software do you use for tracking your expenses?

Bill,

Thanks for the input.

It looks like a several things I can be doing leading up to closing.

Get utilities transferred to my name/setup for closing
Get home insurance setup
Create project schedule
Walk subs through the house/get quotes
Get dumpster scheduled
Get an account w/ Lowes/Home Depot
Start figuring out material selections
Establish accounting software or practice I want to use
Finalize detailed budget w/ sub pricing

Thanks again.

Mike Jakobczak · Answer

Good points all round.

Depending if you are installing new cabinets or granite. I always touch base with my contractor to get these measure and find out what the time frame for ordering and installing. Sometimes may take a few weeks so you want to stay on top of this to minimize your delays on your property.

Bill Gulley · Answer

James and I posted at about the same time, and i forgot the dumster...again! Yes, get it scheduled, but I would not schedule anything to be dropped on the day of closing because all clsoings don't close, delays often happen. You don't really have clear access until after closing, I wouldn't try to cut it to the hour.

You should be there when that dumpster is droped (or your worker), lay lumber down on a driveway for the dumpster to sit on, it will scar the surface of the driveway, better set it on the lawn the ruts are easier to fix than gouges in the driveway.

Got my first house...what can I be doing to prepare for closing?

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