Rehabbing can be one of the most trying, but important parts of the real estate investing business.
A good quality rehab will make your property shine in the retail or rental market. Getting to the quality rehab can, however, try your patience.
Things can quickly start running behind schedule, and cost more than expected. Plus, disputes can arise with contractors over when and how the work should be completed.
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What is A “Scope of Work”?
One of the best ways I have found over the years to significantly reduce (notice I did not say eliminate) these issues is with a detailed scope of work. A scope of work is just what it sounds like.
It is a detailed description outlining all of the various parts of a rehab job. A good scope of work can eliminate many headaches, for both you and your contractors before you even begin work.
Here is how. Let’s say you have a relatively simple job to paint a room. Instead of using a scope of work, you simply ask the contractor to “paint this room.”
Well, what does “paint this room” mean? I would suspect you and your contractor will have differing opinions as to just what “paint this room” means.
For example, what color should be used? What grade of paint? What finish? Should the trim be painted as well? Should the trim be the same color?
The same finish? What about the ceiling? Should door knobs and other hardware be removed before painting? Who should be making these decisions?
If you do not take the time to make all of these decisions beforehand and leave them up to the contractor, you may be in for a surprise when the job is “done.” You may feel that the paint job is not at all what you wanted or nowhere near “done.” So why leave that up to chance?
Instead all of those decisions and perhaps more should be outlined in a scope of work.
In the above example, your scope should have specified paint color, finish, grade, etc. And you should provide this information to the contractor up front, so they can provide and accurate price based upon the material and amount of labor needed to complete the job.
Using a detailed scope of work will eliminate much confusion and confrontation at the end of any job.
I prefer to develop a scope of work for each contractor and for each room at a job. I like to outline what is expected of each person room by room. I can even post copies in each room if I need to so there is no doubt.
Your scope of work does not have to be anything fancy, a simple hand written list or spread sheet will do the trick. The key is to just have one. I then make the scope of work part of an independent contractor agreement. This has saved me many headaches over the years.
As you get more experienced in this field and develop relationships with trusted contractors, you will each learn what the other prefers and how a job should go.
So you may not need to use a detailed scope of work every time on every job for every particular thing. You may be able to tell your plumber or electrician what you need and they will be able to figure it out to the standard you wish. But in my opinion, bigger jobs still need a detailed scope of work. Everytime. How detailed? Well, I’m still learning that myself.
How detailed are your scopes of work?
Do you have a good example of haw a scope of work saved you some hassle?
Be sure to leave your comments below!