Rehabbing a rental property – whether it’s one you’ve owned for years or one you’re about to purchase – can be a great way to improve the property, increase rent, and improve the long-term value. However, the process can be long and frustrating if you don’t have a plan for finding the right contractors and managing them well.
In this guide, we’re going to discuss some of our top suggestions for not only finding good contractors to rehab your rental property, but also for managing them well. The hope is that it will give you the confidence to make confident, proactive decisions.
There are a lot of what we’ll kindly call “average contractors” in our industry. Most of them mean well, but they simply don’t meet the standards of the average real estate investor who has high expectations around craftsmanship, timeliness, and professionalism. But then there are those contractors who do check these boxes – and they’re worth pursuing.
As you look for contractors to help you with your rental property rehab and renovations, here are a few suggestions you’ll want to keep in the back of your mind:
Hiring the right contractor is a huge step in the right direction, but you can’t let off the gas now. Once you have a team in place, you have to act as the project manager – making sure everything is tracking as it should be.
Here are some suggestions for managing your contractors:
Make sure your contractors know what you expect from the jump. This includes detailed discussions about timelines, budgets, and the scope of work. Always be specific about what you want and when you want it done – never leaving anything open for interpretation. This will reduce the risk of misunderstandings and ensure everyone is on the same page.
Discuss and agree on a timeline that includes specific milestones and deadlines. This helps keep the project on track and allows you to monitor progress. Make sure there’s a bit of cushion in the timeline for unexpected issues, but always aim to keep things moving forward.
For example, let’s say it’s July 15 and you need the project completed by October 15. The smart thing to do would be to set milestone checkpoints at August 1, August 15, September 1, and September 15 – with the deadline being October 1. This gives you some checkpoints to gauge progress, while also providing an extra two weeks of cushion on the back end. (Never tell your contractor that your desired completion date is actually October 15. That’s your little secret. Instead, push them to be done by October 1.)
Good communication is the key to any successful relationship, and your relationship with your contractor is no exception. Some real estate investors set up weekly check-ins, but it would benefit you to do daily check-ins. These don’t have to be hour-long conversations – a 10-minute phone call will do. The point of these check-ins is to hold your contractor accountable for the work that’s getting done on a daily basis.
A written contract is extremely important and vital to the integrity of the project. It should outline every aspect of the project, from payment schedules to the materials used and the scope of work. This document will be your go-to in case any disputes arise. (Make sure both you and the contractor understand and agree to all terms before the actual work begins.)
Speaking of legal and financial aspects of the project, never pay for the entire project upfront. A common practice is to pay in installments based on completed stages of the project. Each installment should only be paid after you’ve inspected and approved the work that corresponds to that payment.
Being an active participant in the rehab process can make a big difference in the timeliness, quality of work, and the ultimate outcome.
We recommend regularly visiting the site to inspect what’s being done. This shows your contractors that you are involved and care about the quality of the work, while also allowing you to catch issues early on.
Even with the best planning, issues can arise. Whether it’s a delay in materials or a sudden unavailability of a key contractor, be prepared to make adjustments. Having a contingency plan and budget can help you manage these challenges without derailing your entire project.
This is why we encourage you to give your contractor a deadline that’s several weeks ahead of your actual deadline. And from the financial side of things, you should always include an estimated 10 to 15 percent in the budget. That means if the estimated cost is $25,000, you should anticipate it being more like $28,750.
At Green Residential, we take great pride in helping our clients manage their rental properties in a stress-free, highly-profitable manner. This includes managing both the big picture and finer details of each property in your portfolio.
Want to learn more? Don’t hesitate to contact us today!
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