By Paul Esajian

To learn more about Real Estate Flipping and remodeling, look at Rehabbing for Huge Profits

To attend one of our Real Estate Flipping seminars and remodeling, look at 4 Day Intensive Rehabbing Bootcamp

Pay Now or Pay Later…Replacing Roofs

When we retail properties we must understand & evaluate the psyche of our end user. Remember our end user is our client, consumer, & customer all in one. When investors rehab & sell residential housing we must think like our end user. First of all we only want the best for our clients, so the functional integrity of the roof is imperative. Secondly all consumers, which refers to the individuals or households that purchase our rehabs that we put out to the marketplace, need to be sold with selling features. A new roof is a great selling feature for any consumer. Finally, in order to sustain a long term business and build a solid reputation you need to be confident that all your customers are satisfied with the product you deliver to them. By selling a rehabbed house that needs a roof replaced within a year you will not build a strong customer base. The decision to replace the roof needs to be fully understood before you buy the property. If you buy a property that needs a new roof but it is not in your rehab budget, you will be better off not buying the property. In your decision of replacing the roof or not, you must ask yourself, “Will it deter me from selling the property if I do not replace the roof?” If the answer is yes then the decision is simple, replace the roof!

Pay now or pay later, if a roof looks questionable to the naked eye I will usually replace the roof. If you do not replace the roof on your investment property that looks like it’s at the end of its useful life then you will most likely get negotiated down on the offers from your end buyers that view your finished product. Although it’s obvious to replace a roof that leaks, it takes more foresight to replace a roof that may, by mere appearance, deter eventual offers. This is where ones knowledge base & hands on experience come into play. I look at it as paying now to incur the cost of replacing the roof in order to have an additional selling feature to help my property distinguish it from the rest of the inventory. By doing this I save significantly on holding cost and days on market. Remember, I typically get full price offers within the first two weeks of my initial listing. This is procured by making these important decisions in the rehab that add to a long list of selling features and distinguishing points once my property is “For Sale.”

The outline below is a “cheat sheet” to the essential points on this decision for Replacing Roofs

1. When do I replace a roof?
   • When cupped & curled shingles are blatantly visible
   • When more than three layers of shingles are present
   • Over 20 yrs old, useful life is coming to an end
   • Obvious leaking &/or holes in existing roof
2. Most common problems in the decision to replace a roof
   • Flashing around chimney causes most “unknown” leaks
   • Eaves, valleys, & dormers are high probability spots for water penetration
   • Gutters draining directly to foundation
   • Improper or no displacing of water run off
   • Shoddy roll over job, instead of implementing a full rip & reply
3. Design Points when you replace roofs
   • Make sure to contrast the roofing shingles to the body of your house
   • Architectural shingles will hide imperfections in a roof line in comparison to three tab shingles which have no texture to the design.
4. Liabilities of doing work when replacing roofs
   • Highest risk in using non-insured workers on a roof, there is to much liability with putting unlicensed & uninsured workers on a roof that you own.
   • Again, even if a roof is functional but it looks old & ugly this will deter eventual offers of your investment property. This will be the most common argument to a retail buyer if the roof “looks” to be at the end of its useful life

To find out more about our life changing home study courses and live seminars, see them using the corresponding links or email us at info@fortunebuilders.com

By Paul Esajian

To learn more about Real Estate Flipping and remodeling, look at Rehabbing for Huge Profits

To attend one of our Real Estate Flipping seminars and remodeling, look at 4 Day Intensive Rehabbing Bootcamp

There are many aspects to a successful rehab. From demolition to laying down carpet and everything in between. If you do not use a proven rehab system, you are not setting yourself up for success. In my “How To” series I will walk you through key components of the rehab process and talk about our proven systems for getting the job done.

Introduction

Investing in knowledge is one of the three key components that will make you and your real estate investment career prosperous. Through the acquisition of knowledge and the pursuit of proven and true systems to implement in your rehab business, you can be assured your goals will become a reality. Time, money, and knowledge are the three elements to completing a successful and profitable rehab. Our pursuit and understanding of designing, implementing, and managing a successful rehab are built from a platform of these elements.

Understanding key components of the different aspects of the rehab process will allow you to become a well rounded real estate investor. You will be able to better estimate costs, negotiate with contractors and more effectively sell wholesale properties. When you are able to walk through a home, determine that the exterior siding needs to be replaced and quickly estimate the amount of material and cost associated with the installation, you are maximizing your time and energy.

My “How To” articles will touch on many important topics. For example, essential knowledge, key terms and definitions and contractor management. The goal is to give you a basic understanding of the different areas of the house. After reading through an amazing “How To” article, I want you to say “wow Paul I did not know that.”

I spend much time lacing up my work boots, managing contractors and making sure our projects get completed on time and budget and I enjoy sharing some the knowledge I have acquired. Knowledge truly is power. It is the foundation for our success in any endeavor. Do not simply go through life…grow though life.

To find out more about our life changing home study courses and live seminars, see them using the corresponding links or email us at info@fortunebuilders.com

By Paul Esajian

To learn more about Real Estate Flipping and remodeling, look at Rehabbing for Huge Profits

To attend one of our Real Estate Flipping seminars and remodeling, look at 4 Day Intensive Rehabbing Bootcamp

Rehabbing properties and managing contractors is a fast game. If you can’t figure out your head from your bottom, you will lose your shirt or worse yet your shirt will be ripped off your back while rehabbing your first house. First and foremost we must become experts at locating and prescreening contractors, quality mature adult contractors. If this is done right, the probability of the rest of your rehabbing project being a success increases ten-fold. When you work with competent people you are able to utilize your time and leverage your ability while rehabbing.

To truly become an expert in real estate rehabbing one must have a reference point to every aspect of the house in order to manage the rehab effectively and efficiently. Having a reference point to find out essential knowledge, terms and definitions, contractor management, and most importantly labor and material cost will protect against bad and/or stupid decisions during the course of your real estate rehabbing career. Remember, the goal for us as successful real estate rehabbing investors is to understand and manage the rehab process, not to teach ourselves to install toilets so that you can save $50 in labor on each job. That’s right, by no means do I want people to do work themselves, I want them to understand how to do the work so they can manage others to make them money. Would Donald Trump be where he is today if he actually installed the toilets in his high rise development projects so he could save on some $$$ on labor cost, of course not. Donald Trump is smarter than that, so let’s hope you are too. You will not buy, renovate, and sell 100 properties a year by doing the job yourself to save a couple of bucks. The more rehabs you can manage, (notice the key word manage) the more money you will make. So let me ask you, do you want more money? Or do you want more work? Obviously more money, it’s all about working smarter not harder!

In my first year we bought and sold 30 properties; the second year we multiplied that by two, plus some, and reached 70 projects. By our third year we had bought and sold 104 properties!! What was the change you ask? The change occurred with the creation of systems, working smarter not harder, understanding the three key components that we had to leverage in order to meet out goals. Understanding the value of time, utilizing each decision on rehabbing to leverage your money, and investing in continual education is the key to your real estate rehabbing success.

To find out more about our life changing home study courses and live seminars, see them using the corresponding links or email us at info@fortunebuilders.com

By Paul Esajian

To learn more about Real Estate Flipping and remodeling, look at Rehabbing for Huge Profits

To attend one of our Real Estate Flipping seminars and remodeling, look at 4 Day Intensive Rehabbing Bootcamp

Often times people ask me how I have been able to manage between 15-25 projects at one time and not lose all my hair. Although I must admit that I have lost quite a bit of hair from the many mistakes I have made along the way, I have noticed recently that it is slowly growing back as I get better at learning how to manage my contractors more effectively and avoid these mistakes. I have spent a lot of time studying the art of rehabbing homes from some of the best in the business combined with learning from my experiences of doing over 100 deals and 64 projects just last year alone.

Now I have made it my mission to share my systems for hiring contractors and managing projects effectively with real estate investors across the country. I noticed that many investors see the huge potential of the business of rehabbing homes but dread having to deal with headaches or potential contracting nightmares. This fear prevents many investors from getting started rehabbing in the first place. I am committed to helping you overcome this fear so you can cash in is one of the most lucrative streams of income out there.

So what does it take to find these contractors, Paul?

When people see my team and I on A&E’s TV Show “Flip This House” they are able to see the amount of rapport that I maintain with my contracting teams which is a critical ingredient to becoming successful in the art of rehabbing homes to maximize profits. Let me say this, there is a lot of work behind selecting and managing a contracting team that can get your job done not only the efficient way but the most effective way which will ultimately mean the difference between success and failure on your bottom line.

One of the most common questions that viewers post to my blog is this: How do you find qualified and competent contractors to complete your jobs both professionally and proficiently? The first step in good management is hiring the right contractors from day one. The key to doing this is knowing what to look for in the first place. The single most effective way to communicate to potential contractors is to learn to speak their language. The single mistake of mismanaging your contractors can make you or break you in this business. Although it may sound cliche I cannot stress enough how pivotal mastering communication on the initial estimate can be on the final outcome of your job. I have a 3 Step process that I follow that will help you become an expert communicator in Contracting 101.

Step Number 1

Do your Homework

When I got started in this business I would call four contractors and receive one bid. Many of you I am sure are lucky sometimes if you can get that and when you do it is often a bogus quote. The solution to this is first mastering the conversation with the contractor while they are bidding on the job by making it clear that you know what you are talking about. If you are unsure of costs you must do some preliminary research beforehand so that you can speak contractor language. Contractors will not respect you and often take advantage of you if do not clearly state what you need and what you expect to pay for their services.

Begin by educating yourself on what the costs of doing a job really is. You can search online, talk with local material suppliers or consult a reference manual similar to the one that I wrote which I created to solve this problem when I was training my project mangers. I have found specific manuals dictating baseline costs of materials and labor are one of the most valuable resources to use especially if you are new to this business.

Step Number 2

Lay Out a Detailed Scope of Work that Outlines Your Expectations.

Before I meet with a contractor I lay out what I call a detailed scope of work. This scope of work lays out each component of the contractor’s job that I expect to be completed within a certain timeframe in order for them to be compensated.

This holds them accountable but also shows them that I have done my due diligence and that I know what I am talking about in terms of the work expected. In addition in my initial meeting I make it clear that I have a budget and a specified timeframe to complete the work within. Then I will actually give them a deadline to meet when submitting their quote. I clearly state a period of time that I expect the job to be done in order to test their confidence in hitting the overall target date for completion.

Let me give you an example of a typical conversation that I would have on an initial estimate;

Hi, I’m Paul Esajian with CT Homes, LLC. I work with a network of investors that rehab over a 100 houses a year and I need to form new relationships with responsible contractors so that I can give them multiple projects. Is this something your interested in?

Great, I have a budget of 25k and feel confident that you can work within that number. This is a great opportunity for us to start working together and I would like you to give me a estimate for a roof at 123 East Street today if possible. The scope of work is at the house with the standard “Quote Itemization Form” complete the form and fax or drop off this quote by 5pm today. I need to get working on it right away as it needs to be completed in three weeks. Do you have the staff and the time to complete this job within that time frame?

Great, as I mentioned before I do multiple projects at once so I will require you to pull the permits, That is something that you do correct? Great, I have written up a scope of work that I expect you will need to do to complete the job but will also be open to your expert opinion in how I can get this job completed in the fastest most professional and cost effective manner.

Great, I look forward to reviewing your bid on Wednesday and if everything looks good we can begin work on Monday.

Notice that I laid the foundation for everything that I expect from this contractor before I have even met him. I do not want to waste his valuable time and I definitely do not want to waste mine. By following contracting Interview scripts like the one above, I have obtained all the answers I needed before he has come to look at the property and bid on the job. If they can meet all these requirements next I will invite them to come bid on the project.

Step Number 3

Investigate the Contractor’s Business before you go to contract.

When an estimate comes in and is near my numbers the next step in my hiring process is investigating the contractors business. I want to know how long they have been in business. If they have another business I also investigate what that is and the time and capital to run that as well to make sure they can work on my allotted timeframe. Because of previous negative experiences I no longer hire contractors that have less than 3 years experience as a rule of thumb. Next I check their business credit. I never want to have to make a payment because they have run out of funds. I go by the golden rule to stay ahead on work and behind on payments. Finally I verify their insurance and provide them with 6 critical documents that I have developed that protect my business. This gives me an opportunity to communicate both verbally and written exactly what is expected to be completed before payment can be given. I also make a payment schedule that outlines benchmark & milestones.

By following these 3 easy steps you are well on your way to building a network of competent contractors that can efficiently manage and complete multiple projects leading to huge profits in the future.

To find out more about our life changing home study courses and live seminars, see them using the corresponding links or email us at info@fortunebuilders.com