Regardless if you have one rehab under your belt or 100, there are always things to take away from every experience. Not only is the process extremely rewarding, but there is always something that can be gleaned from a completed project – successful or not. At the very least, you can learn from previous mistakes, and improve upon your process on the next deal. Learning from personal experience is great, and essential to survive in this industry. However, if you can learn from the mistakes of others you will benefit without having failed yourself. There is a lot of valuable lessons to be learned between the lines. Before you get started on your next rehab property, keep these four valuable rehab lessons in mind:
1. Plan before you close: Your rehab does not start when you get the keys to the property. Before you even submit an offer, you need to have a firm grasp of all the costs associated with the transaction. Making an offer and trying to figure things out as you go usually ends up costing you money. Once you take ownership, you should hit the ground running. If you are an experienced rehabber, you probably have a decent grasp on all of the costs and numbers associated with a project. If not, it is critical that you take the time and get as many estimates as you need. In most cases, the estimates will be similar. Outside of the estimate, you will want to work with who you are most comfortable with and can get the job done in your time-frame. You also need to take the time to apply for any necessary permits and coordinate a work schedule. Without permits, you are likely to experience setbacks and delays. The same can be said about finding the right people to work on the property. Waiting until you need to find someone is not the best strategy. Get everyone lined up and on the same page before you close.
2. Hire a quality contractor: A property manager or contractor may as well be the the coach of your team. Regardless of the property, you need someone you can trust that will take care of things on site. There will always be issues that pop up from time to time. It may not be realistic that you can drop everything and run to the property. This is one of the things that your contractor is there for. Not only does your contractor put out small fires, they also keep things moving towards completion. In a perfect world, you will have an existing relationship with your contractor or get a referral from someone you trust. This may not always be the case, however. You really need to take your time and talk to as many different people as it takes. The contractor you go with will be your eyes and ears on the ground. If you are not comfortable with their approach or their resume, go find someone else. Taking an extra few days to find someone that is the right fit is much more valuable than anything else you can do.
3. Learn to adapt: You may have spent weeks preparing a schedule and plotting a course of action, only to have everything stalled because of one little hiccup. The most successful people in business, however, are those that can easily adapt to any situation. As much as you would like it to be the case, things will not always go your way. There will be scheduling delays, issues with materials and other unexpected problems that will come your way. Instead of sulking or panicking, you need to take a step back and find a way to deal with them. What you will find is that most problems can be corrected by taking the time before the project starts. It is important to check, and double check, who is will be working on your project. What will they be doing and when will they will be doing it? Learn to adapt to difficult situations and make important decisions without wasting time.
4. Stick to your budget: There is no point in making a budget if you are going to go over it. The budget you make directly impacts your bottom line. The day that you decide to go over your budget, there may be no turning back. There are instances where spending money will yield a greater return, but this should have been factored in before you made an offer. If you do need to spend money, make sure the decision is totally yours. It is easy to get persuaded by outside voices telling you what to do. People may have an opinion, but what worked for someone else on another property may not work for yours. Going over your budget may produce a nicer property, but it will also cause you not to realize the profit you initially thought. Rehabs are all about risk and reward. The minute you go over budget, you project becomes a risk that you may not have wanted to take.
Anyone can buy a rehab property, but it doesn’t mean they will be successful at it. There are things you can do that will make you much more successful. These are just four things you can do to help you with your next rehab.