Estimating Prices, Working with Contractors

Ashley:
Ever surprise what the method is to run a rehab, learn how to handle contractors? Properly, as we speak we’re going to get into it. My title is Ashley Kehr and I’m right here with Tony J Robinson. That is the Actual Property Rookie podcast.

Tony:
And welcome to the podcast the place each week, 3 times every week, we carry you the inspiration motivation in tales you might want to hear to kickstart your investing journey. And as we speak we’re joined by the fantastic Serena Norris. Thanks for becoming a member of us as we speak.

Serena:
Thanks for having me guys.

Ashley:
And we’re reside in LA within the studio right here with Serena. So thanks a lot for driving by way of the LA site visitors. I do know be a part of us right here as we speak.

Serena:
I’m an LA resident once more, so hope you’re right here.

Tony:
So Serena, I feel simply actually fast for the listeners, you’ve been on the Ricky podcast earlier than, however for many who perhaps don’t know your story, what number of flips do you assume you’ve been concerned in during the last a number of years?

Serena:
Yeah, so I’ve finished round 100 thirty, 100 thirty 5 flips and been part of undoubtedly much more transactions, most likely as much as 200 transactions and for the final 10 years, it’ll be 10 years in April.

Ashley:
And in addition burrs too. You’ve finished rehabs on leases

Serena:
Additionally? Yeah, so about most likely 30 to 40% of these ended up being burrs. And so I’ve a few dozen long-term leases proper now between single household and industrial retail. And I’ve one Airbnb short-term slash midterm

Ashley:
To make Tony proud.

Speaker 4:
There you

Ashley:
Go. So with this partnership, what was your major position taking up these tasks?

Serena:
Yeah, so at first 10 years in the past, I simply began aiding with every thing with my mentor after which after a couple of years actually took on all of the design elements of it, high quality management and serving to with systemization. After which over time I grew into simply app undertaking administration position after which being extra near the numbers. Then I turned underwriting as nicely for acquisitions and simply type of the glue between going from acquisitions into rehab after which to disposition additionally was our actual property dealer of the crew. So I listed all of our flips on the backend in the event that they weren’t already connected to an acquisitions firm. And so yeah, the design undertaking administration, managing the contractors, systemizing and principally the operations.

Ashley:
So do you assume we are able to use this episode to fully break down that strategy of when that property is handed off to you? So is it when it’s below contract, is it after they shut on the property, when does it truly transferred to you and what are the primary steps it’s important to take?

Serena:
Yeah, so our course of with our crew, we had a important acquisitions particular person they usually had been those that had been analyzing a bunch of the offers, making the connections with both wholesalers or direct to vendor themself as soon as a property handed what we name the sniff check. In order that they’re like, Hey, we predict we’ve a deal right here we

Ashley:
Could make, so it meets your purchase field,

Serena:
Sure, it meets our purchase field and what the numbers are , they’re going to margin, it might be a deal that we need to take down. Then they begin accumulating the entire data that I say, Hey, I would like this data a Z with a view to decide, sure or no. And normally in that guidelines there could be a ton of images as a lot as attainable, a preliminary type of fast flooring plan simply drawn even on the again of a serviette simply so as a result of remotely I may perceive then the circulation and type of see, hey, we’ve to not add a toilet right here. And I’m like, I don’t assume that is proper. So then comps, preliminary comps, what the acquisition worth could be, how a lot they’re pondering, the rehab could be, all of that element. After which just about remotely, I wouldn’t even want to go to the property I’d go to nearly after which have the ability to decide sure or no.

Serena:
So regardless that I used to be important undertaking supervisor and operation put up buy, I undoubtedly had a hand within the acquisition the place at a sure level the place we failed as a crew was that acquisitions half and the put up acquisitions half had been very segregated and we didn’t talk. And so when development costs ended up rising by like 20, 30% and simply their rehab numbers weren’t matching mine and I inherited a pair properties to handle the place I’m going, this doesn’t work, this doesn’t pencil, that is going to be one the place we hope that we are able to make it again on the backend. And in order that’s the place I stated, okay, we have to be extra like a Venn diagram and work collectively. And so creating these processes, I made an acquisitions guidelines for them, additionally acquisitions, preliminary scope of labor and funds the place they may simply go in and shortly kind in what number of home windows doorways, will it want a separate restore, will it want this?

Serena:
After which a worth per sq. footage, they’ll simply put within the worth per sq. foot and inside 5 minutes they’d have the ability to give a ballpark rehab estimate that I used to be snug with that might translate to post-acquisition. In order that’s actually the place it began starting after I’m going to be like, okay, we’re going to say sure to a deal, there’s nonetheless some closing time. And so in that point then we even begin the planning course of. We all know we’re going to shut, and so to get forward of our holding prices, that’s once we’d get in, see if we are able to get in somebody to take the ground plan. Plenty of hoarder homes typically we are able to’t all the time try this, we’ve to attend for trash out. However yeah, that’s the place we’d actually start it.

Ashley:
I simply need to point out one factor, Serena’s speaking about our crew and the totally different roles, however that is actually issues that you are able to do. Don’t get targeted on having crew members deal with the precise roles and duties that she’s declaring as a result of you are able to do all of these items, however it’s simply the method that we would like you to remove from this that you could observe to really do your individual rehabs.

Serena:
Completely. While you first get began, you’re going to put on all of these hats, what we name it. You’re going to be in all of these totally different positions and understanding, get accustomed to what that position seems individually and perhaps even when it helps you bodily. Okay, now I’m in my acquisition hat, now I’m in my development administration hat. Now I’m in my disposition hat if you’re additionally licensed. In order that approach whenever you do need to scale or construct a crew, these transitions are extra fluid with the processes.

Ashley:
Tony, you probably did that within the very starting of what you are promoting. You probably did your org chart.

Tony:
Yeah, we discovered that to be an excellent useful train and I informed the story many occasions and the explanation that we type of had this realization is as a result of in our short-term rental enterprise, there was a day Sarah and I weren’t collectively, my spouse and we each replied to the identical visitor who’s asking a query, however we gave them totally different solutions. In order that they get two solutions on the similar time which are saying completely various things like, okay, we received to pause right here. However what you’re answering is I feel a very essential level that good rehab administration truly begins on the acquisition section as a result of it’s important to know, hey, what are my prices going into this for my labor for the totally different finishes that we’re going to make use of and all these various things. So let me ask you a query. Say I dropped you in a model new market, you’re truly type of doing this proper now, proper? As a result of

Serena:
I You’re going by way of this proper now. Precisely.

Tony:
Say I dropped you in a model new market. What steps are you taking to begin constructing out your labor prices for all these totally different trades? If I’m an entire rookie, I’ve by no means finished this earlier than, what is step one I must take to begin constructing out that pricing sheet?

Serena:
Completely. It goes again to your community instantly. Once I knew I used to be going to be right here and that I used to be going to begin constructing a enterprise in right here and actively on the lookout for flips in la, I knew instantly it is a totally different market. I’ve solely flipped in Seattle, Tacoma, and Portland. And my final flip, I’d been shifting round a bit bit, my final flip was over a yr in the past. So even the numbers have modified then. So I need to get shut to what’s occurring within the now. I reached out to all of my connections right here in LA and located the those who they’re doing offers, they’re near the development. I imply by that. They’re truly invoices, they’re getting estimates, they’re flipping homes, they perceive what the present market prices are. And I truly analyzed a pair offers for a good friend right here and I stated, Hey, can I do a scope of labor and funds for this deal?

Serena:
Even in the event you don’t purchase it, you thoughts taking a minute and seeking to see what my estimates, are they right? The place am I too excessive? The place am I too low for this market? And he got here again and he gave me nice suggestions. He stated, you possibly can most likely get roofing much less right here. Counter tops are going to be extra. And so with all of this, it’s simply getting data, placing it down. Once I get my first deal right here LA, I’m going to get as many estimates as attainable from contractors instantly. Even when the primary estimate that comes again to me is what I would like, I’m going to rent them. I’m nonetheless going to get extra estimates as a result of I’m simply accumulating that data to have the ability to perceive what the present market charges are.

Ashley:
We try to get to 100,000 subscribers on YouTube, so go to youtube.com/at realestate rookie and be sure to are subscribed to our channel.

Speaker 5:
We’re going to take a fast break, however whereas we’re away, are you able to ignite your actual property investing journey? Be a part of us at BiggerPockets Momentum 2025. We’re high trade consultants and buyers come collectively to share sport altering methods and actionable insights. Okay, let’s leap again into it.

Tony:
So the community is one piece, getting a number of estimates. Completely. Let’s say that as a result of once more, say you’re in a singular scenario, you’ve got this community of individuals you possibly can go attain out to, but when there’s a riki who perhaps hasn’t constructed that community but they usually need to get these estimates, the place have you ever discovered is one of the best place to go to really supply potential contractors, subcontractors for these totally different

Serena:
Yeah, so I might take a look at networking teams, so occasions that you could go to after which I additionally take a look at Fb teams and get tied into these and see in the event you can shadow somebody of their undertaking. In the event that they’re actively flipping, say, Hey, I need to offer you worth in the best way, would I have the ability to drive your property a few times every week? I’ll offer you 150 pictures in an organized approach and simply would that enable you to of their enterprise? They usually’re like, positive, somebody checking on my undertaking or sending me a report, hey for that might perhaps a commerce a time the place may you ship me a few of the invoices from the job there? You don’t even have a property for the go look, however you possibly can truly look off of another person’s data. I imply, who’s not going to ship you bill? Hopefully they’re organized sufficient or they’ve a Dropbox hyperlink they’ll ship you over they usually’re not simply of their emails however off the cuff. I really feel like that’s what I might do and

Ashley:
I feel even in the event you simply put up on the BiggerPockets boards, right here’s my scope of labor, right here’s my funds, that is for this market, this neighborhood, does anyone have any suggestions on my pricing? And I feel there could be tons of buyers who spend money on that market that will dive in responding and giving their recommendation as a result of it’s not such as you’re going and asking the investor, are you able to do that estimate for me? Are you able to construct this funds for me? You’ve already gone and finished the work. You’re simply asking for suggestions on it now and it’s really easy. If somebody posted in Buffalo they usually stated, I feel this kitchen could be X quantity to rework doing these items myself, my contractor all on BiggerPockets may simply simply reply like, oh no, truly I feel this could be extra one thing like that too.

Serena:
Yeah, I feel additionally counting on Google as nicely, final week after I was going this in AI now, and I’ll no less than offer you ranges as a result of an investor, you’re going to get higher charge, proper? You’re not going to be on the lookout for

Ashley:
Excessive finish,

Serena:
The excessive finish or the contractor that has the pimped out truck with the wrap and no matter you’re on the lookout for. The unmarked automobile guys that seemed like type of shady, however I’ve been at nighttime bands, however no less than you will get a variety from there and if that’s all you do, you’re like, Hey, I don’t know anybody but. I haven’t even been to a networking group. I’m simply going to Google every thing. What are the ranges in LA County and begin and simply begin plugging that into the scope of labor and there you’re starting a framework that you could all the time change.

Tony:
I feel you’d be shocked at how simple it’s simply to select up the cellphone and name individuals, particularly subs. I really feel like GCs are a bit bit tougher, however for instance, one of many first flips that we did the place we needed to set up new mini splits, we had by no means finished that earlier than and we simply referred to as all of the native HVAC firms and stated, Hey, right here’s the dimensions of the property. Give me a ballpark vary on what you assume it’ll value to put in it. Most likely three to five,000 bucks per mini break up you might want to set up. So okay, cool. Now I’ve received a way of what that

Serena:
Prices. That actually was what I Googled as a result of in Washington I’ve requested my HVAC man in Washington, however after I’m analyzing this deal final week they usually had this archaic LA heating and Washington heating are completely totally different and we don’t actually put AC in our properties, however clearly in a flip the place our A RV was going to be like 900 plus we would like ac. And I used to be like, I don’t know learn how to even bid for this. And so I simply googled it how a lot in LA County does putting in a mini break up they usually had been like 5 to seven Ok and I used to be like, okay, nicely let’s put seven Ok then as a result of the upper quantity simply

Ashley:
In

Serena:
Case there’s

Ashley:
Additionally occurring Lowe’s or House Depot or no matter, even strolling by way of the shop, you see the indicators that say get your carpet put in for a greenback 99 per sq. foot too. And that simply provides you a variety or an concept of what it may value is by your {hardware} shops and what they’ve their contractors charged.

Serena:
Yeah, I imply the fabric prices are really easy to look

Ashley:
At.

Serena:
I imply occurring House Depot and saying, okay, what would the product be that I might select for this home? Perhaps consider a home the place discover a home on Zillow the place you’re like, this seems like type of what a product an A RV put up rehab flip the completed product, proper? Okay. It’s received LVP flooring, not the least costly however perhaps mid vary. Okay, what’s that on House Depot as a flip? That’s what we’re doing. We’re going procuring at a House Depot. Okay, it’s $2 and 50 cents a sq. foot. Then name up flooring set up firms and say, Hey, what do you cost per sq. foot to put in LVP? They usually’re like, we cost three 50. So simply accumulating that data. The opposite factor that I assumed concerning the different day is, hey, is there a easy approach I may perhaps name a couple of electricians and say, how do you create your estimates? Do you go off worth per sq. foot? Do it’s important to see the home? Do you rely all of the circuit? And simply attempting to grasp higher how they estimate. After which they’re like, oh, by sq. foot. And also you’re like, okay, nicely then may you give me a ballpark vary? If I had all of the drywall eliminated all the way down to the studs, how a lot would it not be then sq. foot so that you can set up? They usually’re like, I dunno, $10 sq. foot.

Serena:
And I’m like, okay, that’s data. Once more, going again into my framework after which accumulating it from there and having that data simply makes you a lot extra assured that you just’re going to know the prices post-purchase whenever you’re sourcing.

Tony:
So masterclass breakdown on learn how to begin constructing that pricing sheet for potential work you want finished. However I suppose that subsequent step of truly constructing out your scope of labor and your funds, which one comes first? Do you set your funds first after which construct the scope work primarily based on that or do you try to say, Hey, what are the comps, what’s the scope after which what funds do I must get there?

Serena:
Yeah, nice query. So I even have my scope of labor and funds collectively on one sheet. I discovered that that works one of the best for our system so we didn’t need to do two separate issues. They go hand in hand. And so I’ve a template, I’ve most likely a 400 line objects scope of labor template the place I’d relatively have all of the objects there after which undergo and delete those I don’t want for the undertaking than sitting at a clean paper and making a scope of labor. I imply we used to do this at first and we’d all the time miss sure issues. I can’t inform you what number of occasions we missed a dryer vent set up and Charles could be so mad and I’m like, whenever you make a mistake greater than a few times, three, 4 occasions, I imply that ended up costing us cash on the again finish. I used to be like, the dryer vent is within the template. If we don’t want it, we delete it. And so

Tony:
That was us with P trapps. We had a property that we had rehabbed and become a short-term rental and we’re like, what’s going on? Why is that this occurring within the restroom? It seems that pea trapps had been in salt, so now each rehab we’d like to ensure the peach traps are in there.

Serena:
It’s

Tony:
Like a joke now with us in our crews. Did you set the peach? Are you positive the peach lure is in there?

Serena:
Yeah, and the factor concerning the dryer vans, we sometimes didn’t put laundry machines in our flips. We simply had the hookups obtainable. However as soon as the dry hire must be put in at Roughin and never on the finish of the property, so we’d find yourself having to interrupt into drywall and anyhow, so constructing the scope of labor template, I might begin from there. Even in the event you’re simply getting began is write out something you’d even want. We do it within the order of development. After which

Tony:
What do you imply by order of development?

Serena:
Order of development? Properly, so truly break it out first into three totally different sections. So we’ve preliminary companies, in order that’s going to be trash out demo. These are the stuff that we are able to care for at first earlier than we even plan the remainder of the scope of exercise. We all know that we’re going to wish trash out. There’s an RV on website we have to take away or a automobile boat we have to take away or rekey sewer scope. And so we’ve these preliminary companies. Then we’ve our exterior after which we’ve our inside after which we’ve our pre-listing, so about 4 totally different, so levels. After which in every of these we’ve an order of development. So let’s simply begin with exterior. Truly inside might be simpler to clarify. So inside, you’ve got your demo and then you definately’re going to be doing all your framing. Then you’ve got hvac, your plumbing, then your electrical, then your insulation, then you’ve got your drywall, after which you’ve got the remainder of the finishes. In order if a contractor was going to go in and begin doing all of that work, that’s the order of development that they’d do it at in order that approach the contractors can type of go in and observe it. Form of taking place an inventory.

Tony:
And I need to ask Ash, do you do yours the identical approach in that order of development or how do you type of construct out your scopes? Barely totally different.

Ashley:
I’m going by room.

Tony:
I additionally go room by room.

Ashley:
It’s simply simpler for me to understand me and I bodily stroll by way of each room as to love, okay, I’m within the mud room, right here’s every thing that must be finished. Then I give it to my contractor. Then he places it by commerce,

Tony:
By commerce. So I do it the identical approach. I’m going room by room and I simply level out every thing, however then I tag every factor by the commerce. So I’ll say like, Hey, we have to swap out eight shops and the outlet covers and I’ll tag {that electrical}, I would like six recess lights, I’ll tag {that electrical}, or hey, we have to reframe this room or no matter it might be. However for me simply visually, perhaps it’s a lot simpler for me to do it by the room as nicely.

Serena:
That does make sense. I imply after I, going by way of how I’ve set it up the place I’ve my complete record when I’m simply going, I’ve received it arrange the place I’ve the unit worth for every, after which I’ll simply go in and put portions after which I’ll add it up on the high after which that’s my projected prices. However after I’m on the plumbing part, I’ve to assume, okay, what number of bathrooms? And I’m like what number of bogs and what number of of that as a substitute of doing it by lavatory, however both approach. And that’s so cool to listen to you guys do it otherwise. You are able to do works both approach. Works both approach.

Ashley:
We’re going to take yet another brief break after which we’ll be again with Serena. Okay, let’s leap again in.

Tony:
So that you’re constructing out your scope of labor and your funds on the similar time, however how do you be certain that, as a result of a stability there, proper? As a result of you’ve got a funds you might want to hit, however you additionally need to guarantee that your scope of labor is nice sufficient to get you to the after restore worth that you just’re on the lookout for. So how do you strike that stability between scope and funds to get to the precise RV that you just want?

Serena:
Yeah, so it goes again to the comps. I’m what the unique product is. I name it homes, merchandise, flips merchandise, what the unique product seems like, after which I take a look at the comps and which are achievable and I resolve, okay, what’s that degree of end then that we have to get into? Are we extra high-end? Can we do extra mid-level finishes, decrease finish finishes? After which that can assist me resolve what then the scope of labor is. And there’s nonetheless most likely going to be about 80% the place I’m positive of, after which one other 20% the place we’re like give or take is {that a} will need to have to succeed in our a RV or want to have, does it assist with saleability promoting it quick or can we go away a pair issues that aren’t so nice and anticipate it to set a pair extra weeks in the marketplace?

Serena:
That’s type of the place simply expertise is available in. However you’ve got your earlier than product, you’ve got your after product. What’s going to find out my scope of labor, and that is the place it type of goes again to the deal evaluation and going, Hey, is that this simply going to be a beauty flip the place we may do a full intestine rehab and repair every thing up however these numbers don’t work? Can we make numbers work the place we simply do a beauty flip, {the electrical}’s advantageous, it’s not good. We will repair a pair issues and obtain a much less a RV and the deal, truly pencils higher that approach. So two totally different choices. We sometimes went to due to our market, we needed to do full renovations, I imply all the way down to the studs, all new electrical, all new plumbing.

Serena:
And so to return to your query is I’ve that scope of labor template, that’s every thing there. I’ll undergo and I’ll write in all of the portions and have that add up and if it finally ends up being much more than what it must, I’m going, okay, is there something I can take off right here in my preliminary then? However as soon as it’s good solidified, I’ll delete the entire different line objects that I don’t want from that template. After which there you go. There’s my scope of labor, there’s my funds. The most important factor at first once we began was our scope of works had been simply bullet factors on a phrase doc. And there’s a lot interpretation there, particularly with contractors. And we discovered one another discovered occasions that we might ship the PDF phrase doc to the contractor, they’d write us an estimate and their estimate could be pages lengthy, particularly if it was a gc.

Serena:
I’m speaking a few normal contractor right here, pages lengthy they usually’re writing out the entire line objects in their very own verbiage and perhaps they’re even not line objects, they’re all bulk collectively. After which in the course of the undertaking we’d have all of those sure arguments as a result of I assumed drywall repairs went this. They thought the drywall repairs went that. And since it wasn’t clear sufficient in writing, we had two totally different interpretations of learn how to repair the identical factor. Then we ended up with these, I don’t need to say arguments, however these change into stress factors the place he then desires extra money as a result of it has a special expectation after which we’re additionally delaying the job. And so why I created the template is I’ll have, okay for all of drywall then I’ve an outline of drywall repairs. That is degree of end and I’m particular. I deal with it prefer it’s going to be a contract, would this maintain up in court docket?

Serena:
And that has labored so nicely and it takes the stress off of my relationship with my contractors. Anytime they’d be confused about one thing on the job, I’m going, nicely, what does the scope of labor say? And we’d pull it up and I’m going, oh, proper right here it says this and this. They usually’re like, oh, okay, okay, okay, proper. And I’m protected then I’m not getting a change order. I don’t need to spend extra money or I’m like, oh, you’re proper. I solely stated six of this and there’s seven. And I’m like, nicely, that’s an additional value. I missed it. However there was no battle between us and it’s saved plenty of relationships with contractors.

Ashley:
So when you’ve constructed that scope of labor, you’re clearly taking your numbers out of it, you’re giving them these line objects after which they take that to construct their estimate that they’re giving again to you. What’s your expectation for an estimate? So that you had talked about, you stated you get some which are identical to, right here’s the majority worth. What do you anticipate again from a contractor and what ought to our rookies be on the lookout for after they’re given an estimate?

Serena:
So again within the day, they used to ship us an estimate all in their very own phrases, in their very own format. And one which takes a lot of their time to do, they need to, exterior of truly being on the job and both working bodily themselves or being a superintendent, managing their crew, they need to go dwelling and spend late nights away from their household to jot down these estimates. And so plenty of occasions I might strategy them and say, Hey, if I simply provide the scope of labor line merchandise, the descriptions fill within the quantity, does that be just right for you? They’re like, hell yeah. And so I might actually export my template into an Excel, take away the numbers, what I had, give them into it and I’d label subsequent to ’em, that is what I would like you to, I’d put GC subsequent to the entire objects I wished them to estimate, after which they’d come again.

Serena:
After which that approach once we’re speaking on the cellphone and negotiating or speaking about this line merchandise’s this a lot and that’s that a lot and negotiating, then we’re evaluating apples to apples as a substitute of their interpretation, how they bid it. And that simply labored a lot smoother for us. Then there have been different occasions the place I labored with GCs that weren’t good at estimating and actually listeners, you can see this, particularly when as a flip and also you’re looking for inexpensive contractors, plenty of them won’t be as savvy for estimating. I had certainly one of my GCs the place he was like, simply inform me what you assume it’s going to be. He trusted me that I knew the numbers and finally you would possibly get there the place it’s like or you’ll get there’s I might say, Hey, I feel that that is actually affordable for the job. And I might ship him my numbers. He’d be like, okay, it’s a bit low on this.

Ashley:
I do it plenty of leg work.

Serena:
A lot time and figuring, particularly if they’re disorganized on their backend too. I name, I feel contractors are extra artists than they’re engineers. And so by giving them some construction to work off of, it’s sometimes not their robust go well with. They actually recognize it.

Ashley:
What’s go into confrontation?

Tony:
Ash’s favourite phrase?

Ashley:
How do you deal with that confrontation moreover avoiding it? I was such an avoider of confrontation

Serena:
After which I labored in development for 10 years.

Ashley:
So let’s give us a bit instance or position play of one thing’s going flawed on the job website and it’s important to confront the contractor. What’s an effective way to begin this dialog and to have it with them the place it doesn’t really feel such as you’re attacking them or saying they don’t know what they’re doing? Yeah, I’m most likely

Serena:
Higher at confrontation with contractors than I most likely am my private relationships. However when say you stroll in and the standard’s not there, I by no means assume something. You by no means know if the GCs already talked concerning the high quality along with his guys, I don’t need to assume that dangerous intentions, I all the time need to go in with good intentions or assume they’ve one of the best of intentions. So I’ll be curious and search to grasp. I’ll ask plenty of questions and I’ll say, Hey, this seems, do you guys have a plan for this? That was most likely what I stated no less than 10 occasions on the job. Do you guys have a plan for this? They usually’re like, say it was finished and this seems actually dangerous. They’re like, no, it’s good. And I’m going, okay, I feel it must be cleaned up a bit bit. You would possibly want, and so then I might attempt to be tactful and say, truly I used to be pondering of this fashion. And typically in relation to interpretation of what one thing seemed not, I can’t actually write that on the contract as a lot as attainable. I attempt to connect as many photos as attainable in order that approach we are able to paint the identical image in our minds and expectations.

Serena:
However sensei, it’s like a distinction in, nicely, I assumed you meant this on the scope of labor after which it meant this on the scope of labor. And I might type of return to my accountability and being like, if I wasn’t clear on that, then I’d must chunk the associated fee or I’m going to say, Hey, I tousled. I ought to have been extra clear. We must always have had a walkthrough collectively and speak about this. You’re saying that that is going to take you further time and supplies. Can you’re employed with me on this? And sometimes whenever you’re coming from that viewpoint, they’re a lot keen to work with you on it they usually’re being like, no, that’s what I meant. You’ve got recognized that, take a look at it. So yeah,

Ashley:
A bit little bit of give and take to maintain issues.

Serena:
Completely. And going again to I will be such a perfectionist with issues and when it was certainly one of our increased finish homes, they simply wanted to be good they usually understood. I might be like, it is a home the place the paint must be high notch. We will’t simply go away. It must be good. After which they understood that. After which there have been different homes the place decrease to mid vary, much less purchaser expectation. And as I’m going by way of they usually’re working exhausting and we’re at our second degree of blue tape, I keep in mind, okay, what do the comps actually appear like? Or what are we going to do to realize our A RV? And I’m like, I might type of look over sure issues like, Hey, subsequent time guys, this actually must be finished higher. And I might the give and tackle that. I might undoubtedly say, Hey, sooner or later can we do that? However that is adequate for this undertaking. And that’s the best way that I might deal with that.

Tony:
What would you say is the error you see plenty of rookies make in relation to managing the rehab? As a result of plenty of shifting items right here, however is there one thing that you just’ve perhaps seen persistently from newer flippers as they step into this?

Serena:
Yeah, plenty of ’em is that they get the keys they usually simply resco instantly they usually don’t do plenty of planning on the onset. I feel a part of that cause comes from they don’t know what they need to be planning for. In order that they’re like, I’ll simply come, I’ll simply take the sneakers and I can resolve them after they occur.

Ashley:
Yeah, I don’t need to

Serena:
Waste time. I received to get began day one. Yeah, my holding prices, I’m being charged $250 a day or no matter. And right here, and what finally ends up occurring is that I’ve had a consumer about final yr that he was like, Hey, I simply purchased my first flip. And I used to be like, nice, let’s speak about it on the primary name. He goes, yeah, I already employed a gc. And I used to be like, I like, nicely, the place’s your scope of labor? He’s like, I don’t have one. And I used to be like, how didn’t you rent a

Tony:
GC with out scope, scope of labor?

Serena:
And I used to be like, oh no, proper? I renew instantly. I used to be like, okay. And my first thought was hopefully this GC is a very good man. And so I used to be like, ship me over his estimate. And I used to be wanting by way of it and I’m going, okay, I’m not attempting to freak you out right here, however there’s rather a lot as much as interpretation and there’s rather a lot that they’re simply bulking in, okay, we’re going to rework kitchen

Tony:
15,

Serena:
What does that imply? Ok, what does that imply? I imply what high quality cupboards? Okay, the supplies are included. Properly, I imply is he getting

Ashley:
His cupboard? Is there an allowance for a way a lot you possibly can spend to pick your fixtures and cupboards?

Serena:
Yeah, precisely.

Serena:
Is he truly going to a cupboard store and shopping for the proper measurement cupboards or is he shopping for them secondhand off Fb market? I imply, what are we doing right here? And so I stated, okay, we’re going to wish to construct a scope of labor. And I knew at that time he simply went from not so steep hill to a very steep hill that you just would possibly must step up. So I might say taking that further time to plan out a scope of labor, take a look at the comps and get as many estimates as attainable earlier than leaping in as a result of we had been responsible of it, we type of typically went too quick and we set ourselves up for failure for few tasks for positive.

Tony:
What’s that saying? I feel it’s Lincoln or one of many presidents, however if you need me to cut down a tree, I’ll spend the primary eight hours sharpening my noticed. Similar factor, proper? It’s such as you received to be sure to’re occurring with a strong sport plan. I do know you talked about earlier that a few of these stuff you’re in a position to do remotely and we simply interviewed Dominique a couple of episodes in the past and she or he had, I dunno, I feel 12 flips occurring, however she RVs throughout the nation. So there’s a capability to do that remotely, however how usually do you’re feeling that it’s essential so that you can truly be on the job website? And as you’re going, I suppose, what particular issues are you on the lookout for to ensure the issues are shifting on observe with the job?

Serena:
That’s truly nice. That really ties into what I wished to make some extent for. The second query is the opposite mistake that I see that’s that they really feel like they need to be there each single day and that they change into way more reactive. Most of my flipping profession, I spent most likely 5% of the time on the job website and 95% of the time on the pc and attempting to be proactive in planning the following sourcing estimates, perhaps strolling the property with the contractors too, however planning, getting the estimates, getting the data down, re-analyzing the comps and being proactive. And so we had been lucky sufficient, it didn’t really feel like a time as a result of we had been driving rather a lot, however all of our flips had been about an hour to an hour and a half away from the place each tarla and I lived. And so we had been like, we’re solely going to go down as soon as every week if we are able to keep away from it. And in order that made us be extra proactive and begin systemizing and begin successfully speaking with our contractors. So what my course of was to guarantee that contractors had been well timed and really exhibiting up and in addition that the standard management was there. My cadence was I went down as soon as every week to take full photos of the property that was like it doesn’t matter what, whether or not

Ashley:
It was additionally you could possibly anyone else to do this

Serena:
Or another person go down. And it ended up going into another person that did that and taking full photos of property even when nothing modified. And for legal responsibility causes, if somebody broke in that’s your weekly much more. So if in case you have somebody it burned down, image it burned down you what it seems like have earlier than for the insurance coverage firm to say, Hey, two days earlier than it seemed like this, the place in the event you don’t have photos for 4 weeks, they’re like, nicely, who is aware of what it truly seemed

Ashley:
Like? Or perhaps the final photos you’ve got the place it demoed in these 4 weeks, a ton of progress occurred, however no

Serena:
Documentation.

Ashley:
Precisely,

Serena:
And also you don’t know what kind of data and movie that you just’re looking for till you really need it. Want it. Oh my gosh. And so there have been occasions the place I received lazy as a result of all of us do. And I used to be like, oh, okay, it’s the final property out of 10 as we speak and I’m going by way of, after which in two weeks I’m like, I wanted that image of that wall two weeks in the past. And I used to be like, dang it. That’s what I get for skipping steps. And so taking full photos, I imply 150 to 200 every week, I did it systematically all in the identical approach. I do all the outside first, then I’d go to the entrance door and stroll by way of the home, not clinic psychotic the place it was like each room the identical approach, however no less than that course of helped. So after I was going again to the photographs folders, I knew that my exterior was going to be at first within the folder and the again of the home inside was going to be in direction of the tip of the, so simply saving time.

Tony:
Tremendous small detailed query.

Serena:
Tremendous.

Tony:
Properly, one observe up truly. Have been you taking the photographs on an iPhone or had been you doing old-fashioned digital digicam

Serena:
IPhone, which meant that I’ve 150,000.

Tony:
That’s what I used to be asking. If you happen to’re doing 150 pictures every week, I simply questioned if perhaps a bit digital digicam, however

Ashley:
Properly, Henry in Washington, he has two telephones in the marketplace and he stated all of his work stuff is on that cellphone as a result of he doesn’t need photos of homes combined with the photographs of his children and is totally separate for that cause.

Serena:
Again within the day too, the iPhone photos are so massive that I needed to then resize all of them simply to slot in our Dropbox as a result of then our Dropbox received too massive. I imply it was a complete factor, however we understood the significance of it. I just like the second cellphone factor. That’s truly, I received two

Ashley:
Telephones. I used to be like, why don’t you simply get a Google Voice quantity? He’s like, it’s not concerning the cellphone quantity, it’s about all

Serena:
The separating. So going again to how do you retain your contractors on time, ensuring they’re exhibiting up. High quality management, being distant. By the best way, listeners, we used to do 15 flips at a time and in direction of the tip there are about six to eight greater rehabs at a time. And there occasions the place I went to South Africa for a couple of months at a time and had boots on the bottom, however following the identical actual processes. So taking photos each single week. The contractors know you’re going to be there week. I might by no means inform them after I was going to be there until I’m assembly them particularly for a gathering walkthrough and or twice every week take full photos. I might do drive reviews on the tasks. That was particularly useful after I had crew members driving the properties for me. So who’s engaged on the job, what progress has been finished? Is the home secured if nobody is there, examine all of the home windows, examine all of the doorways, examine that the heating isn’t at 90 levels. That was big. I imply a pair payments we received proper? Like cadet heaters, simply loopy. And so doing that, I additionally had, on the scope of labor on the high, I might have some procedures for the contractor to comply with. So keys all the time return to the lockbox. The code has by no means modified with out permission or it’s informed to. Heating’s all the time set under 65

Ashley:
While you go away. That’s one thing I’ve by no means considered, is creating insurance policies and procedures exterior of the scope of labor of the way you need the roles website to run.

Serena:
No change in designer finishes until authorized by me or whoever is proving them. What else would we’ve? Make certain all of the home windows and doorways are locked whenever you go away. Plenty of these interactions I’m having with contractors, particularly GCs, however even electricians, I’m speaking to the primary man. I’m speaking to the proprietor of the corporate, however he has all of his laborers and staff and that data, not my, so I used to have him posted up on the property as nicely. And so that will assist a degree of protection of being there with out being there. No smoking within the property, no smoking,

Ashley:
By no means had that.

Serena:
No be in a

Ashley:
Water bottle, didn’t have that one as a result of I discovered that rather a lot, even most likely the storage of supplies, ensuring the supplies are locked inside the home, not disregarded or that’s the

Serena:
Different benefit of having photos was that typically supplies walked off our job website and with a view to work out what day that occurred, I’m wanting, going proper again to these photos. And regardless that perhaps the property had been sitting for 2 weeks due to some cause, there have been nonetheless photos taken. And so I can see, nicely, they walked off between this date and this date who was on website. And so the opposite factor is working into contracts, timelines for completions. So subs are a bit bit simpler in relation to that as a result of they’re actually fast out and in. Their set up would possibly take only a day or two they usually’ve received a full calendar. They need the cash turnover. So not as a lot an issue with them, however I sometimes ask my gc, Hey Tyler, the Tyler, the Tyler is meant to begin this present day. Let me know if he doesn’t present up. Okay, didn’t present up. All proper, texting so I can get on it as a substitute of ready a pair days and I present up and I’m like, shoot,

Speaker 4:
There’s no

Serena:
Tile now I’ve misplaced 4 days. After which so for the GC contracts, we all the time had a, I’d have them, I’d ask them first, when do you assume your completion date shall be for the scope of labor that we’ve agreed upon? And it goes, I would like eight weeks. And so, okay, that’s December twenty first, no matter. And I’m going, how about does December eighth work higher for you? Proper, like an additional week or further two weeks if I feel that they’re a bit bit too brief. After which in fact they’re going to be like, yeah, truly no matter. They all the time want it. And I’d say, okay, you get a bonus of $150 a day in the event you full earlier than this date, that’s contains punch record completion, every thing, or you can be fined $150 a day. So

Ashley:
Subtract

Serena:
It, subtract it from the ultimate fee. With that although, it’s important to hold observe in the event you delay them for any cause. And in order that solely actually ever turned an insurance coverage to us when a contractor was simply actually going south. And we’ve determined at that time we’re not going to maneuver ahead with them on a special undertaking. At the least we may argue with them that we’re like, we’re solely going to pay you half of the factor as a result of it took an additional 4 weeks to finish and it was unreasonable simply not exhibiting up. And we solely paid the bonus one or two occasions, perhaps as soon as, however no less than they comprehend it’s there and there’s some incentivization, but additionally some

Ashley:
Penalty. This has been superior, Serena, thanks a lot. I like speaking methods and processes with you as a result of I all the time be taught one thing new that I can implement in my very own rehab undertaking. Superior. Thanks a lot for coming and becoming a member of us in particular person. The place can individuals discover you and attain out to you?

Serena:
Yeah, finest place Instagram at Serena dot Claire. And from there I’ve hyperlink to sources after which ship me a DM and in the event you’re doing flips already, I’d like to see him ship me some photos. Yeah,

Ashley:
Thanks for having me. Yeah, thanks. Admire it. I’m Ashley. And he’s Tony. And this has been an episode of Actual Property Rookie. We’ll see you guys subsequent time.