My first rehab project was a cute little brick bungalow (built in 1900) in Fayetteville, Georgia. This little baby turned out to be a total rebuild instead of a simple rehab. I paid 55K for the two bedroom home and got 25K in rehab money. Thought I'd finish it up and flip it in three months, making a nice profit. Not!
What I learned from this project will stick with me forever. We tore out every wall; replaced every window and every door; added central air and heat (where there was none); rehabbed one bathroom, and added a second one; created two new bedrooms from dead space; added closets; raised the ceiling in the backroom and gave it walls (used to be a porch); re-pitched the front porch; added white columns on the porch and the carport; added new roofing shingles; carpeted; added ceramic tile to the kitchen; put in new kitchen cabinets, cleared the yard of debris; insulated the home; ran new plumbing pipes, etc., etc., etc.
Here are a few invaluable tips if you're thinking about getting into rehabbing:
Over Calculate: Always over calculate what things will cost. I had 25K in rehab money (hard money loan), but wound up going almost 10K over-budget. Err, where'd that money come from? My own pocket. What I got for what I paid out is incredible, but I didn't expect to have to do that much or have it cost me out-of-pocket. But once you start tearing down walls, the budget tends to go up.
Get It In Writing: Get your final contractor's quote in writing. If your contractor doesn't submit you a written bid, and you come to a verbal agreement, you write it up yourself, being as specific as possible, and get them to sign it. (Even if they don't read English, seriously, get them to sign it.) I should say especially if they don't read English that well. Because they may be saying one thing and you may think they mean another, but you will be on the short end of the stick in what you're paying out if there is a misunderstanding.
Building Permit: Get the darn building permit from the beginning. Should be a simple process, but, for some reason, in some counties, it can take forever. Some rehabbers start the job without a permit and get snagged by the county when the contractors start working on the front of the home. The county will likely drive by and tell your crew to stop all work because you don't have that little $55 piece of paper. Now, one school of thought is to perform quick outside work on the weekends, especially when the property you're rehabbing is a half mile from county offices, but you didn't hear that from me, nor am I advocating it. Your contractors will likely do a better job if they know the county can stop by at any time to see what they're doing.
Firm Hand: Be firm and stern with your crew, especially if you're a woman, or contractors will walk all over you. My HVAC guy had run everything in the ceilings, but ran off with my brand new HVAC unit. I had to buy another unit and hire another guy to finish the job (er, not in the budget!). My electrician did the rough electrical work, but I couldn't get a call back when it was time for him to do the final work. I had to hire a second electrician. He had been paid the bulk of his money when he finished the rough (the main part), but to have to bring in a second guy was, again, NOT in the budget.
Job Rate: Stick to a total "job" rate, not a piece meal rate, when you have one contractor doing most of the work. My contractor, who was unbelievable, could build anything and took pride in his work. But he would come to me and say you paid for everything except me putting in the kitchen cabinets or building the ceramic shower. Now, my contractor quoted me a job rate of $16,600 to rehab the house. But I wound up paying for so many "extras." For example, I paid a bundle towards a ceramic shower that I did not expect. I thought a shower was included in bathroom rehab? Who knew if he decided he would use his incredible talent and build a ceramic shower - which is gorgeous - he would charge me an extra $1,500? If I had known that, I would have made sure he put in the simple, one-piece tub/shower kit, which would have been less than $300.
Signage: There are many schools of thought on this, but, in my humble opinion, put the darn FOR SALE sign out the day you close on the property. The Realtor in me wanted to wait until the house was "ready!" before I put it up. But, if I could do it all again, the sign would have been up before my signatures on the closing documents had dried. I mean, nine times out of ten, especially if it's a foreclosure, people have been snooping around the property anyway, so a fresh FOR SALE sign in the yard will bring immediate interest.
Hire Professionals: Don't try to skirt paying for "things I know I can do myself." No, hire a professional painter so it looks like a professional job. Hire a professional landscaper, so it looks like a professional job. I think I have more paint on my overalls than I should have in trying to do the thing myself. Who knew you had ceiling paint, versus plain old flat paint. It's called "ceiling" paint for a reason (it goes on better and does not drip and splatter as easily). Who knew you had brick paint, versus plain old exterior white paint.
Roll-Off Containers: Ah, and the big roll-off containers (you know the kind where when you're rehabbing, you throw all the junk such as the old windows, old doors, sheetrock, old kitchen sinks, etc. in): if the container company says you can keep it for 30 days, they really mean you can keep it as long as you want, but if you don't call them back in 30 days or less to pick it up, the meter keeps rolling. That happened to me. I said you all were supposed to pick it up in 30 days. The company said you can keep it longer and we will charge you. We don't pick it up until you call. Well, who would have thunk?
Yard Creatures: 'Fraid of snakes? I am. Terrified. Me and my trusty overalls ran into one one day while mowing that bushy lawn. But, now, a three dollar bag of lime is my best friend. (You know, the yard lime. Sulfur I hear is great, but both Home Depot and Lowe's were always out.). Sprinkle lime all over the lawn when you begin. That will give you some piece of mind when it comes to the slithery creatures. Uuuuggggggg!
The market is not moving in my area - it's dead, okay, dead! So the house has been rented out. When I put it on the market, I got an offer the first day, but I wanted to make a "profit!" not barely break even. I'll hold it for three years as a rental and sell it for a nice profit when the market gets a-hold of its britches. I've learned a lot on this one.
Would I do it all over again? Yes, in a hot minute. In fact, I'm working on a cute little bungalow in South Fulton (Atlanta, Georgia area) now. There's nothing like jumping into my overalls, tying a bandana around my head, hopping into my Jeep, and going to see what my crew is up to at the house. It's power; it's watching something transform from plain to beautiful, under my guidance.
Being a lady investor suits me just fine. Payoff may have to wait a bit, but real estate sells. Just a matter of patience and timing.
by Cassandra Black
Lady Investor, Realtor, Business Owner, Author
The Cassandra Group REForeclosure Cleanup, LLCReal Estate CleanupAssociated Content by Cassandra Black
Author of
Lady Investor Book
Photo courtesy of MSNBC
