Estimating Prices, Working with Contractors

Ashley:
Ever marvel what the method is to run a rehab, methods to handle contractors? Nicely, at this time we’re going to get into it. My identify 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, thrice per week, we convey you the inspiration motivation in tales it’s essential to hear to kickstart your investing journey. And at this time we’re joined by the great Serena Norris. Thanks for becoming a member of us at this time.

Serena:
Thanks for having me guys.

Ashley:
And we’re dwell in LA within the studio right here with Serena. So thanks a lot for driving via the LA visitors. I do know be part of us right here at this time.

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

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

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

Ashley:
And likewise burrs too. You’ve executed rehabs on leases

Serena:
Additionally? Yeah, so about in all probability 30 to 40% of these ended up being burrs. And so I’ve a couple of 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 main function taking up these tasks?

Serena:
Yeah, so at first 10 years in the past, I simply began helping with every part with my mentor after which after a couple of years actually took on all of the design facets of it, high quality management and serving to with systemization. After which over time I grew into simply app mission administration function after which being extra near the numbers. Then I grew to become 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 staff. So I listed all of our flips on the backend in the event that they weren’t already hooked up to an acquisitions firm. And so yeah, the design mission administration, managing the contractors, systemizing and principally the operations.

Ashley:
So do you suppose we will use this episode to utterly break down that means of when that property is handed off to you? So is it when it’s beneath contract, is it after they shut on the property, when does it truly transferred to you and what are the primary steps you need to take?

Serena:
Yeah, so our course of with our staff, we had a foremost acquisitions individual they usually have been those that have 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 take a look at. In order that they’re like, Hey, we expect we have now 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 taking a look at, they’re going to margin, it may very well be a deal that we need to take down. Then they begin accumulating the entire info that I say, Hey, I want this info a Z with a view to decide, sure or no. And normally in that guidelines there can 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 might perceive then the circulate and type of see, hey, we have now to not add a rest room right here. And I’m like, I don’t suppose that is proper. So then comps, preliminary comps, what the acquisition worth can be, how a lot they’re considering, the rehab can be, all of that part. After which just about remotely, I wouldn’t even want to go to the property I’d go to just about after which be capable of decide sure or no.

Serena:
So though I used to be foremost mission supervisor and operation submit buy, I undoubtedly had a hand within the acquisition the place at a sure level the place we failed as a staff was that acquisitions half and the submit acquisitions half have been very segregated and we didn’t talk. And so when building costs ended up growing 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 will make it again on the backend. And in order that’s the place I stated, okay, we should 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 finances the place they may simply go in and shortly sort 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 be capable of give a ballpark rehab estimate that I used to be comfy 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 after we’d get in, see if we will get in somebody to take the ground plan. Plenty of hoarder homes generally we will’t at all times do this, we have now 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 staff and the totally different roles, however that is actually issues that you are able to do. Don’t get targeted on having staff members give attention to the precise roles and obligations that she’s mentioning 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 personal rehabs.

Serena:
Completely. If 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 aware of what that function appears individually and possibly even when it helps you bodily. Okay, now I’m in my acquisition hat, now I’m in my building administration hat. Now I’m in my disposition hat in case you are additionally licensed. In order that approach while you do need to scale or construct a staff, these transitions are extra fluid with the processes.

Ashley:
Tony, you probably did that within the very starting of your small business. You probably did your org chart.

Tony:
Yeah, we discovered that to be a brilliant useful train and I instructed the story many instances 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 identical time which are saying completely various things like, okay, we received to pause right here. However what you’re answering is I believe a very necessary level that good rehab administration truly begins on the acquisition section as a result of you need 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 via 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 a whole rookie, I’ve by no means executed 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 immediately. 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 immediately it is a totally different market. I’ve solely flipped in Seattle, Tacoma, and Portland. And my final flip, I’d been transferring round somewhat bit, my final flip was over a 12 months 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 that they’re doing offers, they’re near the development. I imply by that. They’re truly taking a look at 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 finances for this deal?

Serena:
Even when you don’t purchase it, you thoughts taking a minute and seeking to see what my estimates, are they appropriate? 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 in all probability get roofing much less right here. Counter tops are going to be extra. And so with all of this, it’s simply getting info, placing it down. Once I get my first deal right here LA, I’m going to get as many estimates as attainable from contractors immediately. Even when the primary estimate that comes again to me is what I need, I’m going to rent them. I’m nonetheless going to get extra estimates as a result of I’m simply accumulating that info 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 you 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 part of us at BiggerPockets Momentum 2025. We’re prime trade specialists and traders 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 will have this community of individuals you possibly can go attain out to, but when there’s a riki who possibly 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’d 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 when you can shadow somebody of their mission. In the event that they’re actively flipping, say, Hey, I need to provide you with worth in the way in which, would I be capable of drive your property a couple of times per week? I’ll provide you with 150 images in an organized approach and simply would that enable you to of their enterprise? They usually’re like, certain, somebody checking on my mission or sending me a report, hey for that might possibly a commerce a time the place might you ship me a number 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 info. I imply, who’s not going to ship you bill? Hopefully they’re organized sufficient or they’ve a Dropbox hyperlink they will ship you over they usually’re not simply of their emails however off the cuff. I really feel like that’s what I’d do and

Ashley:
I believe even when you simply submit on the BiggerPockets boards, right here’s my scope of labor, right here’s my finances, that is for this market, this neighborhood, does anyone have any suggestions on my pricing? And I believe there can be tons of traders who put money into that market that might 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 finances for me? You’ve already gone and executed 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 believe this kitchen can be X quantity to rework doing these items myself, my contractor all on BiggerPockets might simply simply reply like, oh no, truly I believe this might be extra one thing like that too.

Serena:
Yeah, I believe additionally counting on Google as nicely, final week after I was going this in AI now, and I’ll a minimum of provide you with ranges as a result of an investor, you’re going to get higher price, 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 car guys that regarded like type of shady, however I’ve been at the hours of darkness bands, however a minimum of you may get a spread 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 part. 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 at all times change.

Tony:
I believe you’d be shocked at how simple it’s simply to choose up the telephone and name individuals, particularly subs. I really feel like GCs are somewhat 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 executed 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 suppose it’ll price to put in it. Most likely three to five,000 bucks per mini break up it’s essential 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 houses, 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 methods 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 have 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 Residence Depot or no matter, even strolling via 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 spread or an concept of what it might price is by taking a look at 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 Residence Depot and saying, okay, what would the product be that I’d select for this home? Possibly consider a home the place discover a home on Zillow the place you’re like, this appears like type of what a product an A RV submit rehab flip the completed product, proper? Okay. It’s received LVP flooring, not the least costly however possibly mid vary. Okay, what’s that on Residence Depot as a flip? That’s what we’re doing. We’re going purchasing at a Residence 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 info. The opposite factor that I believed concerning the different day is, hey, is there a easy approach I might possibly name a couple of electricians and say, how do you create your estimates? Do you go off worth per sq. foot? Do you need 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 might you give me a ballpark vary? If I had all of the drywall eliminated right down to the studs, how a lot wouldn’t it 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 info. Once more, going again into my framework after which accumulating it from there and having that info simply makes you a lot extra assured that you just’re going to know the prices post-purchase while you’re sourcing.

Tony:
So masterclass breakdown on methods to begin constructing that pricing sheet for potential work you want executed. However I assume that subsequent step of really constructing out your scope of labor and your finances, which one comes first? Do you set your finances first after which construct the scope work based mostly on that or do you attempt to say, Hey, what are the comps, what’s the scope after which what finances do I must get there?

Serena:
Yeah, nice query. So I even have my scope of labor and finances collectively on one sheet. I discovered that that works one of the best for our system so we didn’t must do two separate issues. They go hand in hand. And so I’ve a template, I’ve in all probability a 400 line objects scope of labor template the place I’d somewhat have all of the objects there after which undergo and delete those I don’t want for the mission than sitting at a clean paper and making a scope of labor. I imply we used to try this at first and we’d at all times miss sure issues. I can’t let you know what number of instances we missed a dryer vent set up and Charles can be so mad and I’m like, while you make a mistake greater than a couple of times, three, 4 instances, 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 became 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 have been in salt, so now each rehab we want to verify the peach traps are in there.

Serena:
It’s

Tony:
Like a joke now with us in our crews. Did you place the peach? Are you certain the peach entice 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 accessible. 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’d begin from there. Even when you’re simply getting began is write out something you’d even want. We do it within the order of building. After which

Tony:
What do you imply by order of building?

Serena:
Order of building? Nicely, so truly break it out first into three totally different sections. So we have now preliminary companies, in order that’s going to be trash out demo. These are the stuff that we will maintain at first earlier than we even plan the remainder of the scope of exercise. We all know that we’re going to want trash out. There’s an RV on web site we have to take away or a automotive boat we have to take away or rekey sewer scope. And so we have now these preliminary companies. Then we have now our exterior after which we have now our inside after which we have now our pre-listing, so about 4 totally different, so phases. After which in every of these we have now an order of building. So let’s simply begin with exterior. Truly inside might be simpler to clarify. So inside, you will have your demo and then you definately’re going to be doing all your framing. Then you will have hvac, your plumbing, then your electrical, then your insulation, then you will have your drywall, after which you will have 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 building that they might do it at in order that approach the contractors can type of go in and observe it. Type of happening an inventory.

Tony:
And I need to ask Ash, do you do yours the identical approach in that order of building 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 grasp me and I bodily stroll via each room as to love, okay, I’m within the mud room, right here’s every part that must be executed. 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 part, 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 want six recess lights, I’ll tag {that electrical}, or hey, we have to reframe this room or no matter it could be. However for me simply visually, possibly 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 via 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 prime after which that’s my projected prices. However after I’m on the plumbing part, I’ve to suppose, 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 toilet, however both approach. And that’s so cool to listen to you guys do it in another way. You are able to do works both approach. Works both approach.

Ashley:
We’re going to take yet one more 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 finances on the identical time, however how do you be sure, as a result of a stability there, proper? As a result of you will have a finances it’s essential to hit, however you additionally must ensure that your scope of labor is sweet 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 finances to get to the precise RV that you just want?

Serena:
Yeah, so it goes again to the comps. I’m taking a look at what the unique product is. I name it homes, merchandise, flips merchandise, what the unique product appears 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 may assist me resolve what then the scope of labor is. And there’s nonetheless in all probability going to be about 80% the place I’m certain 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 wish to have, does it assist with saleability promoting it quick or can we depart a pair issues that aren’t so nice and count on it to set a pair extra weeks in the marketplace?

Serena:
That’s type of the place simply expertise is available in. However you will have your earlier than product, you will have 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 might do a full intestine rehab and repair every part up however these numbers don’t work? Can we make numbers work the place we simply do a beauty flip, {the electrical}’s tremendous, 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 right 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 part 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 finances. The most important factor at first after we began was our scope of works have been simply bullet factors on a phrase doc. And there’s a lot interpretation there, particularly with contractors. And we discovered one another discovered instances that we might ship the PDF phrase doc to the contractor, they might write us an estimate and their estimate can be pages lengthy, particularly if it was a gc.

Serena:
I’m speaking a couple of basic contractor right here, pages lengthy they usually’re writing out the entire line objects in their very own verbiage and possibly they’re even not line objects, they’re all bulk collectively. After which through the mission we’d have all of those sure arguments as a result of I believed 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 methods 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 needs more cash 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 might 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 must spend more cash 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 price. I missed it. However there was no battle between us and it’s saved numerous relationships with contractors.

Ashley:
So when you’ve constructed that scope of labor, you might be 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 count on 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 must, outdoors of really being on the job and both working bodily themselves or being a superintendent, managing their crew, they must go house and spend late nights away from their household to write down these estimates. And so numerous instances I’d strategy them and say, Hey, if I simply provide the scope of labor line merchandise, the descriptions fill within the quantity, does that give you the results you want? They’re like, hell yeah. And so I’d 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 need 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 after we’re speaking on the telephone 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 instances 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, numerous them may not be as savvy for estimating. I had one in every of my GCs the place he was like, simply inform me what you suppose 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’d say, Hey, I believe that that is actually cheap for the job. And I’d ship him my numbers. He’d be like, okay, it’s somewhat low on this.

Ashley:
I do it numerous leg work.

Serena:
A lot time and figuring, particularly if they’re disorganized on their backend too. I name, I believe 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 admire 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 building for 10 years.

Ashley:
So let’s give us somewhat instance or function play of one thing’s going incorrect on the job web site and you need to confront the contractor. What’s a good 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 in all probability

Serena:
Higher at confrontation with contractors than I in all probability 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 together with his guys, I don’t need to assume that dangerous intentions, I at all times 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 numerous questions and I’ll say, Hey, this appears, do you guys have a plan for this? That was in all probability what I stated a minimum of 10 instances on the job. Do you guys have a plan for this? They usually’re like, say it was executed and this appears actually dangerous. They’re like, no, it’s good. And I’m going, okay, I believe it must be cleaned up somewhat bit. You would possibly want, and so then I’d attempt to be tactful and say, truly I used to be considering of this manner. And generally in terms of interpretation of what one thing regarded not, I can’t actually write that on the contract as a lot as attainable. I attempt to connect as many footage as attainable in order that approach we will paint the identical image in our minds and expectations.

Serena:
However sensei, it’s like a distinction in, nicely, I believed you meant this on the scope of labor after which it meant this on the scope of labor. And I’d type of return to my accountability and being like, if I wasn’t clear on that, then I would must chew the price or I’m going to say, Hey, I tousled. I ought to have been extra clear. We should always have had a walkthrough collectively and speak about this. You’re saying that that is going to take you additional time and supplies. Can you’re employed with me on this? And sometimes while 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 will have recognized that, take a look at it. So yeah,

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

Serena:
Completely. And going again to I may be such a perfectionist with issues and when it was one in every of our greater finish homes, they simply wanted to be good they usually understood. I’d be like, it is a home the place the paint must be prime notch. We will’t simply depart. 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 via they usually’re working exhausting and we’re at our second degree of blue tape, I bear in mind, okay, what do the comps actually seem like? Or what are we going to do to realize our A RV? And I’m like, I’d type of look over sure issues like, Hey, subsequent time guys, this actually must be executed higher. And I’d the give and tackle that. I’d undoubtedly say, Hey, sooner or later can we do that? However that is ok for this mission. And that’s the way in which that I’d sort out that.

Tony:
What would you say is the error you see numerous rookies make in terms of managing the rehab? As a result of numerous transferring items right here, however is there one thing that you just’ve possibly seen constantly from newer flippers as they step into this?

Serena:
Yeah, numerous ’em is that they get the keys they usually simply resco immediately they usually don’t do numerous planning on the onset. I believe 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 clear up 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 12 months 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 immediately. 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 via 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. Nicely, 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 dimension 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 want 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’d say taking that additional 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 have been responsible of it, we type of generally went too quick and we set ourselves up for failure for few tasks for certain.

Tony:
What’s that saying? I believe it’s Lincoln or one of many presidents, however if you’d like me to cut down a tree, I’ll spend the primary eight hours sharpening my noticed. Identical factor, proper? It’s such as you received to be sure you’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 believe 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 crucial so that you can truly be on the job web site? And as you’re going, I assume, what particular issues are you on the lookout for to verify the issues are transferring on observe with the job?

Serena:
That’s truly nice. That truly 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 must be there each single day and that they change into way more reactive. Most of my flipping profession, I spent in all probability 5% of the time on the job web site and 95% of the time on the pc and attempting to be proactive in planning the following sourcing estimates, possibly strolling the property with the contractors too, however planning, getting the estimates, getting the knowledge down, re-analyzing the comps and being proactive. And so we have been lucky sufficient, it didn’t really feel like a time as a result of we have been driving rather a lot, however all of our flips have been about an hour to an hour and a half away from the place each tarla and I lived. And so we have been like, we’re solely going to go down as soon as per week if we will 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 ensure that contractors have been well timed and really displaying up and in addition that the standard management was there. My cadence was I went down as soon as per week to take full footage of the property that was like it doesn’t matter what, whether or not

Ashley:
It was additionally you can someone else to try this

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

Ashley:
Like? Or possibly the final footage you will have 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 info and film that you just’re looking for till you really need it. Want it. Oh my gosh. And so there have been instances 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 at this time and I’m going via, 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 footage, I imply 150 to 200 per 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 via the home, not clinic psychotic the place it was like each room the identical approach, however a minimum of that course of helped. So after I was going again to the images 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 the direction of the tip of the, so simply saving time.

Tony:
Tremendous small detailed query.

Serena:
Tremendous.

Tony:
Nicely, one observe up truly. Have been you taking the images on an iPhone or have been you doing old skool digital digital camera

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

Tony:
That’s what I used to be asking. In the event you’re doing 150 images per week, I simply questioned if possibly somewhat digital digital camera, however

Ashley:
Nicely, Henry in Washington, he has two telephones in the marketplace and he stated all of his work stuff is on that telephone as a result of he doesn’t need footage of homes blended with the images of his children and is totally separate for that cause.

Serena:
Again within the day too, the iPhone footage are so huge that I needed to then resize all of them simply to slot in our Dropbox as a result of then our Dropbox received too huge. I imply it was an entire factor, however we understood the significance of it. I just like the second telephone 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 telephone quantity, it’s about all

Serena:
The separating. So going again to how do you retain your contractors on time, ensuring they’re displaying up. High quality management, being distant. By the way in which, listeners, we used to do 15 flips at a time and in the direction of the tip there are about six to eight larger rehabs at a time. And there instances 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 footage each single week. The contractors know you’re going to be there week. I’d 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 per week take full footage. I’d do drive experiences on the tasks. That was particularly useful after I had staff members driving the properties for me. So who’s engaged on the job, what progress has been executed? 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 large. 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 prime, I’d have some procedures for the contractor to comply with. So keys at all times return to the lockbox. The code has by no means modified with out permission or it’s instructed to. Heating’s at all times set under 65

Ashley:
If you depart. That’s one thing I’ve by no means considered, is creating insurance policies and procedures outdoors of the scope of labor of the way you need the roles web site to run.

Serena:
No change in designer finishes until permitted by me or whoever is proving them. What else would we have now? Ensure that all of the home windows and doorways are locked while you depart. 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 employees and that info, not my, so I used to have him posted up on the property as nicely. And so that might 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 in all probability the storage of supplies, ensuring the supplies are locked inside the home, not unnoticed or that’s the

Serena:
Different benefit of having footage was that generally supplies walked off our job web site and with a view to determine what day that occurred, I’m wanting, going proper again to these footage. And though possibly the property have been sitting for 2 weeks due to some cause, there have been nonetheless footage taken. And so I can see, nicely, they walked off between this date and this date who was on web site. And so the opposite factor is working into contracts, timelines for completions. So subs are somewhat bit simpler in terms of 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 today. 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 at all times had a, I’d have them, I’d ask them first, when do you suppose your completion date will probably be for the scope of labor that we’ve agreed upon? And it goes, I want 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 additional two weeks if I believe that they’re somewhat bit too brief. After which after all they’re going to be like, yeah, truly no matter. They at all times want it. And I’d say, okay, you get a bonus of $150 a day when you full earlier than this date, that’s consists of punch record completion, every part, or you may be fined $150 a day. So

Ashley:
Subtract

Serena:
It, subtract it from the ultimate fee. With that although, you need to maintain observe when you delay them for any cause. And in order that solely actually ever grew to become an insurance coverage to us when a contractor was simply actually going south. And we have now determined at that time we’re not going to maneuver ahead with them on a special mission. A minimum of we might 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 displaying up. And we solely paid the bonus one or two instances, possibly as soon as, however a minimum of they realize it’s there and there’s some incentivization, but in addition some

Ashley:
Penalty. This has been superior, Serena, thanks a lot. I like speaking programs and processes with you as a result of I at all times study one thing new that I can implement in my very own rehab mission. Superior. Thanks a lot for coming and becoming a member of us in individual. The place can individuals discover you and attain out to you?

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

Ashley:
Thanks for having me. Yeah, thanks. Respect 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.