By Ethan Roberts
Congratulations! After several years of thinking about owning investment real estate, and saving and planning for it, you’ve finally purchased your first rental property. You got a really good deal, but it needs a lot of work, right? Well, today, I’m going to help you with a 10-step plan to get organized and rehab that property in the most efficient and least expensive way possible.
Step 1: Assess the condition of each room and take notes on the repairs and upgrades it needs.
Walk through the home right before the closing and prepare notes on each room. They can be brief, such as: Kitchen: Re-paint room, Replace vinyl floor with ceramic tile, change knobs on cabinet doors.
Step 2: Make sure you have liquid or credit funds available.
You don’t want to run out of money or credit in the middle of a rehab job when you need to pay your contractors or the home improvement stores. So it’s vital that you put enough funds in an account where you have easy access to it for writing checks, using a debit or credit card, or simply grabbing quick cash.
Step 3: Shop around various stores to find good quality materials on sale.
You can save hundreds of dollars on items like cabinets, counter tops, flooring, paint, and light fixtures if you take the time to shop at several different stores and look for quality items on sale. It’s best to do this before you close on the home so you’re ready to go as soon as closing takes place.
Step 4: Line up the service providers you’ll need.
You can’t wait until the day you need a roofer, plumber, or painter to call them. The good ones usually are booked up days or even weeks in advance. Set up appointments with them before closing, so you can hire them for the first week or two after you close.
Step 5: Draw up a realistic calendar for the project.
A realistic calendar should allot enough time for each step of the rehabbing process. For example, week 1 might include some initial visits from contractors like the plumber, roofer, and electrician, and perhaps some interior painting. Week 2 might include installation of ceiling fans, fixtures and new doors. Be careful you don’t schedule too tightly, or you may find yourself creating a chaotic situation where too many things are going on at one time.
Step 6: Track expenses with an Excel spreadsheet or QuickBooks.
During your project, you need to use bookkeeping software to track expenses. You don’t want to discover at the end of the rehab that you’re way over budget. Conversely, if you see halfway through that you’re under budget, you might be able to add some additional cosmetic upgrades to enhance the look of the home even more.
Step 7: Be available to supervise the work, or hire a project manager.
It’s always best to be at the project site yourself as much as possible to supervise the workers and make sure everything is going smoothly. I learned this lesson the hard way on one project when I wasn’t at the site much, and one of the workers tore the tile out of the wrong bathroom shower! I had to spend several hundred dollars more than planned to re-do what he had destroyed.
Although it’s great to have competent workers, you can’t just assume they’ll do things to your satisfaction. If you can’t be at the site very often, hire someone to project manage it. Communicate with them frequently by phone, and have them send you photos so you can observe the progress from afar.
Step 8: Always have plan B ready in case you have to postpone Plan A.
Weather can play havoc on a rehabbing schedule. A week of solid rain or freezing temperatures can squash those plans you had for exterior painting, landscaping, roofing or siding repair. Always check the five- or 10-day forecast when planning your exterior work schedule.
If a contractor is delayed on a previous job, it can bring your project to a halt. So always have a strategy for other work you can do in case you have to postpone your original plan.
Step 9: Keep materials in a garage or storage shed while rehabbing so they’re not in your way, don’t get damaged, or don’t pose an accident hazard.
The last thing you need is to have a worker injured falling over a box of floor tile, or trip over tools lying around that aren’t even being used. You also don’t want paint or other debris splattered on new cabinets or appliances, so move them away from the work area.
Keep the garage or shed locked when you’re not there. Theft from job sites is a common occurrence, unfortunately.
Step 10: Follow a rehabbing sequence that’s both highly efficient and keeps your site as clean as possible.
A highly efficient rehabbing sequence would be as follows: Tear everything out first, then paint. Install fixtures, ceiling fans and other items. Bring in your appliances, and finally, as the last step, install your flooring.
There are practical reasons for this sequence. Tearing out old materials such as carpets, tile and baseboards creates a mess of dust and dirt. So sweep or vacuum those areas before you start painting. It’s also far easier to paint a bathroom before the mirror, medicine cabinet and fixtures are installed. If possible, have contractors such as plumbers do their work as early as possible in the process.
Once the paint is dry, you can install new cabinets, countertops, fans, fixtures and wall switch plates. Then add your appliances, blinds, wood or tile floors and carpets.
One important decision you’ll need to make is whether to work on the interior or exterior first. That frequently depends on the weather or when service providers are available. But if you do the interior work first, remember to put carpet runners or other protective materials over the floors so you don’t track water, mud, paint or sawdust onto them.
If you follow this 10-step plan, you’ll find your rental property remodels to be far easier and less costly. Best of luck with your project!
Ethan Roberts is a real estate writer, editor and investor. He’s a frequent contributor to InvestorPlace, and his work has been featured on MSN Money and Reuters. He’s also written for Seeking Alpha, Investopedia, The Fiscal Times, ForSaleByOwner and Smarty Cents, and was one of five contributing editors to The Tycoon Report. He’s been investing in real estate since 1995 and has been a Realtor since 1998. He also teaches classes on investing in residential real estate.
