Introduction

 

In 1998, I was ready for a career change. I decided to leave the teaching profession because I was frustrated by children who wouldn’t behave in the classroom, parents who didn’t care, and ones who cared too much for their own good, and a school administration that spent most of its time pinching pennies. And that meant I wasn’t making any money. I had had enough of living paycheck-to-paycheck. I felt if I stayed in that career I would never own my own home.

 

After some thought I decided to try my hand at renovating houses. The problem was my extensive education in undergraduate school and graduate school left me with limited skills in management and dealing with people, and absolutely no home remodeling or renovation skills.

 

But despite my lack of remodeling skills, I took a job for a small local company that specialized in fix and flips, mostly of foreclosed homes. We had over a dozen employees, not including all of the contractors, and we turned over 100 houses every year.

 

I first met the owner of the company one afternoon at a jam session—I was also a musician. A fellow musician, he had seen the work I had been doing on nights and weekends for over a year on my own house. He felt that I had just the attention to detail to manage the houses his company owned.

 

I’ll never forget my first day on the job. The owner gave me a digital camera, a laptop computer and the address of eight homes, all within 50 miles of the office.

My boss said, “Take before pictures, get the houses fixed up to sell, then get after pictures. And you have three weeks… . Go.”

 

The business worked like this: Once the company had acquired a house, it became my responsibility until it was sold. Paying special attention to detail and planning and using the age-old method of trial and error—for good measure I also had to learn how to speak Spanish—I fumbled through the first 100 or so houses. But I was able to make everything work as smoothly as possible.

 

 I learned many of my skills from my father, who was a great carpenter. He built two houses and several other buildings, many from scratch, all of which are still standing today. The most important skill I learned from him was problem solving.

 

Unlike new construction, where every aspect of the job is controlled, with certain exceptions, remodeling often requites a much higher degree of problem solving. You never know what you might find behind a wall like faulty electrical work, bad plumbing, or rotten or damaged framing.

 

This book recaps what I have learned from remodeling over 500 homes. I’ll teach you how to evaluate the big picture, what’s important and what’s not, and how to effectively manage the work. All based on examples and experience in the marketplace.

After I quit my teaching job, I borrowed some money—not a lot of money—from family members and some skeptical friends, and I bought my first fixer-upper. At first I made every mistake imaginable from A to Z. But many years and several hundred homes later, I feel confident enough to reveal the quickest ways you can make money remodeling houses.

In this book I’ll tell you what I’ve learned from my costly mistakes, so you won’t waste time and money making the same mistakes. I’ve learned a lot about when you should do the repairs yourself and when you should hire a professional. I’ve figured out which repairs are necessary and which are strictly optional. I’ve even included worksheets, timelines, and other forms that you can download from the CD so you can renovate each property with confidence.[CM1] 

If you’re a real estate investor who buys and flips houses or someone who buys, holds, and manages properties to build wealth, you must read this book. If you’re a homeowner considering remodeling or you’d like to maximize your profit when you sell your home, you, too, will find this book invaluable. This survival guide will steer you around financing hazards, management pitfalls, and contractor roadblocks, so you can complete your projects quickly, efficiently, and inexpensively.

 

Chapter 1: Making Every Dollar Count

 

We’ve all heard the adage, “Time is Money.” In real estate, especially, this is an important idea to remember. Most real estate investors believe that every dollar spent is a dollar out of their pockets. They fail to understand the importance of spending money wisely. The fact is not spending enough money or spending too much money can ultimately cost you BIG money.

 

That’s why this book is vital to your success; it outlines management techniques to help you maximize every dollar and every minute you spend on your real estate projects. If you follow my advice you won’t spend money needlessly on remodeling projects, you’ll add value to your property..

 

One of the things I’ll do is explain how to effectively plan out every step of the remodel. Planning is the most essential part of even the smallest jobs. And part of that planning is figuring out how to choose the right contractor for the right job. I’ll let you in on proven techniques to help you select and hire the best contractor for each job. My techniques will also help you weed out those contractors who just don’t measure up.

 

K.I.S.S. Keep It Simple Stupid

This book will outline how to keep jobs moving forward by keeping the jobs simple. Routine house repair and management is a simple concept. Hence, the K.I.S.S. or Keep It Simple, Stupid mantra. Because home repairs involve so many mundane tasks, you might overlook the simple work. And that almost always means you’ll spend more time and more money finishing those simple jobs to get the house ready to sell or rent.

 

Being Available

One of the single most important concepts in home repair is that you, the manager, need to be available. If a contractor working on a house has a question, and he can’t get an immediate and definitive answer, you can be almost one hundred percent sure it’s going to cost you more money. In this book, I’ll give you techniques you can use to manage your project whether you’re on- or off-site so you can keep it running smoothly.

 

This book is based on real project management stories related to the rehab of several hundred single-family homes as well as the observations I’ve made dealing with countless contractors of all types and skill levels. Based on these experiences, I’ve discovered several successful techniques to help you manage remodeling jobs like a pro.

 

Reducing Variables for Maximum Success

One effective way to manage remodels is to reduce the number of variables. To properly manage your project you need to have everything you need lined up and ready to go. That means you need contractors with the proper tools, a detailed list of improvements, a timeline, and back-up plans for every possible outcome in the remodel. Back-up plans might include an on-call painter, a second roofer, or a back-up supply house where you can purchase that light fixture that your main supplier doesn’t have in stock. Every time I have a well-thought-out-plan for remodeling and back-up plans in place, I improve my overall profit margin. With a well thought out plann the job always gets done faster, and I’m less frantic.

 

Know the Contractor Market

Just like knowing the price of homes and the average monthly rents in your neighborhood, it’s important to fully understand contractors, work scope, and prices.

 

To successfully manage and oversee renovations, remodels and construction, you must understand how much things cost so you can accurately estimate the price of a job. It’s also important to know the minimum wage in your state and the going rates for both manual and skilled labor. Without this information, you might underestimate the costs of some tasks and overestimate others. Reaching a realistic middle ground will prevent you from losing reliable contractors and spending too much when you contract out a job.

 

Let’s face it; it’s hard to find qualified contractors. In some markets, builders and home remodelers can’t find anyone to show up. It’s a fact that most laborers will work for the person who pays them the most. So if you’re offering minimum wage in an area where others are offering salaries well above the minimum wage, you won’t have a workforce for long. It’s also important to know and understand the average contractor salary as well. In the long run, hiring and keeping good contractors will help you save time and money on your projects.

 

In some of my houses, I’ve chosen to use local contractors who are willing to travel to jobs in remote areas or resort towns. Although I might spend more money on travel allowances, I know I’m hiring proven contractors and laborers who do the work to my specifications. It’s usually less expensive to work with people you know and trust.

 

As an example, one house I had under contract had a small clog in the main drain. The home inspector for the buyer discovered the clog and I had three days to fix it. My regular drain cleaning guy was out of town for at least a week and couldn’t get to the property. Do I wait for him or hire another company that would certainly charge three times as much? If I wait, I risk not closing the deal on a $200,000 home. And I incur holding costs of roughly $500 for another ten days.

 

When evaluated in that light, I realized it was cheaper for me to pay the higher cleaning costs rather than delay the closing. Had I fully inspected the house before putting it on the market, I could have taken care of the drain issue before it became a potential deal-breaker. That situation taught me that it’s always best to know what you’re selling before you sell.

 

The responsibility and due diligence of every buyer is to have a qualified home inspector inspect the home before he purchases it. Years ago, after the experience with that clogged drain, I began to do my own in-house, pre-inspections on properties. Doing so taught me two valuable lessons; Every home inspector is unique and every home inspector, no matter what the condition of the house, will find something wrong with the house because that is his job.

 

I once bought a house in foreclosure. The home was new construction, only six months old, but never occupied. When I sold the house, the buyers wanted the never-used, seven-month-old, furnace “cleaned and certified.” Of course, I had the work done to close the deal, although it was completely unnecessary. Unfortunately you have to put up with those unreasonable inspections because they’re just part of the real estate business.

 

Initially, I provided an inspection report for every house I sold. I hired an independent contractor to fill out a complete report similar to the one I’ve included with this book. I displayed the report and all the necessary certifications in a central location in the house so potential buyers could review the file while they were looking at the home. However, that effort often proved futile because buyers still requested their own inspections.

 

I always recommend a buyer request his own inspection regardless of what the seller claims. The problem, however, is that the buyer’s inspector, always finds something wrong with the house because he wants the buyer to think he’s doing his job.

 

While I continue to do my own inspections, I currently sell my homes “as is.” If there’s an issue during the buyer’s inspection, I’ll provide the necessary certifications or document my repairs. This approach is more cost-effective and less time-consuming than my previous strategies.

Why Buy Distressed Houses or Remodel your distressed home before trying to Sell it?

 

Let’s face it, fixing up a house is not always easy. Whether the house is bank-owned, owner-occupied, a rental, or vacant, the more distressed a house is, the more leverage you have to negotiate a better deal. Usually, buyers don’t want to deal with houses that need a lot of work. Keep that in mind when you’re selling your house.

 

Because I’ve carved out a niche in the market, I don’t mind buying distressed homes. In fact, I look for them and take advantage of the savings by purchasing those types homes. If you know how to manage your project properly, you can make more money buying and selling distressed houses.

 

Take for example a newer two-story home I recently bought. The house had been through foreclosure and the previous owners had abandoned it. Before the bank repossessed the house and secured it, the power company shut off the gas and electricity. As a result, the pipes in the house froze and burst, sending water through the walls and ceilings and into the bathrooms. That house was a complete disaster. Studs were visible everywhere and fallen drywall covered the floors and the garage, which was below one of the bathrooms. It was a frightening sight, even for an experienced project manager, but it could definitely be repaired.

 

It was hard to tell how long the water had leaked into the house, but it was long enough that waterlogged drywall fell down just about in whole sheets. It made the house a mess, but it made the repair job much easier. First, I cleaned up and removed everything that had been soaked by the water. I had my plumber repair every leak, first testing with compressed air, then with water. He checked for any signs of mold, and he had a mold expert take air samples to confirm there were no issues with mold. Only then did my drywall contractor repair the missing drywall and texture to match the rest of the house. Finally, I painted the entire house, steam-cleaned the carpets, and put the house on the market.

 

There were several other interested parties, but none of them wanted to deal with this mess. I was able to buy the house at nearly $100,000 below market value, and I spent less fixing it up than I did on a typical remodel. The house was newer and it didn’t need the typical carpet, tile, bath fixtures, landscape, windows, and doors. The only things it needed were new drywall, plumbing repairs, paint, and a thorough cleaning.

 

With good project management and a basic understanding of repairs and how to use contractors, repairs that seem difficult will become easy and increase your profit when selling your house.

 

Less Risk = Less $; More $= More Risk

There are always risks in every investment. If you want a guarantee, you can put your money in an insured bank and get a two or three percent return on your investment. The general rule that I use in real estate is the more expensive the investment the more risk involved. Of course, with more risk, also comes more reward.
 

In any market there’s always a value on houses. It’s generally based on what comparable houses have sold for around the same time. This is often easier in neighborhoods that were developed by a single developer. For example if one particular home sold for X dollars one week, a similar house in the same neighborhood will probably be on the market at a very similar price the next week.

 

On the other hand, keep in mind that the comparable value (comps) or appraised value can be very complicated and there is no simple accurate definition of in the value of real estate in a slow or difficult market. I have seem many situations in a slow market, where nothing is selling, making it impossible to accurately value real estate.

 

With that in mind here are two example flips, one high risk and one low.

High risk:

House on five acres, horse barn, less than ten years old, very good condition, sold new for $625K. Comps are hard to find in this area. Not many houses, lots of open space, far away from the city. House purchased in foreclosure for $425K. Even based on sold price from ten years ago, had big potential. There were two other similar houses sold within eight miles in similar price ranges. This house didn’t sell quickly. It was on the market for eighteen months before it finally sold for $495K. This seems like $70K profit until you add the $5k a month holding cost. The potential in this example was big, but the market didn’t cooperate. We lost money on this one.

 

Here’s another example: In a nearby resort town reasonably priced housing is very difficult to find. However you can take advantage of this situation. Starter condos, which are the least expensive housing available in the area, go from $150,000-$250,000 for a one- or two-bedroom condo. The price difference is based solely on location and condition. I’ve found that these units simply “sell.” They’re the cheapest out there.

Keep in mind that most buyers don’t like to remodel. Maybe they’ll paint an accent wall or put up a few fancy blinds, but not the big stuff. So there’s a market in remodeling.

 

In this area the price of an outdated condo is equal to three months holding cost plus one and one half times retail. I’ve consistently been able to make money in this market by watching and waiting, putting in offers with my realtor, even without seeing the place. How much can you spend on a six hundred square foot condo? OK, a lot if you want to, but not to sell it for top dollar. We’ll get into overfixing later in the book.

 

So, take a $150K condo, paint, install carpet, granite counters (cheap), some accent tile and/or hardwood, new appliances; spend $7,000. One hundred fifty thousand, plus $7,000 plus $3,000 holding costs and sell for $195K, you can clear a $20K-$25K profit every time. And these places are selling. These are low risk, they’ll provide  a safer return on your investment. Again none of this is guaranteed, because any number of things could happen including a turn in the market, a fire, or even a water leak that damages all three condos.

 

 

 

Chapter 2: Inspections

 

Although they are often intertwined, there are two separate inspections involved with buying and selling a house. The first is an aesthetic inspection of the house, while the is the structural/mechanical inspection.

 

The aesthetics inspection involves what you first see and notice when looking at a house? Does it have enough bedrooms? Do you like the color? Do you like the tile in the bathroom? Is the kitchen big enough for your needs? These are the questions a typical buyer asks. The structural/mechanical inspection covers the visible structural components of the home from the foundation to the roof, as well as the mechanical systems in the house. These mechanical systems include the electrical system, plumbing system, HVAC (heating/ventilation and air conditioning) systems and appliances that usually remain with the house.

 

When I look at a house, I like to see that it fits the criteria for what I think will sell in that particular neighborhood. For example, does the house have as many bedrooms as other homes in the area? What about bathrooms? The answer to those questions influences what I do aesthetically to fix up or remodel the house. In a house with three bedrooms and only one bathroom, I might decide to add a second bath to increase its value. In another house, I might paint the dark wood kitchen cabinets a bright color, while in another house, I might tear those dark wood cabinets out and replace them entirely with more popular, brightly colored wood cabinets. Does the home need carpeting or tile or hardwood floors? What other necessities does this house require? Do the furnace and air conditioning work? Is the roof OK? Is there any rotten wood or other structural problem?

 

A buyer, especially one with an experienced realtor, want assurances that your home is as good looking as other homes in the neighborhood, that they’re safe and in working order.

Being a good project manager will save you money in the long run. You might be able to cut corners on items that won’t affect the sale of the home like painting the doors instead of replacing them. But you shouldn’t bat an eye when you realize you have to replace leaky plumbing or a bad furnace.

 

Inspector’s report

In addition to doing your own inspections, it’s also invaluable to obtain an independent inspector’s report. The money you spend on a report can save you thousands on a remodel.

 

Why are independent inspectors so important? Well, if you’re inexperienced or you’ve been doing this for 30 years, there are certain jobs you have to sub out. Maybe the first few times an investor buys a house, he’ll get rid of the trash himself. I’ll admit it can be amusing and almost exciting . . . once. But after that, you hire someone else to do it while you drive around trying to find the next deal. Your time is too valuable to spend wallowing in garbage.

The same principle applies to home inspectors. Sure, it’s your responsibility to inspect your house and make decisions on paint, carpet, lights, new counter tops in the kitchen, etc. But it’s equally important to hire a good inspector. He’ll do the dirty work and determine if there are any structural and mechanical problems with the house. And he’ll have the necessary tools to do the job right.

 

A qualified inspector’s report will save you time and money. You can use it as a reference guide to help you figure out the true cost of a remodel. Remember that furnace you thought was good? Remember what happened when you sold the house two months after you finished remodeling it? You had to spend an additional $2,500 replacing the furnace because the buyer’s inspector said it had to be done. Had you known there was a problem with the furnace upfront you probably could have found a better deal on a new furnace, or you could have reallocated your budget, and cut back on some of the less important items such as landscaping.

 

Take care when hiring your inspector

There are basically two types of inspectors, good and bad, but they don’t all fit into those two distinct categories. Even though an inspector is expensive and has many certifications, it doesn’t mean he’s a good inspector.

 

One of the types of inspectors you should avoid is the inspector who doesn’t inspect all of the mechanical systems of a house. These are typically the “$100-all-the-time” inspectors. You’ll find them working in neighborhoods with low-priced houses. They pretty much spend as little time as possible at each house. They check the light switches and some outlets. They’ll check the faucets for water flow, and some days you might even catch a glimpse of them on the roof of a house they’re inspecting. They might find problems, but usually they don’t. And before you know it, they’re already inspecting the next house.

 

You should also stay away from the very thorough, high-end inspectors. These types of inspectors will usually cost you considerably more, although not always. I try to avoid these detail-oriented inspectors because they can often break the sale of a perfectly good house to first time home buyers, or cost you an unreasonable amount of money.

 

I once used one of these inspectors on a house I was selling. After his inspection, he presented me with two-pages of items that needed attention. His report indicated that the three front steps to the house were not quite level—not rotten mind you, just not level. After reading the inspection report, the buyer’s agent personally told me the three front steps, which were still solid, HAD TO BE REPLACED, because they weren’t level. The agent said the buyer would accept a $3,000 credit, even though the steps created a hazard to their health because they weren’t level.

 

Normally I just would have had my handyman fix them, but the closing was in four days. The buyer got his $3,000 credit, although it was a hard decision for me to make. Either way, five years later, not to mention $3,000 richer, the buyer is still using the same old stairs. These types of inspectors have cost me a lot over the years. I try to avoid them whenever possible.

 

And you should avoid at all costs, the inspectors who know just enough to get them in trouble. These are underqualified, over-trained inspectors who have been taught not to take any responsibility for anything at all.

 

Their reports read something like this: Signs of a water leak somewhere in the house at some point in the last fifteen years, recommend a licensed plumber check plumbing and certify; also recommend a licensed roofer check roof; also recommend licensed electrician check front patio light. This is always a burned out light bulb, we leave it on for security 24/7, the bulb is burned out. Why do we have to hire a licensed electrician who’ll charge $100 to change a light bulb?

 

Of course, when you’re selling a house, you can’t choose the buyer’s inspector. But this is just a guideline for the types of home inspectors I prefer not to hire to do inspections for me.

 

When I purchase a home and have it inspected, I expect certain things from my inspector. I don’t want him to miss anything on the house, but I also expect a reasonable evaluation. I want an inspector who’ll go through the house and prepare a thorough report on what needs immediate attention, what will need attention in the future, and what items aren’t quite right, but don’t need to be repaired.

There are several different inspection report templates available in bookstores, libraries and on the internet. All of them serve the same basic function: They serve as a basic outline or check list for examining all of the structural, mechanical and functional properties of a house.

 

I have included a basic list of items any good home inspector and perspective seller should be aware of. I’ve also included a typical summary of a home inspection. Since all houses, from new construction to old houses, will have issues, it’s important to evaluate all aspects of a house, address the critical and important ones, and discard the unimportant items.

 

In the end it’s up to the buyer to determine what’s important when purchasing a home, but be careful not to miss out on either buying or selling a house just because you don’t want to deal with the unimportant issues.

 

Here’s a example of what I mean. You might be purchasing a house that has a leak in the main water line or a furnace that emits a natural gas order when it’s running. These are items a typical buyer might want to have addressed. On the other hand, I’ve seen deals not close because the buyer wanted new window screens in the house because the old ones were dirty, wanted the broken latch on a screen door fixed.

 

In a buyer’s market, a seller might want to address these little items just to sell a home. But in a seller’s market, a seller might pass on an offer from a buyer who wants several  little issues fixed in favor of a buyer who will purchase the house “as is” and overlook many easily correctable items  like loose trim under the dishwasher or a broken door latch.  

 

Remember on every home inspection, the inspector’s job is to try and evaluate every visible and testable function of a home.

 

The key items that should included in an inspection are:

Foundation: Are there visible cracks, signs of sinking, unevenness, or expansion?

Plumbing: Is it to code? Are there any leaks in visible areas such as under sinks, around toilets? Are there any visible signs of leaks behind walls and ceilings?

Roof: Is it in good condition; are there any visible signs of leaks or damage?

Gutters: Are they necessary? If so, do they exist and are they functioning. Are they rusted and/or missing downspouts or extensions?

Windows and Doors: What condition are they all in and do they all function properly?

Flooring: Is it all structurally sound?

Exterior: Siding and trim, what condition is it in? Are there any signs of prior damage and is anything in need of repair?

Interior: Are the walls in good shape? Are there possible structural issues?

Heating and Cooling: Is the heating and/or cooling system in working order and within the useful parameters of the unit. (Thirty-year-old furnaces and hot water heaters that function properly still may have reached the end of their useful life expectancy.) If there are fireplaces, have they been serviced and inspected?

Electrical: Does the house have a proper electrical service and is the wiring safe? This is extremely important in older home. Over the years, electrical has changed tremendously and many older homes have original wiring, which when built was acceptable. But are unsafe according to today’s standards and can pose potential fire hazards. Does EVERY outlet and switch function as it should?

Landscaping: Are there any drainage problems?

Appliances: Does every item installed in the house function properly? This will encompass not only the stove, oven, dishwasher, washer and dryer, but other extras like the central vacuum, intercom system, doorbells, heated driveways, and anything attached to the house.

Driveways and walkways: Are they in good condition or in need of repair?

 

The following is an example of an inspection report:

EXCELLENT HOME INSPECTION SERVICE

1234 S. Maple Ave. Denver, Colorado 80213

(720) 123-4567

 

INSPECTION REPORT FOR: John A. Brown           

                                    Report Number: 01-01-A03                                         June 01, 2007

INSPECTION SITE: 5678 E. 14^th St.

                                                 Denver, Colorado 80226

 

I inspected the house at the above site on May 31, 2007.

 

Overview

The house is a tri-level house with a two car attached garage and a basement. The lower part of the house is of masonry construction with a brick exterior. The upper part of the house is of frame construction with mostly metal siding. The foundation, lower level walls, basement walls, basement floor and garage floor are poured concrete.

 

The upper level has a master bedroom with private full bathroom (shower, no bathtub) two more bedrooms and another full bathroom. The main level has a living room, dining room and a kitchen with breakfast area. The lower level has a family room with wood burning fireplace, a laundry alcove and a powder room. The basement has a recreation room, a finished bedroom, a full bathroom and a storage/utility room. The overall house is in about the average condition of similar properties.

 

Structural

The foundation is firm and the entire house is structurally sound. There is no evidence of expansive soil damage. Because of the age of the house, there should be no future expansive soil activity. There is also no evidence of water from the outside having entered the basement or any other part of the house.

 

Access to attic is in the breakfast area ceiling and in the upper hallway ceiling. The attic has marginally adequate insulation.

 

 

Roof

The roof has 3 layers of “T-lock” composition shingles. The top layer of shingles is estimated to be approximately 10-15 years old. The shingles are in acceptable condition. With normal maintenance, the roof should last for at least 5-8 more years. Gutters and down spouts are in good condition but contain leaves and dirt.

 

Exterior

Metal siding is in good condition. Siding and trim paint is in acceptable condition. Open areas in siding joints and around the doors and windows have adequate caulking. Brick is in good condition.

 

The front porch is in good condition. The walkway has settled but is in usable condition. The rear fence is in good condition. The lawn, shrubbery and trees have been neglected but should recover with reasonable care. The rear patio is in good condition.

 

There is an in-ground lawn sprinkler system that was not checked.

 

Interior

Paint is newer and could be all right for some time. Carpeting in the basement is loose and bunched but all carpeting is in good condition. Floor coverings in the kitchen, laundry room and bathroom are in acceptable condition. Kitchen cabinets and countertops are in acceptable condition. Bathroom cabinets and countertops are in acceptable condition.

 

Heating and Cooling

Heating is by gas forced air. The furnace is located in the basement and is adequately sized for this house. It is an older furnace but there are no natural gas leaks and no carbon monoxide present in the heated air. However, it has been some time since the furnace was cleaned and serviced. There is dirt, rust and combustion residue in the furnace interior. Also, the furnace vent pipe is separated on top of the furnace. The thermostat is on the living room wall. The thermostat is in good condition and operates properly.

 

The family room fireplace, damper and flue are in good condition

 

There is a through-the-wall air conditioner in the family room. The air conditioner runs but does not cool the air.

 

Plumbing

The plumbing could not be thoroughly checked because of a major leak inside the master bathroom wall. The location of the leak could not be precisely located but water leaked down into the powder room, utility/storage room and into the garage.

 

It was noted that the main water shut off valve and the sprinkler system shut off valve are located on the front basement bedroom closet wall. Plumbing supply pipes are copper and plumbing drainpipes are partly plastic and partly cast iron. The water heater is located in the basement utility room next to the furnace. It is a 40-gallon, gas operated water heater that is estimated to be approximately 15 years old. The water heater leaks and the heated water is excessively rusty.

 

Electrical

Electrical service is adequate for this house. The 125 amp main circuit breaker panel is located on the exterior rear wall. The panel is in good condition. Wiring is copper. There is 220 volt service for the clothes dryer and for the kitchen range. There is also sufficient electrical capacity for a central air conditioner or any other normal household application. The doorbell is in operating condition.

 

Smoke detectors test as working. A cover plate is missing from an electrical outlet in the living room. Light fixtures are missing from the family room and dining room.

 

Doors and Windows

The front entrance door is in good condition. The rear patio door is in good condition. The overhead garage door and garage door opener are in good condition and operate properly. The door from the garage to the interior is in good condition. The door to the basement is missing.

 

Windows are double paned windows with metal frames. Windows in the family room, dining room, living room, master bedroom and second bedroom have defective seals allowing moisture to enter between their double panes. These windows are still functional but cannot be cleaned.

 

Appliances

The fan in the range vent hood does not work. The dishwasher was not checked since the water was turned off because of the water leak. The garbage disposal operates properly. There is no kitchen stove, refrigerator, clothes washer or clothes dryer.

 

SUMMARY OF ITEMS requirING attention:

 

Water leak inside the master bathroom wall should be eliminated. The rest of the plumbing and sprinkler system should then be thoroughly checked. Any problems/deficiencies identified during the plumbing inspection should be addressed as though they were included in this original report.

Gutters and down spouts should be cleaned.

Basement carpeting should be re-stretched.

Furnace should be cleaned and serviced by a licensed heating contractor. He should  certify that the furnace is in safe and proper operating condition.

Vent pipe on top of the furnace should be replaced.

Family room air conditioner should be repaired or replaced.

Water heater should be replaced.

Missing cover plate should be replaced on the electrical outlet in the living room.

Light fixtures should be installed in the family room and dining room.

Door should be installed to the basement.

Windowpanes with defective seals in the family room, dining room, living room, master bedroom and second bedroom should be replaced.

Range vent hood should be repaired or replaced.

 

The above are the principal problems found that need attention and this completes the report. Visible components only were inspected. Components hidden inside ceilings, floors, walls and underground are not included in the inspection.

 

Investigations for mold, lead based paint, noxious weeds and radon also are not part of this inspection. These are specialty areas that require particular equipment and skills available to experts in their fields.

 

The inspection is intended to provide you with information as an input to the buying decision. It is not a warranty or guarantee. Unexpected repairs should always be anticipated.

 

Original signed by Joe Inspector

____________________

Joseph Inspector

Excellent Home Inspection Service

1234 S. Maple Ave.

Denver, Colorado 80213

 

This is a copy of an actual inspection report from a house. As an overview, let’s look at the summary and pick apart how all of these inspection items could be used to the advantage of the seller. Before you put a house on the market check these items carefully.

 

1.Water leak inside the master bathroom wall should be eliminated. The rest of the plumbing and sprinkler system should then be thoroughly checked. Any problems/deficiencies identified during the plumbing inspection should be addressed as though they were included in this original report.

Water leaks are common and usually simple to repair. Never sell a house without a visual inspection of all the visible water lines. Flush all the toilets, run the water in every sink for at least five minutes, if you see any signs of leaking either from the valves or in the drains. If an inspector cannot find anything wrong, he won’t put it in the report. If a good inspector sees something wrong, he’ll recommend the buyer check everything out. If you fix the problem first you won’t have to worry about what the buyer’s inspector will find.

 

2.Gutters and down spouts should be cleaned.

This is regular maintenance, clean the gutters before you list a house.

 

3.Basement carpeting should be re-stretched.

This is an item that would be covered in a typical remodel, in most cases this will not be an issue because you will be replacing the carpet or flooring. However, there are certain situations where good carpet simply needs to be cleaned and re-stretched. In a remodel, if applicable, this is a good cost-saving alternative.

 

4.Furnace should be cleaned and serviced by a licensed heating contractor. He should certify that the furnace is in safe and proper operating condition.

When in doubt, ALWAYS have the heating and cooling system in a house cleaned and certified before you list the house

 

5.Vent pipe on top of the furnace should be replaced.

Your heating contractor should include this in his service, be sure to remind his of this when you send him out to the house.

 

6.Family room air conditioner should be repaired or replaced.

 Get rid of it. Rule of thumb, if it’s not necessary and it doesn’t work, remove it.

Window air conditioners will not make or break the sale of a home. Evaluate every item like this in a home and ask yourself if it’s necessary. Remember that old under-the-counter can opener, or the clock radio? If it doesn’t work, a good inspector will write it in the inspection report and it may come up at the closing table.

 

7.Water heater should be replaced.

Unfortunately, some things you can’t avoid. But this will give you time to install a new one for less than what a retail plumber will charge.

 

 

 

8.Missing cover plate should be replaced on the electrical outlet in the living room.

 With proper management and qualified painters, this will never be an issue. Cover plates are so inexpensive, that even in low-end homes, they should all be replaced with new covers.

 

9.Light fixtures should be installed in the family room and dining room.

Again, this is all part of a complete remodel. It shouldn’t be an issue

 

10.Door should be installed to the basement.

This is a code/safety issue. Installing a door is easy and relatively inexpensive. Do it immediately if the buyer requests it. Otherwise, depending on the layout of the house, you may prefer to leave it off and wait until the house is under contract.

 

11.Windowpanes with defective seals in the family room, dining room, living room, master bedroom and second bedroom should be replaced.

A window company should be one of the first companies you call when remolding a house. At least have the cost of replacing the windows your budget because buyers will usually want them fixed.

 

12.Range vent hood should be repaired or replaced.

This is a standard $75 fix. It should be replaced when you replace the outlet covers and the lights in the house, unless it looks new and works.

 

 

It’s important to evaluate every inspection item. The rule of thumb is that during the remodel you should fix any item in a house that you can address easily and cost effectively, especially if it adds value to the house. As always, spending a little money ahead of time on a few small details, can save you a lor of time and money at the closing.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 3: Reference Guide: Getting It Done

 

In this section I’ll walk you through a remodel of a single-family house that was purchased specifically to be rehabbed and resold for profit. You might want to copy and customize the charts and lists in this chapter to fit the needs of any single-family house. The items that should be addressed will depend on whether the property is to be sold in the near future, will be sold in one to two years, or rented immediately.

 

When you first look at a potential rehab project, start from the outside. The following list will explain what to look at and in what order. While reviewing the list, it’s important to keep in mind that the buyers will have an experienced inspector go over the house as well. Unless you’re in a strong, appreciating market, the items on the inspection list can influence whether you sell the house.

 

Many experienced realtors will often offer a service to “stage” a home. This is because staging can help potential buyers imagine what a house will look like with furniture and the accessories in it. Sometimes, this is an add-on or last minute effort to cover up or distract buyers from seeing flaws in a home. In general, a buyer likes a clean presentable home. If the remodel has been done properly and the house appears to be new, you may not need to stage it. However, I have found that minimal staging can always make a home show better. Be careful not to “over stage” a home. This can not only distract potential buyers, but can make the home appear smaller than it actually is.

 

If I don’t do any other work on a house I’m trying to sell or rent, I make sure the paint on the exterior in in very good condition to ensure that it looks as good as possible. I believe in the philosophy that the best-looking house on the block will sell or rent the quickest. So I strive to make every one of my houses look great. With good planning and good management skills, this is not only easy, but cost-effective, as well.

 

Think about this: If you have a house that needs minimal work, such as paint and carpets, you can sometimes get away with a little cleaning and a little touch-up. You can choose to have the carpets steam cleaned and touch up some of the paint. It takes just about the same time to lay down new carpet and paint the whole house as it does to clean it and touch up the paint..

 

For example, it may cost $1,562 to paint the entire interior of a typical 1,250-square-foot house and $1,875 to install new carpet, which ends up costing about $3,437. It will cost you about $500 to touch-up the paint on some of the walls and $500 to steam clean the carpets, or $1,000 total. The difference between the two is approximately $2,400.

 

When evaluating the selling or renting of a property, always consider the holding cost. A $200,000 house with a seven percent interest-only mortgage will cost $1,333 a month, add another $200 for taxes and insurance, and another $200 for utilities and your total cost will be $1,733 per month. If you’re a house flipper and you’re borrowing the money, then the cost of the house will increase. So, if you have a 14% interest-only loan, your house payment will jump to $2,733 per month.

 

 

Example 1:

8% interest rate

$200,000 house value

8% interest rate

200,000 x 0.08 = $16,000 per year cost

Divided by 12 months = $1,333.33 per month

 

Example 2:

14% interest rate

$200,000 house value

14% interest rate

200,000 x 0.14 = $28,000 per year cost

Divided by 12 months = $2,333.33 per month

 

When you evaluate the cost of holding a house for one month, you’ll find that it will cost more than repainting and recarpeting the entire house. About $333 less than one month of your average monthly house payment. [CM2] In many markets where the typical holding time is four to six months, spending a little more on the basics will help your house sell quickly and save you money.

 

If I give myself six months to sell a house with $2,733 monthly holding costs, the total holding cost would be $16,398. If I spend an extra $2,500 to make the house look new inside by installing new carpet and painting the walls, I’ll probably sell it faster than doing a piece-meal carpet and paint job.

 

In my experience, homes in decent neighborhoods tend to be on the market for about six months. On average, my rehabbed homes sold in less than four months. I save two months holding costs, $5,466, minus the $2,400 expense of new paint and carpeting. Therefore, I save at least $3,066 per house, which is a $3,066 extra profit per house.

 

It’s up to the individual project manager to decide what to do and how much to spend for each house. It’s important to consider cost-saving ideas and how each idea will influence the home’s price and ultimately its sale.

 

I often don’t know the right thing to do until I’ve made a few wrong decisions. I had one house for sale that was pretty expensive, over $700,000. It was a wonderful home, in a good neighborhood and it had been expertly remodeled. It sat on the market for over six months in a strong market. Everything else I had on the market was going under contract in less than two months.

 

Although there was a spectacular view of the mountains from the entire back of the house, there was also a six-lane super highway running alongside the back. Though the highway was not directly behind the house and there were a few hundred yards of open space, the highway was noticeable and noisy. That was my problem.

One of the owners finally went out to the house to see why it wasn’t selling. Although the house showed well, the owner decided that the project manager did a terrible job. The owner’s solution was to change the double pane windows to triple pane windows. I spent the extra $10,000 replacing the windows and kept the price the same. The house remained on the market another six months before it was rented. It never sold. The only way to sell such a house is to discount the sale price. The new $10,000 windows did not affect the sale of the house at all. The moral of this story is to be aware of each remodel decision.

 

The following table is a guideline for inspecting the aesthetics of a home. This corresponds to the included bid worksheet. The outline is an overview and a preliminary guide to what I look at when I’m first evaluating a home for a remodel. Keep in mind that this is mostly a visual inspection of what needs attention so the house will sell for top dollar. While remodeling, I always check and certify all the mechanical systems such as plumbing and electrical to insure that I am selling a safe and sound house.

Inspection Guideline

I. Outside

1. Curb appeal

            a. Yard, landscaping, trees and shrubs

            b. Driveway and walkway condition

            c. All decks, stairs and landings

2. House condition

            a. Paint, siding, trim, and colors

            3. Roof and Gutters

            a. Signs of damage

4. Windows and Doors

 

II. Inside

1. Paint and trim condition

2. Flooring Type

            a. Carpet         

            b. Tile

            c. Hardwood

            d. Other (vinyl, concrete, etc.)

3. Kitchen

            a. Countertops

            b. Cabinets

            c. Appliances   

            d. Flooring

             e. Overall layout; is it functional?

4. Bathrooms

            a. Shower/bath wall condition (usually tile)

            b. Vanity/ toilet

            c. Flooring

5. Lighting and electrical

            a. Light fixtures

            b. Electrical service and meter

            c. Outlets and switches

6. HVAC and Plumbing

            a. Heating (furnace) and cooling (A/C) systems

            b. Exposed plumbing, galvanized, copper, PVC pipe.

Chapter 4: Office Evaluation and Initial Walk Through

 

It will save you much time and gas to do your preparatory work at your home office/desk. When I see a potential house I’m looking at to buy, I do much of the paperwork before I even walk through the house. I’m not going to cover what types of homes you should invest in; there are plenty of books on the market with much more detail on how to find houses and what kind are good investments. I will, however, focus on how you can save time and money in the process.

 

The fact is you will need to spend some money on nearly every house you buy, even if it is just to hire house cleaners to make it sparkle. To save time, I work up an initial budget before I even look at a house. I created a spreadsheet of various costs by analyzing my previous remodeling budgets. This information is the crux of how I will eventually bid out the houses for repairs.

 

My project manager has taken the time to put together an accurate spreadsheet to bid out houses. The items on the sheet are all the common items used in a typical remodel, although their costs may vary. Because of supply and demand, an area with a high cost of living typically has higher material, labor costs and housing costs,. Conversely, an area with a low cost of living has lower material, labor, and housing costs.

 

Using the spreadsheet presented in this book, you can come up with set costs based on your geographical location so you can properly bid out home remodeling jobs, even if you don’t have any prior estimating experience.

 

Every bid will need to have a contingency fee of fifteen percent to cover unexpected costs. I hope to never use it, and with careful inspections, I rarely do. However, I have faced issues with a remodel that were either overlooked or I never knew existed.

 

The most common and avoidable mistake is the heating system. When in doubt, put the cost of a new system in your bid. There’s nothing worse than to get a house under contract and find out it needs $2,000 more heating work done to complete the deal. And you have to use that money you were saving for a trip to Maui to cover it. When in doubt it’s important to be conservative, and assume you’ll need to spend more money than less money. Optimistic investors and landlords who underbid repairs and maintenance, don’t stay in business for long.

 

There are countless obstacles and repairs that you‘ll probably encounter in this business, many of which are unforeseeable. Even the best and most experienced investors run into problems that are beyond their control.

 

One of the common problems I often run into is a meddlesome neighbor. I recently had a house for sale in an average neighborhood that had been vacant and abandoned by the previous owners. Because it was vacant, the next-door neighbors started parking their work truck in front of my $300,000 house. I did a considerable amount of work on the house to make it the best-looking place in the neighborhood. Unfortunately, the curb appeal evaporated because the neighbors continually parked their two work trucks in front of the house.

 

I asked the neighbors numerous times not to park in front of my house, and each time they obliged. But every time I came back to show the house, the trucks were parked there again. And the more I complained to the neighbors, the more hostile and passive-aggressive they became. They made it their mission to sabotage the sale of the home. They greeted realtors and potential buyers as they came toward my front door, telling them of the terrible issues related to the rehabbed house, including broken pipes, water leaks, and mold. None of this information was true. Rather, it was just a fabricated story from the neighbors to insure their extra parking spaces remained undisturbed.

 

I finally sold the house, although I had to heavily discount the price for someone to overlook the neighbors’ nonsense. In addition to the discounting the price, I ultimately owned the house for an extra six months, which meant paying the mortgage and heating bills for that time period. To top it off, a licensed plumber and a licensed mold inspector had to verify that, in fact, everything the neighbors told the buyers was fabricated. In this instance, there was little I could do legally to correct the situation. I took the hit, paid the price, and lost money on this deal.

 

Another house I bought looked to be a very profitable deal. It was a bank-owned house. The previous owners vanished for no obvious reason at all. I did a fantastic remodeling job on this house, even going a little overboard on it. I put in a quality kitchen including solid surface countertops and stainless steel appliances. The yard was extensively landscaped and I even installed a sprinkler system. One afternoon, the painter called up and said he was cleaning up his paintbrushes when the water stopped. He was sure I had simply forgotten to pay the water bill and asked when I would get it taken care of so he could finish the job.

 

I looked in the file and found that, surprisingly, this house was not on city water, but rather, on well water. Not good. I found a well company and sent them out to fix it. I though it must have been the pump. The next day, the well company called us with the report. The good news was there was no problem with the pump; I saved $300 on that. The bad news was the well had gone dry. I needed to drill a new deeper well. I weighed out the difference in cost of drilling a new deep well for $20,000, which the well company said would probably work—although they wouldn’t guarantee it—versus installing a new city tap for $40,000, which was guaranteed to work. I chose the well, which worked fine, but it cost me $20,000 I wasn’t planning to spend. I was also forced to wait until all of the repairs were made before I could put it on the market.

 

The lesson here is that you need to be aware of all of your repairs before you even consider buying a house. There are always issues that will come up with home repairs. Having a good idea of all the potential problems that may exist will help you avoid many common, costly errors. Only through careful planning can you be sure that every expense on a remodel is viable and necessary, and will inevitably make you money.

 

 

Initial Walk Through

When you first walk through a house, you envision what you will be doing to the house.

 

Curb Appeal

The first impression a buyer or a renter gets of a house is the one that lasts. When you first look at a house, anything that stands out in your mind will stand out in the buyers’ minds. Be aware of what you see and what looks good and what needs an upgrade or a cleaning. As with every aspect of remodeling for profit, it’s crucial to consider the comparable sales in the neighborhood. The property’s appearance from the street must be equal to or better than the other houses on the street. This is especially important in a soft or declining market.

 

When there are more houses for sale than buyers, their first impression of the house is what they will remember. Ask yourself, what’s missing or needs attention. Does the lawn need irrigation? Is it important? Do the other houses on the block have landscaping? Is the yard the best or the worst yard in the neighborhood? If your landscape is the worst on the block, it probably needs some attention. Ask yourself, what the house across the street looks like. How well are the property, trees, landscape and accouterments maintained? If all the houses in the entire neighborhood has beautiful green lawns, your house should also have a great lawn if you want buyers and renters to show interest.

 

What You See Is What You Get

Have you ever noticed that many builders will spend money and time installing landscaping, trees, shrubs, sod, and even expensive irrigation systems in the front yards of homes? There’s a reason for this. Builders will often spend extra money on the first part of the home you see, the front yard, and often spend little or nothing on the backyard. They dismiss the lack of landscaping in the back as a “plus” or added benefit. They’ll often sell this home as “custom.” The builder advertises that he’s helping the buyer customize the backyard to his individual specifications.

 

The truth is the very last part of a home a buyer looks at is the backyard. Once buyers get to the backyard, they’ve already seen the front, the entry, the kitchen, bathrooms, bedrooms, and family room, and they’re able to make a decision about purchasing it or renting it. There are exceptions, including homes with backyard views, homes on the water, and homes with open space or parks adjacent to them. Be aware of your situation and what you can do economically to make your landscaping just right for your home but put it where it counts. 

 

Builders will often “sell” buyers extra add-ons in their new homes. That means these homes may not come with grass in the backyard, but the builders will offer grass as an added service. This is how buyers can customize their homes and the builders can jack up the base price. This is the same tactic that new car dealers employ. The base price of a car may be $20,000, but if you want a CD player with an MP3 hook-up, instead of the stock AM/ FM radio, it may cost you up to $1,500 more on the purchase price. Is the radio actually worth $1,500? Absolutely not, but people would rather not deal with installing a comparable $150 radio from a local audio store.

 

Builders will install backyards, and several other add-on items, but for a fee. I’ve worked with new homebuyers in the past and found that typically it was at least 50% less expensive to add the upgrades after buying the home. My bookkeeper bought a new home and found it more economical to tear out the new carpeting in her home, recycle it for no cash back, and install hardwood floors. Even though she paid for the carpeting and essentially discarded it, she still saved about $2,000 versus having the builder install the hardwood floors.

 

A good project manager must understand and make educated guesses about what the average buyers want. It might only cost $800 more to install hardwood flooring rather than the carpeting during a remodel on a house in my bookkeeper’s neighborhood, but the return would be $2,500, and the desirability and salability would increase. The same holds for every aspect of a competent remodel for profit.

 

Take note of the climate in the area where the property is located. If it rarely rains and the lawn needs watering regularly, consider your options for adding a sprinkler system. Hiring a local installer, or one who works on the side, for this type of small is more cost effective than hiring a large firm. But you should use larger companies for big jobs that require three or more workers. If you can consistently give mom-and-pop contractors some part-time work, they’ll give you a better price and they’ll do a good job because they must rely on you to give them additional work down the road.

 

Large companies that do bigger jobs will eventually forget about the occasional job you have for them to work on a small repair or a simple lawn cutting. Your yard will soon either turn brown or may become over-watered and overgrown with weeds because the large company won‘t give its full attention to your small jobs.

 

I once had a house with over $20,000 of landscaping. The irrigation system ran three times a day on a yard that was over 1/3 of an acre. Once the large company’s completely installed the system, I forgot about the yard for three weeks. Only when a neighbor called the number on my “For Sale” sign in front, complaining of some weeds in the yard, did I find the weeds and the lawn had grown to over six feet tall. And it was only then that I realized no one was tending to the yard. It cost a small fortune to manicure the lawn so it looked like new.

 

Don’t neglect you houses. Monitor your vacant houses weekly. Small independent contractors will usually take responsibility for their work. And typically, only the smaller companies that want more work will monitor their sprinkler systems once they’re installed. In addition, their prices tend to be lower. Larger landscape companies prefer to move on to the next large job, or they’ll service your lawn for a high price, which is not what you want.

 

I’ve never had any luck paying other on-site contractors to water the lawn everyday for twenty minutes, even though they were already working on site. A contractor’s job is to work on the house, not water the lawn. If you expect them to, you’ll probably be disappointed. And you’ll end up spending more on lawn maintenance and irrigation when you sell or rent your house. Also, don’t expect renters in below average neighborhoods or college students to take care of the lawn; they won’t either. My solution is to hire a lawn service or a local kid for weekly lawn service and maintenance. The results will be much more cost-effective, and it’s far likelier to be done properly. On the other hand, always take advantage of your workers to do the things that they understand and can be compensated for.

 

It’s critical to remove any dead or diseased trees from your properties. Prune any dead wood or weakened branches from trees, as these pose a threat to renters. In addition, most buyers will probably ask that you tremove such items before closing. Most buyers’ inspectors will ask that any trees or limbs touching a house or roof be trimmed to at least twelve inches from the building.

 

Removing or pruning very tall trees, trees near power lines, or trees that pose the threat of breaking and damaging your building or a neighboring property are jobs for professional arborists. In other cases, a contractor’s helper may be able to do some of the easier, yet more time-consuming tasks. Pulling out shrubs and putting in mulch, while painstaking and time-consuming, does not take much skill. Take advantage of your on-site workers, and their assistants to consolidate jobs. If you have good workers, they’ll be happy to make a little more money, and you’ll save money in the process.

 

Driveways, walkways, and sidewalks deteriorate over time. The concrete cracks and often heaves in colder climates where freezing and thawing occurs. Take advantage of companies that can repair and fix damaged concrete and paved driveways. As with many home repairs, if it looks like new, it will sell like new. I’ve had great success repairing expansion damage through a process called “mud jacking,” which pumps concrete through a tube below the concrete to lift it up. Often a driveway or sidewalk with unleveled concrete slabs can be mudjacked and adjusted by a skilled contractor who can make it level again. And it will only cost you a fraction of what it would cost to tear out and replace the concrete surface. When inquiring about mudjacking, get references for different contactors. The quality and skill for this varies considerably; therefore, the more difficult jobs will require a more skilled company.

 

Dwelling, House Structure

Is the house straight? Are there any obvious structural issues? Although only a structural engineer can verify the integrity of a house, there are several “red flag” issues you should recognize.

 

 

So you should use examine the structural integrity of a house in the following order,:

1. Age of the house

2. The lines of the house

3. Visible signs of damage

4. Visible signs of repairs

 

The age of a house is the first indicator of structural problems. Usually, new homes have less structural issues than older homes, although this is not always the case. But it’s fair to say that the older the house, the more likely it is to have structural issues.

 

The structure and lines of the house (are the sides of the house are parallel? Are the angles are correct?) can be identified by simply eyeballing the house/ A visual inspection is he easiest way to check the structural integrity of a house. While looking at the house, determine whether the house looks straight. Often, older homes are not especially straight. You can use the roofline to determine if a house is level, which means it’s still standing as it was built. Look to see that all the right or ninety-degree angles in a house look correct. Many older houses (sixty years and older) experience some shifting and movement, so use your judgment when looking at these older homes.

 

A house that is not straight has two problems that need further attention. The first is that if the house is not plumb or looks funny, potential buyers will also see this as undesirable. Second, if there are structural problems that you choose to address, you will need documentation from a structural engineer.

Most repaired structural damage will reveal telltale signs of the repairs, which are typically hidden in basements, crawlspaces, and attics. Conversely, other structural problems will be apparent with the naked eye. When looking through a house, be sure to have a flashlight and get into the dark areas. See if there’s anything that looks different or “not right.” It’s easy to identify broken or split beams or rafters in an attic that support the roof. But it’s not as easy to identify loosened joints where the nails are showing in crawl spaces and behind exposed walls. Look for cracks in basement walls. Much of this is present in most every house, but look for the most severe damage. If you;re unsure, always consult a structural engineer.

 

While looking for problem areas that were previously repaired, keep an eye out for any major repairs. There really isn’t anything that should concern you about major structural repairs. In fact, this is more desirable than if the structural damage had not been repaired. Look for signs of new or replaced beams and rafters, “sistered” in pieces, such as when you fasten a 2x4 to an existing piece of broken wood to strengthen it. Look for anything that doesn’t appear to be original. If you have any concerns at all, consult your structural engineer.

 

Your Structural Engineer

It’s important to have a structural engineer you can trust to resolve your structural issues. There are several large companies who can prepare long, multi-page, costly reports. I’ve used these services of these companies and paid several thousand dollars for their reports. There are some instances including with high-end houses, houses built near or over water, or houses built on steep grades where these extensive and overly technical reports are required, but typically not necessary. After all, a buyer want to know the house is safe and not going to fall down. He doesn’t want a a lengthy, technical, thirty-page report with possible theories on what could happen to the house if the world ended.

 

Therefore, it’s a good idea to find a local structural engineer who can write a less expensive, technical report. I have a fantastic retired structural engineer who does all of my work. He used to build rocket launch pads and in his retirement he enjoys looking at houses. He’ll visually inspect a home, write a report, and give the report his stamp of certified approval for less than $200, which is what buyers want.

 

If my structural engineer does find a problem or has concerns, I simply fix the problem. When the necessary repairs are complete, he re-inspects the house, writes his report, and moves on to the next project. End of story. This has never been a problem and I know the report represents a guarantee for both the buyers and me, the seller.

 

My home repair philosophy is that all repairs should be done in direct correlation to the value of the house . I’ve seen countless custom homes, including one, entry-level home I bought in an average neighborhood that even included a water feature. More specifically, the previous homeowner installed a pond and a waterfall in the living room. It may sound fantastic; except it was a two-bedroom house and the water feature took up a third of the house. As I mentioned, I prefer to remodel homes in a fashion suitable to the value of the home. This home did not have custom cabinetry, high-end appliances, triple pane windows, custom tile, or granite countertops. Therefore, when I removed the pond, I did not simply tear it out and cover it with carpet. Instead, I made sure the house kept the structural integrity suitable for its value.

 

If you’re in the business of buying and selling or buying and renting, know your product. Be aware of cutting corners, because if you sell a faulty product, it will come back to get you in the end.

 

Roof   

The second most common inspection request from buyers is a roof certification. Buyers want to know if the roof is in good shape. Therefore, they want a guarantee from the seller that the roof isn’t leaking and it won’t cause any problems. Remember, a faulty roof can’t be compared to a dead shrub, a cracked sidewalk, or weathered paint. If there is problem or a leak, it can and usually will cause extensive damage, and end up costing quite a bit of money to repair. You have to be aware of this. I’ve found that it’s important to have a qualified and licensed roofer you trust working for you—someone you can call when you need him.

 

Why do you want a licensed roofer? Even though handymen and side contractors can do competent repairs, only a licensed roofer can give you a written guarantee that the roof is certified. The only time using an assistant or a handyman can save you money is when you’re installing an entirely new roof. Otherwise, when you hire a non-licensed roofer, you’ll also have to pay for a roofing company to come out and certify your roof.

I find it’s typically more cost-effective to use a small, local company for ALL  my roofing work because I can provide them with nearly continual work. Therefore, it’s in the owner’s best interest to do his best work for me at his best prices.

 

I found my roofer during the sale of one of my houses. During the fix-up period, my on-site manager thought the roof could be certified for five years, but upon closer examination, he realized it had some damaged shingles. Because the buyer’s home inspector requested a roofing certification from me, I called two of my regular roofing companies, who said the roof needed to be replaced for around $3,500, although they never examined it. So my project manager called a third, smaller roofing company that had completed work for us in the past. After a quick call, the owner went up on the roof and said he could do the job and competently certify the roof for five years for a whopping $350. I saved $3,150 by making one additional phone call. I also found a roofing company I still use today.

 

In this business, it’s important to understand that every company works differently. Every contractor charges different prices for each specific job. For the small company, the final costs may vary depending on when the owner’s daughter’s school tuition is due, when his rent is due, or even when his cell phone bill is due. Take advantage of these opportunities to establish strong relationships with your contractors. You can help one another out and build lasting working relationships that will benefit each of you.

 

You also need to make sure you know the different types of roofing material and what is required by code in your community. I’ve never experienced a buyer whose decision to buy a home was even remotely based on the type of roof or color of the shingles. If I’m selling a house that needs a new roof I automatically set up a time for my roofer to inspect it to see if he’ll certify it. If he can’t certify it, then he’ll give us a bid. Because I’ve used his services for a number of years, I understand his pricing schedule, which allows me to properly estimate the costs to install an new roof for a house of that size.

 

My roofer will always bid out the entire job, and sometimes he’ll itemize different portions of the job. In my area, the code for roofs varies by township. Some townships allow you install a new roof over one existing layer; while others will allow a new roof to be installed over two existing old roofs. And other townships require that you tear off everything down to the bare wood or felt (what goes on before any roofing material) before you install a new roof.

 

At this point, the decision-making process takes place. The labor involved in installing a new roof can sometimes be as costly as the new roof itself. Therefore, I evaluate the minimum effort needed to repair the roof. If a typical roof installation job costs $1,800 on a particular house, the final bid, including the labor of removing two existing roofs would be approximately $3,800. But you should also check with your city or town to determine what the code is for installing a new roof.

 

Although there’s no science behind the math, in this case you could still save money if you only had to remove one layer of the old roof. Not only will you save money on labor, you’ll also save money on a trash container for the extra waste material. But you won’t save a dime if your roofers aren’t diligent when they remove the old roof. You need to ensure that they really are only removing what’s necessary.

 

Keep in mind that the life expectancy of a thiry-year roof is reduced by half when it’s installed over an existing roof. The idea of overlaying the roof is a great, money-saving idea for people who are selling. However, if you plan to live in the house or use it as a long-term rental, you might consider spending the extra money and removing the existing roof(s) to ensure a quality and long-lasting roof. The decision is up to you.

 

Gutters

It’s vital to understand the importance of gutters in your area. Although there are some parts of the country where gutters aren’t needed. there are many geographical areas where gutters serve an important structural role in the integrity of the house and foundation.

 

Gutters do more than keep the water from pouring down on your head when you enter your house. They keep water from pooling in unwanted areas and from leaking into the foundation around the home. Gutters can also protect the exterior of your home and keep the wood and siding from rotting, which would eventually become a structural nightmare.

 

More than once, I’ve seen cracked, broken, or rusted gutters and downspouts destroy a house or its foundation. If that happens, you’ll need to repair the damage immediately.

 

One house I bought had a detached downspout that simply “came undone.” It didn’t look like a big deal until I put a level on the kitchen floor that revealed that the sodium bentonite soil, which expands when wet, had raised the backside of the house by more than five inches. The entire house sloped noticeably toward the front. The house was only six years old; therefore, the builder’s warranty covered the claim for the repairs.

 

Although I didn’t have to pay for the repairs, which were over $90,000, the process was long and tedious. I had to spend a significant amount of time overseeing the repairs and it ended up costing me money that the insurance company wouldn’t cover. The insurance company also didn’t make it easy to fulfill the requirements of the claim. From start to finish, it took more than eleven months to complete the necessary repairs. During that time as well as the months before and after the claim, I had to make the eighteen mortgage payments on the $350,000 property that wasn’t producing income. Unfortunately, there was nothing I could do to change the situation.

 

Take inventory of your properties, both those for sale and those for rent. In addition, inspect your properties regularly and do everything you can to maintain them. It’s a small price to pay for the possible costs of negligence. Renters typically won’t maintain your house, and potential buyers may inadvertently damage your house.

 

There are several, buyers and realtors who have “helped” me by turning off the heat in various houses to try to save me money on my energy bill. This is unfortunate when the outside temperature is eighteen degrees Fahrenhei and the  plumbing is exposed to freezing temperatures. Fortunately, I routinely inspect my rental and vacant homes, especially when a dangerous storm or deep freeze is forecast, to make sure the heat is on so the pipes won’t burst. I have never had pipes burst in any of my houses.

 

Exterior

What is the condition of the siding and trim? Has any siding become detached from the walls? How is the trim around windows and doors? Is it rotten or damaged? Is there any missing or peeling paint? For short term sales, as well as for rental proprieties, you have to repair these items if there’s a problem.However,if there is a problem in a house, you need to find the cause of the problem before you do any repairs.

 

If the siding is fabricated like vinyl or aluminum, be sure it is completely intact. Look for any signs of detachment, missing pieces, and loose trim. Typically, this type of damage is not a cause for concern and all you need to do is refasten or replace it.

 

However, it’s important to check the siding carefully. Sometimes damaged siding may be caused by a more serious problem that’s hidden beneath the surface. If there is damaged or rotten wood, it not only needs to be repaired, but first the cause of the damage must be identified and repaired. I have had several homes that were only cosmetically repaired. Unfortunately, the problems persisted until I determined and corrected the underlying cause.

 

Typically what I’m talking about is water damage, but this idea is true regarding every aspect of a house. Take, for example, a door that doesn’t close and latch properly. A simple fix is to move the strike plate in the door casing so the latch fits and the door locks. This is a simple quick fix, but it’s only treating the problem, not the underlying cause. For example, the door may have a loose hinge that has caused the door to sag. If you just repair the hinge, you won’t be addressing the fact that the door sags and you’ll probably have to make more expensive repairs in the future.   

 

If there is, indeed, a problem in a house, you need to find the cause before you address the problem. If you don’t, you’ll always pay more for the repair because you’ll end up fixing it twice.

 

If you’re looking to buy a brick home there are a few major concerns you need to be aware or. Even though brick houses are beautiful, they could have cracks, which make them structurally unsound. Cracks are common in all homes, but they are most obvious is stucco and brick homes. This is because small cracks in a wood frame home can be hidden by the trim and even more visible cracks can be hidden with Spackle, caulking and paint. This is a common fix and considered an acceptable repair. But cracks in stucco and brick homes are a bit more difficult to reoair.

 

As in wood frame homes, cracks in brick and stucco homes are usually not a major problem and while you shouldn’t be too concerned about them, you must addressed them. If you don’t fix them, you run the risk of moisture entering the house and causing damage. Moisture can cause mold and rot and, in colder climates; moisture can freeze causing the bricks or stucco to expand.

 

There are many reasons that homes have structural cracks, including poor drainage, a bad gutter, or final grades that slope toward a house rather than away from the house. Sometimes, just the ground and soil conditions lead to structural cracks. If the underlying cause is correctable, by all means, correct it. Putting dirt around a house so water flows away from a home rather than toward it is an easy and inexpensive fix.

 

You have to hire qualified contractor who is skilled in tuck-pointing to fill in all the cracks in the brick with mortar to reestablish the structural integrity of the house. After they’re properly repaired, the cracks in brick and stucco homes can be cosmetically dressed up in a few ways:

1. Good tuck-pointing, if done cleanly and neatly, can preserve the original aesthetics of the house;

2. Painting the brick by covering all the brick and mortar with a consistent finish;

3. Installing siding or stucco over the brick to hide any blemishes, while keeping the home structurally sound.

 

Of the three options, I prefer the first. I have an excellent tuck-pointer who is experienced, does clean work, and can match mortar colors very well. It took us several years to find a cosmetically competent contractor who does excellent tuck-pointing. I pay twice as much for him as I would for a less experienced, but it’s worth it because he does a first-rate job.

 

I’ve also found that brick homes sell more easily than stucco or homes with siding. So it was easy to justify paying a tuck-pointer double because it was still more economical than paying the less experienced contractor to either paint the entire house or install and paint siding.

 

A good project manager might be able to combine these techniques to save money. For example, it might be a good idea to tuck-point the front of the house and paint the less visible areas of the house where the aesthetics are not as important. In addition, if you can’t find a good tuck-pointer and you decide repairing and painting your house is a better option, be aware of which brick homes you choose to paint. Brick never needs painting. However, once you paint a brick house, you’ll need to repaint it on a regular basis.

 

Keep in mind that rental properties may only need solid, structural repairs, which don’t have to be as pretty as if you were selling your home. If your masonry repairs are for a rental or long-term hold, a more economical option might just be to do the inexpensive, messy structural repairs, and address the aesthetics later. In this case, you can defer the cost of repairs and painting until you decide to sell the house

 

When you’re looking at houses to buy, be aware of older brick and stucco houses with these types of repairs. I’ve seen many brick and stucco homes on the market with substandard repairs. Most deeply discounted homes have significant structural or exterior issues that need attention. Sometimes you get lucky and find that this isn’t true for some homes.

 

For example, one house I examined was priced just below market value. The interior and exterior showed no signs of damage and the house didn’t seem to need any major repairs. During a routine walk-through, my project manager was examining one of the walls of a two-story house and noticed some loose siding. The previous owners had chosen to install wood siding over the brick. As I stated earlier, this is not uncommon. However, the wood siding was fastened through the exterior of the brick into the interior walls and studs. The mortar between the bricks had crumbled, and the siding was the only thing holding up that side of the house.

 

Stay away from structural nightmares like this and use extreme caution if you choose to buy such a home. If the seller covers up structural issues of any kind, there’s no telling what other problems you might find.when you remodel such a house.

 

 

Wood siding is usually easy to repair and paint. Certain houses require scraping and priming, which might take a little more work, but most competent painters can handle the job. They can also repair and replace bad or rotten wood. It’s amazing what caulking and a good coat of paint can do for a distressed-looking house.

 

If you find a house that does have issues with bad or rotten wood, be sure to evaluate it thoroughly. Issues with water leaks, either from a bad roof or gutters, are the most common cause of siding damage. Be sure to address these issues first.

 

I once had a house with some roof issues—parts of it were missing. Because of a shortened timeline, I started working on the interior of the house the day I closed on the property. I was waiting for permits to replace the roof, so I began work on the interior. I temporarily tried to remedy the leaky roof, but not completely enough. On Sunday morning, two days into the job, my project manager stopped by to inspect the property and found four inches of snow on the newly poured concrete floor in the kitchen.

 

Although this was not a major setback, replacing the roof became a priority. Be aware of how quickly you start on a job and the order in which jobs should be completed. Often trying to save time by doing jobs out of order will cost more time and money in the long run. Consider that almost always, deferred maintenance will cost considerably more in the long run than if you keep with repairs on property.

 

 

Exterior

Paint

Purple and orange houses may look “cute,” but they’ll stand out and keep a house from selling or renting. Therefore, make sure the color of your is neutral. Neutral colors appeal to the majority of buyers. And my goal is for my house to appeal to the most people as possible.

 

Windows and Doors

Examine windows and doors on the inside and out. Look at every window. Look for broken panes, broken seals (they’ll have water deposits, or fog between the panes) and make sure that they all open AND lock. Any deficiencies will come up at inspection. Screens are optional. In homes where the buyers will likely use air-conditioning rather than open windows, you can probably get away without screens. By comparison, renters almost always want screens. If the screens are missing on your rental properties, get your window guy to measure and install new screens.

 

Check the doors. How do the doors look and function? Do the locks work? Are the keys available? Do the doors need to be replaced or just painted?

 

 

 

 

 

Interior

Flooring

Start with the flooring basics. What are the floors made of? What condition are the floors in? Do they need repairs? Does the flooring need replacing? Are the carpeting, tile, or hardwood floors dated or worn, or do they just need some cleaning?

 

There are only a few economical choices for floor finishes, including carpeting, tile, vinyl, hardwood, and laminate. Carpet is absolutely the best floor covering you can put in a house to hide all the flaws. Carpeting can hide repairs and blemishes, and it can be laid over just about any surface. Carpeting can also be installed in porches and garages to quickly convert them into nonconforming living spaces.

 

I’ve seen carpeting installed in bathrooms of million-dollar homes, and even in a pinch, in kitchens of low-end homes. Why? Because it’s cheap, quick and easy to install. Keep in mind that not all carpeting is created equal and not all carpet installers are equally skilled.

 

Over the years I’ve tried all types of approaches to carpet installation. I’ve used big fancy companies, small companies, and I’ve even hired my installers to install carpeting I purchased myself. When doing home repairs, it’s important to have contractors who can work with a fluid schedule. Trust me, no matter what they tell you, contractors rarely complete a job when they say they will. Instead, you’ll hear excuses like “my car is broken down,” or “my wife is having a baby,: or “the store was out of paint,” or “the installer has a court date for nonpayment of child support.” There are always excuses. The problem is the larger companies just can’t work around your schedule. Time and time again, larger companies end up delaying carpet installation for a week because they couldn’t get into the house on the scheduled day, even though you set the date two weeks earlier.

 

If you hire your own installer because you want to save money, there are other issues. It doesn’t take much time to buy the materials, pick them up and store them in your garage or storage unit. But there are some things you have to do if you go this route including::

Measuring the needed materials at the job site.

Placing the order.

Paying for the order (this can be consolidated by credit card if the project manager has that authority).

Picking up, or meeting for delivery at some storage facility (space is paid for by you).

Checking to see the carpeting is installed properly.

Verifing and securing any leftover material so it’s not missing, accidentally thrown out, or stolen.

Taking responsibility for any mistakes your installer makes, and of course paying for them.

 

However, the time it takes to manage all of these factors, in addition to the inevitable screw-ups, does not come close to justifying doing it yourself. Take it from me, you will end up pulling your hair out.

The most cost-effective and efficient means to install carpet is to find a local, small company with one to three installers. If you work with them regularly, they can and will give you a competitive rate. Once you have earned each other’s trust and you can agree on work schedules, a small business owner will do everything he can to make the jobs go quickly and easily. He wants your business and you need his expertise. The more you pay for not doing it yourself is a small price to pay for the hassle of the job.

 

I’ve done over six hundred jobs with my local small carpeting company. My carpeting contractor likes me because when the retail business is slow, he can usually count on me to give him a small job that keeps his installers busy and helps him pay his utility bill.

 

Consequently, I get top-notch service. I had one house that was located in the mountains. None of my contractors wanted to travel to this remote location, but they did. At the final walk-through, my project manager noticed a half circle of paint on the carpeting exactly the size of a five-gallon paint lid. The crescent was etched into the carpet ever so perfectly; it looked like it had been painted by a master.

 

However, it was anything but a masterpiece. It didn’t take long to realize that the painters dropped the paint lid in the middle of the living room right on the new carpet. They realized this after the fact and cut the dried white gloss paint out of the rug with a razor. The fix was horrible and the painter reluctantly admitted his mistake and agreed to have the carpet repaired. With one simple call to my carpet company, the carpeting was repaired the next morning free of charge. Even if there had been a fee, that type of service is invaluable to you and your business? No monetary value can be put on reliable companies, contractors, and workers. Therefore, it is essential to cultivate your contractor relationships.                  

 

Tile

Tile installers are a breed of their own. There are two inherent problems with good tile installers: they demand high prices and get them; and they tend to be booked so far in advance they can’t accommodate your tight timeframe.

 

The best thing a project manager can do is find a quality installer who’ll work with you on price and timeframe. In my years of experience, I’ve found this to be nearly impossible. The problem was I didn’t have enough consistent work for the tile setters to keep them on-site. In addition, they charged too much to allow me to make a profit on the job.

 

For a long time, I let my flooring company install low cost vinyl flooring. I used vinyl flooring for all of my entry-level homes and saved the expensive tile for the high-end homes. This was a workable alternative because it kept the expenses low enough for my budget. In addition, vinyl is somewhat common in entry-level homes.

 

Adhering to this philosophy, I hired a new paint crew, who were particularly ambitious. After a few months, the guys asked if they could work on additional repairs that the handyman was doing like updating light fixtures, installing baseboard trim, and changing doors. It wasn’t long before the crew wanted to do even more. Many of the repairs were simple. And since I was paying them a set price per piece, they could make a lot more money doing other repairs than if they were just doing the painting. As a result, my project manager began teaching the crew other simple remodeling skills, like installing new cabinets and countertops in the kitchens and new plumbing fixtures in the kitchens and baths.

 

The next step was to let my eager painters start setting tile. By this time, I had already been using other novice tile setters who needed constant supervision and daily phone calls to get them to even show up for the job. Although they were novices, their work was acceptable and their prices were reasonable, but it took them too much time to complete their tasks.

 

Meanwhile, my project manager loaned the paint crew his wet saw for cutting tile and gave them a quick lesson on how to set tile. They did a few jobs and some of them came out fine. Once they got the hang of it, they were tiling everything including kitchens, baths, and tub surrounds. And all without my supervision.

 

In fact, one house I bought had a very tight budget. I decided to only paint the interior and then list the house for sale. Due to some miscommunication, the workers painted half of the house and tiled the kitchen, dining room, and bathroom floors. My project manager chose to split the cost with the crew. Because I did benefit from their mistakes, I paid them for the materials and half of their time.

I was fortunate to find work crews who wanted to work and learn how to do many of the minor repairs I needed done, with limited supervision. As you will see, these types of crews rapidly became the backbone of my company. They could do almost seventy percent of the unskilled and semi-skilled labor on my houses at a reasonably competent level. This freed up my time to find more deals.

 

Hardwood

In all of my houses with hardwood, I typically sand and refinish the floors with two coats of finish unless they were too damaged to repair,. Why? I found it cheaper to refinish hardwood than install carpeting. But because I’ve recently seen an increase in the prices for some types of hardwood, this isn’t always the case anymore. The difference in prices is in the quality of the wood. However, I still think refinishing hardwood floors adds more value.

 

I found it useful to use two different hardwood flooring companies. This is helpful for two reasons: First, if one company is busy or booked up, I can usually hire the other company. Second, because one of my companies is does higher quality work than the other and charges higher prices, I choose the more expensive company to work on my high-end homes. And I hired the low cost company to work on my low-end homes and my rental homes when I don’t always need perfect results.

 

 

 

 

Flooring for Rentals

There are some things to think about when you consider what flooring to use for rentals. It might seem obvious that high-end, high-rent, rentals need quality finishes, including flooring. However, don’t neglect your low-end rentals.

 

Here are some useful ideas to help save money and time with flooring for rentals:

1. Hardwood wears well, but it must be sealed with a protective finish. If it’s not maintained, water and pet damage can cause irreversible damage to the wood.

 

2. Tile that’s installed correctly can last many years. Therefore, it’s a good idea to install tile in rentals rather than vinyl because careless tenants easily damage vinyl flooring.

 

3. When you decide on a color for carpeting, remember that darker-colored carpeting doesn’t show stains as easily and lighter-colored carpeting and also cleans up much better.

 

In general, think about each individual house and how long you plan to own it. If you’re going to own a house for a long time, you might want more durable flooring.

 

 

 

 

Paint

Interior paint is the single most important feature of any house. A quality paint job can make almost any house appear and smell like a new home. Painting is one job that is necessary in almost every house. It has the ability to make or break the sale or rental of a home. When in doubt, paint it. Paint can hide major flaws and add a sense of completeness to a house that is dated or not complete.

 

When a potential buyer walks through a home with dirty walls in one room and new paint in others gets a sense that house is really not finished. If you’re going to paint (and you should), go ahead and paint everything. There’s nothing more unsettling than a job half done, or almost done. However, don’t show a a house to potential buyers or renters until it is one hundred percent complete or you’ll risk leaving them with a bad impression of the home.

 

It’s also important to do a good job painting the trim. Many older homes have wood-stained trim. In many newer houses, especially entry-level and mid-level homes, I usually choose to paint the trim and doors as well as the walls. It gives them a new look and it can save you the expense of replacing damaged, water-stained, or cracked wood trim.

 

Sanding, staining, and refinishing woodwork in a home can become time-consuming. Translation: expensive. Plus, in today’s market, stained trim and veneer doors really don’t help you sell the house. A good paint job, on the other hand, can hide almost any flaw and make the house appear new and modern.

 

If the house has wood trim that’s stained, you may choose to keep it, but it’s a good idea to re-stain it. There are products on the market that can easily hide nicks and scratches in wood-stained trim, including standard furniture polish with stain. Be aware, these products only work well for a short time (i.e., when you are showing a home to sell) and are not permanent fixes.

 

.Before you being to paint, everything must be prepped. So you want to make sure your painter is spending as much or more time prepping to paint as he actually does painting. When a painter spends enough time preparing to paint, the job always goes faster. I’ve seen painters spend days cleaning up after other sloppy painters, which means longer and more expensive paint jobs .

 

The prices for painters will vary. But the more expensive painters are not necessarily the best. When you hire a painter, ask him how he paints? There are two general categories of painter: those who spray, and those who roll. Those who spray typically use an airless sprayer machine to spray the walls and ceilings the same way you would paint a car. The second type of painters use rollers. Rolling usually takes more time, but it has benefits.

 

My advice is to find a painter who uses both painting methods, which is called back rolling. In this case, the painter sprays the paint onto the surface making sure to cover all the nooks and crannies. Then he rolls the paint to give the surface a smooth, even finish. This results in the best finish and it’s completed in the shortest amount of time.

Colors

I won’t spend much time on paint colors. In general, neutral colors are best. They’ll appeal to a larger buying audience. As I mentioned, there are some incredibly colorful homes. Orange, pink, and purple are all fantastic colors, but if you’re selling or renting, it’s best to stick with the neutrals. In fact, that’s the approach new builders follow.

 

Buyers usually want a home they can move into immediately, not one that needs cosmetic painting just to make it palatable so they can move in. Some buyers will want custom colors. However, keep in mind what you’re working with. If you have a brick home with something unique like retaining walls made of stone, or interior flooring you’re not going to change, you should try to complement those colors. Get a color palate from your local paint store and identify the light, neutral colors.

 

The best idea is to use on one or two different color schemes in all your houses. In this way, you can easily do touch-ups in rental homes because the paint is standardized. Buyers will also appreciate it if you give them extra wall paint so they can touch up any walls that get scuffed during moving the moving process.

 

Every painter has a brand of paint he likes best. Some just buy the cheapest paint they can find, while others choose the best or most expensive paints. Since I pay my painters by the job, I don’t specify what brand they should use. The paint job just needs to meet my standards when it’s complete.

Over the years, I’ve  consistently found that flat, off-white paint on walls and a slightly contrasting bright white semi-gloss paint on the trim and doors works well in all cases.

 

Using flat paint on walls is especially good for four reasons:

1. Flat paint is what’s used in high-end homes and even

an average painter can almost always achieve a great-looking finish on a house;

2. Flat paint hides many blemishes, including small cracks that have been caulked, and patches in walls;

3. Flat paint is easiest to touch up and match; and

4. Flat paint costs less than semi-gloss or glossy paint.

 

Many landlords who have rentals might argue that they prefer semi-gloss paint to flat because they can just clean it with a damp cloth and a spray cleaner. This is absolutely true. But my experience has proven that in houses where the walls need cleaning after a tenant moves out, even semi-gloss paint requires touching up. Most of the time, I paint all the walls, or the entire unit. Therefore, using flat paint on the walls is the fastest, easiest, and least expensive way to paint. I use flat paint for all my rental homes, as well as for the homes I’m selling.

 

Bathrooms

The biggest problem you’ll find in bathrooms are leaky pipes. You’ll typically find leaky pipes under the sink and in the “wet” wall in the shower or tub surround. The wet wall is the wall that houses the valve or faucet is in the tub or shower.

There are three types of checks you should perform for leaky pipes in the bathroom, kitchen area, and laundry area.

 

The first test you should perform is to visually check for missing tile, missing grout between the tile, and mold at the edges of the tub or tile surround. Any of these are indicators of leaking water.

 

The second test is to open the valves and identify any visual leaks. If there are any leaks you will usually see dripping water. Open the water valve all the way for at least one minute. This is usually enough to see if there are any leaks in the plumbing and to check the drains to confirm that there is no blockage. You should also check to make sure there are no drains that are hidden under the floors and/or walls that are leaking and possibly damaging the drywall.

 

The third test is a simple “bang” test. Make a fist and lightly hit the tile around the valves with the bottom of your fist, where your pinky is. If the tile moves, or shows signs of being loose, this is a sign that there is water damage and needs to be repaierd .

 

You must perform these tests because any plumbing problem will show up at the buyer’s inspection or when the tenants move in. And it will cost you thousands of dollars to fix the problems if you discover it “after the fact.”

 

Most experienced or intelligent handymen can replace simple plumbing fixtures. Changing bath and kitchen valves (faucets) is typically straightforward; in fact, most plumbing parts even come with directions in a few different languages as well as pictures. However, there are certain instances when it’s essential to have someone in the plumbing trade do some of the work.

 

It’s important to always have a good plumber to call in case of an emergency or for those more complicated jobs. There are many types of skilled and trained plumbers out there who can do the work. I usually hire the guy who works for a large company during the day, and runs a small licensed and insured business on nights and weekends. These smaller outfits welcome consistent side jobs and the referrals I give them weekly.

 

These plumbers tend to be more reliable and they usually appreciate the positive, working relationship they have with me. The larger companies move on to the next big job with little concern for the guy who only calls them every few weeks or months.

 

A few times, I called a larger plumbing outfit to check out a problem for me. They claimed the only way to fix my problem was to dig up the yard and replace everything. Since I was good a customer, the company said it could give me a deep discount—a special price of $4,000, just for me. Without hesitation, my project manager called my smaller plumbing company and explained the problem. The owner came out that evening and fixed it for a whopping $150. Without a doubt, replacing everything is always better. But it’s not always necessary, and usually, though not always, it will cost more.

Be aware of overzealous contractors who like to cut and replace. It’s easier for them, but it can unnecessarily hurt your pocketbook. Search for competent and experienced contractors who know what’s really necessary and who appreciate the extra money they can make..

 

During a recent job, I installed a bathroom in a basement that didn’t have a drain below the basement floor. In this case, I had to install a “lift station.” This was the first time I had to deal with this situation. I got three bids and chose the plumber who appeared the most responsible and gave me the most reasonable estimate. He worked well with the other contractors and did a commendable job. The job was comprehensive and very involved. When the house went under contract, the buyers requested a hook-up for a washer and dryer.

 

My project manager called the same plumber back to install a hook-up in the basement. This was a simple job; the parts and materials didn’t cost more than $50, and it would only take about twenty minutes for an experienced plumber with the proper tools. Incredibly, the bill was over $370. Quite a mark up. My project manager called the plumber and asked how he arrived at such a figure. His response was that he priced his work by the book on a per-fixture basis. He then added that I needed to evaluate who I was hiring before that company did the job. I told him that I just did, sent him a check, and never called him back.

 

 

Kitchens

It’s important that you determine the types of kitchens in comparable houses in your neighborhood. When you check comps and walk through the other homes you’ll quickly become aware of what.s out there.

 

The items in the kitchen that you should pay attention to are:

Cabinets: Take note of the style of the cabinets and, whether the wall cabinets go all the way to the ceiling. The most common types of cabinets are solid wood, veneer, and composite wood.

Countertops: The typical countertops include laminate, butcher block, tile, solid surface, natural stone, and synthetic stone.

Appliances: Are the appliances high-end name brand, stainless steel, or white apartment grade?

Flooring: The typical flooring includes vinyl, tile, wood, or wood laminate.

 

There is a very delicate balancing act between under-improving and over-improving the kitchen. If you over-improve your house, you’ll waste both time and money. With few exceptions, granite countertops will not increase the value of an entry-level home but they will cost you extra money that you won’t make back when you sell.

 

Conversely, installing vinyl flooring in the kitchens of mid-level to high-end homes will not save you money either. And don’t waste your time and money doing a less-than-par remodel. Instead, discount your price and don’t do any work. You’ll better off in the long run.

 

Today, lighter-colored kitchen cabinets are a popular choice in new home construction. Maple has replaced the dark or red oak cabinets that were popular several decades ago. My cabinet supplier always keeps me up-to-date with the newest products available on the market. And he has been able to supplies us with low- to moderately-priced maple cabinets. These cabinets have real maple wood fronts and doors, veneer sides and backs, and hidden European hinges. They’re very attractive and they wear well.

 

A higher quality cabinet is almost four times more expensive that the cabinets I just mentioned. The major difference between the two cabinets is in what you don’t see. The more expensive, all-wood cabinets are made better and they dovetailed drawers, which will truly last a lifetime. But do you need these in the house that you plan to sell? If it’s a high-end house, the answer is probably yes, but not so much for a mid-level or entry-level house. That’s because many buyers don’t expect such items in homes at that  price range or they aren’t even aware of the difference. Either way, if you spend more than necessary on any upgrades, most buyers won’t be willing to pay for those upgrades. But they will pay a fair price based on the condition of the house, the square footage, and the location.

 

Weigh the cost differences of what you’re putting in your houses versus how the potential buyer or renter will view these upgrades. Make sure everything you do to a house raises its potential price and that your buyers will appreciate your upgrades.

 

Electrical and Lighting

Lighting impacts your potential to rent or sell a house for top dollar. Again, take advantage of the comps in your neighborhood. In most markets, you want to sell or rent the best house at the best price. Therefore, lighting is one of the easiest improvements you can make to easily put the sale or rental price “over-the-top.”

 

Buying lighting fixtures for high-end homes is no easy task. I’ve spent countless hours ordering and countless weeks waiting “special” lighting deliveries for high-end homes. But when you’re dealing with lower and midlevel homes, you can simply buy the lighting from your local home improvement stores. Designer and new styles come out every year. And soon after, larger manufacturers copy and produce these same high-end fixtures, then sell them at discount and home improvement stores. Take advantage of these stylish, yet more affordable lighting options.

 

For one remodel, I ordered elegant, Italian hand-blown lighting. Everything about it was “special,” including the price, which was nearly $500 plus tax. It also took almost a month to arrive. Less than two years later, Home Depot stocked a similar kit for less than $75. Was the quality the same? Probably not, but they looked similar. Most buyers are looking for style, rather than handmade quality. But be aware that in higher-end homes, buyers recognize better quality in the fixtures, switches, and wall plates.

 

When you’re remodeling entry-level homes keep in mind that all home improvement stores will have a large selection of inexpensive lighting. One of my favorite inventions is track lighting. It’s relatively simple to install, inexpensive and it can make a big difference in lighting a home. Unfortunately, it’s also not very popular in today’s market.

 

Fortunately there are still inexpensive options. In today’s housing marketing, the trend is to use recessed can lights in basements, because of their lower ceilings, and in kitchens For a low-end flip, these lights may be cost prohibitive, however if space is available, there are modern versions that are quite trendy and relatively inexpensive. They’ll also help make your homes look and feel very updated and you won’t have to spend money on rewiring or installing in-wall recessed lighting or ceiling lighting.

 

One version of the new and still popular track-style lighting is cable lighting. With this style of lighting, the lights are hung across a room off two low voltage cables. This enables the home owner to direct a limited amount of individual lights, usually five, wherever they want. These newer lights are very small and attractive as opposed to the original utilitarian-style track lighting, which were quite bulky and unappealing.

 

Another style of track lighting is what’s called rail lighting. These have an aluminum rail that can be shaped and extended as long as needed. Not only is this type pf lighting functional, it looks good and won’t put a dent in your wallet. When it comes to the rest of the lights, I usually look for something that’s reasonably priced and looks modern.

 

Some people like to go the ballgame on Sundays, I go to open houses. It’s the number one way to find what’s selling and why. And I get great lighting ideas from other home owners and investors who offer open houses. Take advantage of these free previews, sometimes you can even get a free cup of coffee and a cookie.

 

Electrical

The quality of the electrical system, especially the wires you don’t see, is just as important as the lighting. You must repair or replace any “red flag” items that can be dangerous to renters and buyers and can also cost you money at closing. I can’t tell you the number of homes I have sold where I missed one or two electrical items. And it’s usually right before the buyer requests an inspection by a licensed electrician. You can avoid this by spending a little time and doing your homework. If you bought a house where the previous owner did his own electrical work, check everything out carefully.

 

It’s important to always have a qualified and experienced, licensed electrician available, but you should avoid calling him whenever possible. Instead, find a journeyman electrician (an apprentice to a master electrician) who knows the business, or an experienced handyman who can complete some of your minor electrical work. Have them check out your homes and look for hazardous or dangerous wiring. For simple jobs, like changing light fixtures or replacing a broken outlet, let your handyman handle it, but for more complicated work requiring a service change or permit, definitely call your trusted electrician. And remember, it’s always less expensive and less dangerous to do it right the first time.

 

Heating, Ventilation, Air Conditioning Systems

If you have any reasonable doubt about your heating and cooling system, get a licensed contractor to check it out and issue you a Furnace Certification.

 

Buyers always want guarantees that they’ll have heat in the colder months and air-conditioning in the warmer months. If the HVAC system is over ten years old or looks rusty or damaged, have your licensed contractor check it out before you sell. You should be able to locate the year it was manufactured on the heating unit itself, But if you can’t find it, have your licensed heating contractor check it out. If he tells you it needs to be replaced, you can set aside those expenses in your budget.

 

But remember this is never a job for a handyman. Find an experienced, local HVAC company you can trust and establish a long-term relationship with that company. These guys are your friends. Remember the company’s license is at stake when one of its technicians certifies a HVAC system. But be wary of large outfits that send out minimally-qualified technicians because their first instinct is to cut and replace even when it’s not necessary.

 

Find a company that’s experienced and understands the purpose of your business. I’ve established a working relationship with my HVAC contractor so the company’s goal is to save me money. But a good relationship works both ways. Both you and your contractors must understand that time is money. They can make more on a thirty-minute, $500 repair job, than a complete new system installation that could take over twelve hours to install. Discuss this with your contractors if they don’t understand the concept.

 

You might think that if you have a certification from a reputable company, you’re off the hook. Legally this might be true, but it’s probably not the best way to do business.

Years ago a friend of mine bought a house from a seller who installed a new HVAC system as part of the closing. But the licensed company that did the job never realized that the 100-year-old chimney was home to a family of birds that had completely clogged it, rendering it useless.

 

Because of it wasn’t working, my friend spent the first few nights in her new home, opening windows in 20-degree weather to let in some fresh air. After a few night she had had enough, so she had it checked out. What the contractor told her was she probably would have died if the situation hadn’t been corrected. Although it was corrected and my friend was fine, imagine how the seller of the house must have felt.

 The moral to the story is, no matter who’s legally responsible, never go out of your way to save a buck and put someone’s life in jeopardy.

 

Here’s a list of things any responsible HVAC or home inspector should do to make sure your furnace is working properly:.

1. Clean out any debris in the furnace either with a vacuum, or with a damp cloth or other suitable means.

2. Operate the unit for a reasonable period of time to ensure all the functions are working correctly.

3. Check thoroughly gas leaks in all of the gas lines and valves.

4. Check thoroughly for any carbon monoxide leaks that could be coming from any part of the chimney as well as a clog or even a cracked heat exchanger. Clogs and chimney leaks can all be repaired; however if there’s a visible or otherwise detectable CO2 leak in the heat exchanger, it’s more than likely that the entire furnace will need to be replaced.

 

Chapter 5: Getting Started

Once you’ve made a list of all the repairs you want to perform, you need to organize and prioritize your list before you get started. The following is a chronological list of how I prioritize my work:

 

Contractor/ Material List

This list starts with the most important, and the most difficult items to schedule.

1. Any unknown or unfamiliar variable: This includes any worker or any contractor you’ve never used before, as well as any specialized contractor. This could be the company you’ve hired to put in a new septic system, repair a solar collector or repair an expensive name-brand appliance that has parts that might be hard to find.

 

2. Electrician: If you need any electrical work done like a service upgrade, re-wiring, or difficult or tricky installations hire an experienced electrician.

 

3. Plumber: If you’re doing any plumbing, like replacing a bathtub or vanity, you should make sure your  plumber arrives shortly after the work is done. This way the plumber makes sure he has all the necessary materials to do his job. He can also ensure that all everything is where it should be so he can install the new fixtures.

 

4. Roofer: If you don’t already have a bid in for a roofer, get one. Be sure to include a bid for gutters, if applicable.

 

5. Window company: Make sure you order your windows in plenty of time. Windows can take more than a week to come in if they are double pane.

 

6. Flooring: This might be your carpet company, tile installer, carpet supply house, hardwood company. Whatever material you choose to use for the flooring, contact the company as soon as you’ve decided to get started.

 

6. Painters: Always try to contact them when you’re even just thinking of remodeling. The painters always will have to come back for touch ups. If they’re doing some of the other simpler work on a house like changing some light fixtures and installing cabinets, vanities or even kitchens, they’ll be at the job much of the time. If they’re managed well they can often work around many of the other contractors.

 

7. Carpenter/ Handyman: If you have a handyman who does small fixes after a big job is done, you need to contact that person and get him scheduled.

 

8. Landscaper: You’ll find that landscapers can avoid most interior home repairs or remodeling.

[CM3] 

 

 

 

 

Here’s a schedule of how you should prioritize your work

 

	Day 1	Day 2	Day 3	Day 4	Days 5-7
Week 1	Demo, remove garbage, and check mechanicals.	Electrical Plumbing Repairs and Paint prep	Electrical Plumbing Repairs and Paint prep	Paint Kitchen and baths	Flooring in kitchen and bath
	Day 8	Day 9	Day 10	Day 11	Days 12-14
Week 2	Paint interior Begin outside paint Touch up bathrooms	Check on Cabinets   Painting exterior		Deliver kitchen Cabinets	Install Kitchen cabinets, countertops   Sink and disposal any electrics
	Day 15	Day 16	Day 17	Day 18	Days 19-21
Week 3	Change and light fixtures outlets Landscape	Roof Certification? Carpet/ Hardwood	Furnace/ AC in working order? Carpet/ Hardwood	Windows? Are they done?	Touch up paint from flooring install. Missing hardware Walk through/ Punch list
	Day 22	Day 23	Day 24	Day 25	Day 26-28
Week 4	Walk through	Final clean	Put house on market or put up for rent sign.

 

 

 

 

 

 

Day 1

Contact all contractors needed for the job, get your bids and schedule appointments. Contractors need to know what’s happening with the home remodel, where the house is located, and what your timeframe is.

 

 

 

Meetings

Contractor	Date	Meeting Time	Job Requirements	Start Date	Completion Date
Painter		Morning	Go over job description make sure they have all of the information, address, lockbox code or key, paint colors, necessary materials.
Electrician		When available	Go over scope of work and record timeframe
Plumber			Go over scope of work and record timeframe
Window Company			Measure windows needed Repair or new
Flooring company			Measure for material
Tile Company			Measure for material
Hardwood Company
Landscape			Plan job
Cleaning company
Kitchen design	Day 1 or 2		Measure kitchen walls and cabinets…before the old ones are torn out. It makes the job easier as long as the kitchen is going to be similar
Bath fixtures

 

Painters- They can almost always start at the first day, unless there’s major demolition, in which case they can start immediately when the house is cleaned out. Stay in touch with your painters, particularly if they’re doing more work on the house than just painting.

Electricians-Get them to the job and get them scheduled ASAP. Once you know the scope of the job you may be able to save time by getting bids for certain jobs over the phone.

Plumbers- If you need major repairs get bids and get them working. As with the electricians, they can hold up a job for some time if other contractors are waiting for them to finish.

Window company-Whether the company is replacing broken panes, or installing new windows, it will take time. Be sure to try and pinpoint an installation date.

Flooring company-The workers need to measure. Schedule an installation date. Even if you’re not sure you’ll be ready on that date, always try to push the date. By doing so you can motivate the contractors to finish when they say they can. Never install carpet if there’s still “messy” work being done. This could be paint, tile install, kitchen install, furnace replacement. Carpet should go in last.

Tile company- Book these guys whenever they can get there. If the painters aren’t ready, tile cleans up pretty easily and they can still work around one another.

Hardwood company-If you’re installing new hardwood, get these workers there as soon as possible. They can install in one day and put the finish coat on after the carpet is installed. If you’re just refinishing the floors, have them come the last day.

Landscape-Fit them in when you can, but don’t wait too long.

Cleaning company-I usually call them a few days before the job is done.

 

 

 

 

 

 

Some important points:

1. It’s always best to check on your houses every day, and more often in the first week.

2. Try to schedule appointments one right after the other, if you can. It will save you some of the trips you’ll be making to the house every day.

3. Make sure you actually talk to the contractor who’s doing each job, either by telephone or in person

4. Write down the dates contractors give you.

5. Don’t be afraid to call and check the progress of the job. Call at the end of the day, or ask them to call you.

6. Make sure you and your contractors always know when you expect them at the job and what you expect them to do.

7. Design your kitchen and order cabinets. It’s also important that you get a head start on ordering any items that are not stock items. Kitchen cabinets are always the first items ordered because they usually take the longest to come in and they might not be in stock at the warehouse. You’ll want to make sure the cabinet supplier knows when you’ll need them, where you want them delivered, and so on.

8. Windows are also a special order. Whether you’re going to replace the windows or just repair broken panes, you’llwant your window contractor at the job site as soon as possible. Poor organization and overlooking steps at the beginning of a job will always cost you time and money.

9. Even though the last big step in any job is installing the carpeting, call and let your carpet company know you have a job that you’re starting and you’ll need the carpeting in about two weeks. This will also give your painters time to get the interior of the house finished and ready for the carpeting.

10. You’ll be in good shape if your painters are willing to install the tile in the kitchen, bath, as well as install the cabinets and counters in the kitchen. If they do, you’ve just saved time. And the painters will also prep the house for paint, while removing the old cabinets in the kitchen and baths and prepping the floors for tile. If not, you need to get your tile company out to the job site to bid, measure, and buy materials for the job.

 

If you plan on sanding, finishing, or installing hardwood floors, definitely call your hardwood floor contracts and let them know your house’s address and roughly when you will be ready for them.

 

Day 2

You should be working on the clean out and demolition as soon as you take possession of a property. Some managers like to use day laborers to do most of the grunt work to save money. I only use a separate contractor to do the clean out if the job is very large and will take more than a day to complete. Smaller jobs will cost about the same as having painters clean it out. They’ll work for the same prices and they can start prepping while the rest of their crew is prepping for paint.

 

It’s advantageous to have contractors who are working on the house do the clean up and demo of your kitchen and baths. That’s because other companies that just clean out houses tend to accidentally throw away necessary hardware, which can cost you more money in the end.

 

I once hired a company specifically to clean out the house. They did a fantastic and swift clean up, until I discovered they had accidentally thrown out the inside and outside of the electric panel. Although no one was responsible, this potentially hazardous situation would have been an issue at closing. To make matters worse, it was an older electric panel that was no longer manufactured. I called my best electrician who was a pack rat and collected old parts from various jobs that he did. And even he was unable to find the matching covers.

 

I ended up paying him to make a cover plate and cover for the electrical panel. Even though it cost a fraction of what it would have cost to replace the entire panel and circuit breakers, it was an added expense that delayed the sale of the house. Based on this experience, I try to limit the number of contractors at each house so there are fewer of them to pass the buck when there’s a problem.

 

Here are a few other examples where things go wrong and no one knows what happened. At a final walk-through I see:

• A broken or loose tile. The tile layer said he didn’t do it and the plumber said it wasn’t him. In fact, no one on the job took responsibility for the issue;
• Stains on the new carpet, and none of the contractors accept responsibility;
• Broken windowpanes that magically cracked on their own;
• Thermostat set at 100 degrees and windows left open, during cold winter months;
• Scuff marks on the newly painted walls.

 

In all of these cases, there are only a few possible offenders, but regardless, I paid the price. I paid to have the tile repaired, the carpet cleaned, and the broken windows replaced. I also paid the heating bill and I even paid the painters to return one more time for touch-ups. It was essential to get these houses on the market and rented or sold.

 

Over the years, I’ve looked for ways to shift the responsibilities to a smaller number of contractors. I was successful in doing so by consolidating jobs, and having fewer subcontractors who could work with little supervision. The lesson is simple: The more contractors you have on a job, the more micromanaging you’ll do.I’ve found you’ll always save time, money, and aggravation if you consolidate the work.

 

You’re probably wondering where you should put garbage during a clean up. The simple answer is in a dumpster. I’ve spent countless hours trying to find a waste collection company that charges a fair price. Eventually I found one. They have competitive prices and service that can’t be beat. There’s nothing more frustrating than trying to put a house on the market on a Friday, and having the waste company tell you they can’t remove the 30 yard roll-off dumpster, sitting in the driveway, until Tuesday. Plan a head for this, but when all is said and done, it’s important to have a good relationship with your waste company.

You should also keep in mind that some communities will not allow a roll-off to be placed on the street, or even anywhere on the property. A 30 yard roll-off may seem big, but it fills up quickly when you’re putting new siding on a house, installing new kitchen cabinets, removing a few dead trees, and the previous owner’s seven-foot broken projection TV. Then what do you do?

 

I had one contractor who did a fair amount of work on the side for me. We made an agreement that if I couldn’t put a roll-off on the property, I could put one at his shop. He got to use it, and it was convenient for him when he had to unload all of the trash and garbage from the day’s work out of his pickup truck.

 

On a lot of jobs, I like to pile up all of garbage in the garage. Then near the end of the project, I have a roll-off delivered for one day. That way you don’t alarm the neighbors and you don’t let anyone else know that the house is vacant.

 

Days 10 to 12: [CM4] 

About a week into the remodel, you’ll need to start thinking about flooring for the kitchen and the bathroom. There’s no right or wrong way to do things when you’re installing tile. Some contractors like to install tile around all the cabinets and appliances, like the dishwasher, last. It’s easier to put the tile down first, and then install the cabinets over the tile, and finally grout the tile when everything else is complete. By installing tile in this order, there are fewer damaged cabinets, counters, appliances. And the job site will also be cleaner for the finish work.

There are benefits to having your painters and other contractors work on several aspects of your properties. Whether you’re a project manager, investor, or landlord, you have responsibilities. And those responsibilities don’t include cleaning out houses, painting, fixing plumbing, or any of the work that goes into a house to prepare it for sale.

 

Your responsibilities involve managing contractors, overseeing the remodel job, and worrying about everything else that goes with the property. The list of other responsibilities is endless, and usually includes listing the house with a realtor, showing it to potential renters, choosing tile, designing kitchens, and picking out light fixtures. It also includes the administrative aspects of the job, like paperwork, payroll, check writing, etc. The list is neverending, but a competent project manager is aware of both her strengths and limitations and is unafraid to ask for help.

 

Once the painting is done and the tile is installed, your kitchen cabinets should arrive for installation. In addition, the bathrooms fixtures should be installed and theinterior painting should be completed.

 

Day 14: Start exterior painting.

Always check the forecast because the weather will determine when you can paint. Typically, if the weather is good, the exterior painting shouldn’t take more then three days. Therefore, make sure your painters understand your timeline and they’re aware of their deadlines. Many painters will need your direction to help them get organized and know what to work on first. Inside of course.

 

Exterior/Interior Timeline:

Days 1 thru 14: While completing the interior, the HVAC, the roofing material, windows, and landscaping work should be completed.

Days 12 thru15: Conduct an interior walk-through.

Days 15 thru 21: Do interior touch-up paint; have carpet installed; and sand and finish hardwood

Day 22:      Finish exterior work; conduct a final walk-through; and place a “For Sale” or “For Rent” sign in the front yard.

Chapter 6: How to Find and Hire the Right Contractors for Your Job

Finding the right contractor takes more than just calling contractors out of your local Pennysaver free newspaper or phone book.

 

The best way to find contractors is planning ahead and word of mouth. It’s extremely helpful to get involved with local real estate groups. Many offer free monthly meetings. One of our local groups has a breakfast club one Saturday morning a month. It offers an open forum for discussion. In these forums you can often learn the names and numbers of local handymen and contractors who are in the fix-and-sell business and who know how to cut costs during remodeling. Not only can they help you get your job done, they can help you save money.

Ideas for finding reliable contractors include:

• Word of mouth from friends, family, other investors.
• General contractors. Find a local general contractor either via internet, phone book, or various types of advertisements. Eventually you’ll find one who’ll talk to you. Ask hie where he gets his sub-contractors. Some are happy to give you the number of contractors they use occasionally. This is always a good start. I’ve done this in the past with some of my fourth-string crews. When you have a good contractor that you can’t keep busy full time, you want him to know you’re looking out for his best interests and trying to find him “fill-in” work.

 

But keep in mind: never steal a subcontractor from a general contractor or job site without letting his employer know. This is just bad business practice.

 

Ask employees at your local lumber yard, plumbing shop, and flooring distributor if they know any reliable contractors. They always have a list of qualified contractors and installers.

 

When hiring a contractor, it’s very important that you make your expectations very clear. Let the contractors know what you want to do and ask their opinions. Many contractors who regularly work for Fix-and-Flippers and real estate investors, know your goals and your strategies. They also know that time is money. They’ll be just as eager as you are to get a job done quickly so they can move on to the next job quickly, as you are. It’s all about the money.

 

I can’t tell you the number of times I’ve used a contractor who did a complete cut and replace, so he could make more off the job. Maybe he did a a complete re-wire of an electrical system, when a simple five-minute minute junction box install would have saved hundreds me of dollars. I can tell you I never hire those contractors again.

There are three facets of project management you must consider when undertaking a job with contractors;

• TIME              
• MONEY         
•  QUALITY

The problem is you don’t always have a say when he comes to those aspects of the job. If you need any job done quickly, you’ll pay more. Take dry cleaning for example; one-hour dry cleaning costs significantly more than regular dry-cleaning service. The same theory applies in remodeling. You’ll certainly pay more for a plumber if you have a broken pipe that needs to be repaired in the middle of the night or on a weekend. What if you have a closing in one day or you have tenants moving in the next day? That will definitely affect the time and money aspects of getting the repairs done.

 

A more experienced contractor with the proper tools may be able to complete a job more quickly, but he’ll charge a higher price for his skills, experience and labor. On the flip side, eager young contractors might complete some skilled jobs at a fraction of the going price. However, they might take longer or the quality of their work won’t be as good.

 

Can you use these scenarios to work to your advantage? Yes. One of the most successful techniques is to consolidate your purchases. How many times have you gone to the hardware store and made a purchase for an item that was on sale the following week? When remodeling, it’s not always possible to wait for a sales event. Your timeline doesn’t allow it.

 

Therefore, planning ahead can help you save hundreds of dollars. Take, for example, sales at home improvement stores. I always look for discounts or close-out prices on items that I regularly buy. As long as you have a place to store some of the larger items, you can save hundreds of dollars on each remodel by placing the time factor “in front” of the remodel.

 

For example, I once bought a a close-out kitchen faucet regularly priced at $100 that was marked down to $19. Did I need it at the time? No. Did I use it? The very next week. Another time I bought a brand new, white $450 dishwasher with an opened box for $125. The list goes on. So it’s a good idea to make a written or mental list of the items you regularly need and use when remodeling your houses.

 

This is also a great idea for investors who own or manage rental houses. In fact, some of my rental houses include more expensive fixtures than my higher-end homes. There are some other hidden benefits. Quality fixtures and appliances usually last longer and handle more abuse by renters than low-end fixtures. They also look better than low-end fixtures and appliances. Best of all, when you comparison shop, you’ll pay a fraction of the cost.

Consolidation and management is the key to saving time and money.

 

I have continually found that in my business, there is no such thing as “no job too small.” If you don’t believe this, try it. Small items are part of every job. These items range from replacing some trim to replacing a washer in a leaking sink to sweeping the leaves off the driveway, or even dusting kitchen counters in a house that has been on the market for a few weeks. You’ll need to address these tasks, but how?

No busy handyman will change a fifty-cent washer. He’ll install a new faucet. Just think of the skyrocketing cost of gas. How much would you charge drive to any location? Everyone’s entitled to be compensated for his or her time.

 

Here are some ideas to help you consolidate tasks so you can save time and money:

1. You should always challenge your contractors to maximize their skills. Make a list of items for your handyman to do on each house, including both simple and more skilled jobs. Some handymen like a challenge and they all need to make money. If you offer him a number of jobs to do—so he can make some additional money—he’ll be more inclined to agree to do them.

 

Many of my contractors like to work for me and they’ll often ask what more they can do to earn extra money. Remember, you’re always paying a trip charge for every contractor even if it’s not itemized in their invoice.

 

In one high-end house, I wanted to put stainless steel backsplashes in the kitchen. The window installer asked who was going to do the job. As it turned out, one of the warehouses he gets his supplies from also supplies and cuts sheet metal. I would have done this work myself, but it’s time-consuming and costly. The window installer was easily able to measure, order, and install these pieces. As it turns out, with his discount he was able to install stainless steel in the entire kitchen for just over what it would have cost to buy the material. This isn’t to say that all window installers can install stainless steel, but challenge your more competent contractors to bid out other areas of the remodel that are similar.

 

2. There are three types of painters: those that can paint, those that cannot paint (don’t hire them, but if you do, remember not to hire them again) and, those that can paint and want to master other skills to increase their paycheck. Take advantage of the third type. These are the types of contractors who are eager to work and learn new skills to make more money. These are the keepers.

 

2. I’ve established the best relationships with smaller companies that are good at time management and eager to grow their businesses. This will save you time and money and they’ll earn more per day. Both of you will benefit from this.

 

I met my HVAC (heating, ventilating, and air conditioning) contractor through a friend of one of my painters. After several weeks, my HVAC contractor’s secretary/wife called us and asked if there were any other odd jobs he could assist us with to help grow their new business. The HVAC contractor had a long experience with all kinds of repairs. After a short time, I found out that he was not only a licensed HVAC contractor, but also a plumber, electrician, and auto mechanic. Although his auto mechanic skills did not help us, all of his other skills did.

 

My HVAC contractor became one of my most reliable and knowledgeable contractors. He was an excellent problem solver and quickly learned what results I expected. He inspected every mechanical feature of the houses I sent him to and always took care of any small issues he faced. If he discovered a major problem, he called me with his bid and scheduled a time to take care of the problem. He quickly became invaluable to me and I became a source of endless work for his company and the situation was definitely “win-win.”

 

4. Always look for instances where you can minimize your number of contractors. My HVAC contractor works on all my jobs. He needs to make extra money and I appreciate that he never overcharges or takes advantage of me. Meanwhile, I avoid hiring multiple contractors for my jobs so I save time. I also have peace of mind because he also serves as my licensed “electrician” and “plumber” when I needed certifications for inspection issues.

 

Payday

Payday is the most important day of the week for your contractors. Keep in mind that no matter how frugal you choose to be with repairs and fix-up costs, how you pay your contractors will dictate the outcome of their production and whether they’ll show up at all. It’s important to uphold high standards in every facet of the job, including paying your contractors in a timely manner when the job is complete.

 

Choose your battles carefully. I’ve seen too many good reliable contractors walk off a job because the owner wouldn’t pay them at the end of the job. There will always be reason for this, but keep in mind a $5 fix could cost you hundreds if your best contractor walks and you have a house sitting vacant and no one to do the work.

 

Compensation for contractors

There are several different ways to compensate workers for their time, including paying your contractors by the hour or as salaried employees, or paying them by the job.

 

Paying contractors by the hour: When you follow this payment method, there’s no way to hold contractors accountable for their time unless you or someone else managing the job is there to supervise. It’s not practical for the investor or project manager to spend all of his time at a single job site. Keep in mind there are exceptions to this, but these situations would be unusual. I’ve had the experience when several workers who showed up every day for work, only completed half as much work as their peers working on other houses. When my project manager drove by the house in question, he found these workers dozing under a tree in the middle of the afternoon.

 

Salaried employees: If you have enough work to hire a contractor on full-time basis, employing them as a salaried employee can be a successful alternative. Keep in mind that you must balance his salary with his level of experience. If you pay someone too little, he might not do a good job. These are the same workers you might find dosing under a tree or perhaps taking their time (i.e., two hours) returning from the store that’s located just five minutes away.

 

It’s just as easy to overpay these employees. The added costs to hire a full-time employee includes paying Social Security taxes, workmen’s compensation, health insurance and other benefits. Talk to your CPA or accountant before you make any final decisions to understand what an employee’s package will cost you when hire someone on a full-time basis.

 

The most effective way to manage remodels on- and off-site in this business is to pay “per piece.” This is the payment plan that’s the easiest to manage and is the most productive way to compensate employees. However, there are also complications when paying per piece. I once hired someone whose responsibility involved driving by prospective foreclosure houses for sale. Since these houses were foreclosures, I couldn’t get inside, but I could present a reasonably educated bid based on the condition of the exterior of the house.

 

The person I hired was paid a set fee for each digital picture he took. Just before he went on vacation, he handed in an unbelievable number of photos. (I figured this person must have worked very hard to get them done.) The problem was the pictures of 123 Main Street included beautiful pictures of the kids, and some of the photos were of the wrong house.

 

That’s why it’s necessary to hold contractors and anyone else who works for you accountable for their work. Until you get a feel for the appropriate amount of time needed to complete a job, you’ll have to spend some time checking on these contractors.

To keep contractors on task, I have tried to fine them for each day the houses weren’t  completed as scheduled. When you have several remodels going simultaneously, this becomes a complicated task. With new construction, there are only a few variables beyond the contractor’s control. With remodels, you never know what to expect on a day-to-day basis.

 

For example, one contractor bid out a job to remove paneling in an enclosed porch, install sheetrock, carpeting, and trim. It appeared to be a simple job until he removed the paneling from the walls. Years earlier, the previous (and frugal) homeowner built the porch with small Aspen trees instead of 2x4s to support the walls and ceiling. This primitive style of construction is found throughout the world. I have no way of knowing what lies behind the walls of any given house, nor can I hold the contractors responsible. However, you can hold contractors accountable for their work, and its timely completion.

 

Complete Every Transaction as if You Were working for Someone Else.

Be aware of how you treat your contractors. They’re in business to earn a living just like the rest of us. Complete every transaction as if you were working for someone else. Be aware that no matter how big or small your market is, these guys communicate and word gets around. If you don’t pay these guys, or take advantage of them once, they won’t come back when you need them, and other local contractors will follow suit. Don’t get a bad reputation.

 

If you have consistent work for contractors, there should be an unspoken understanding that the prices should be fair. Impress upon your contractors what you do offer. Make sure they understand that if you don’t work things out, you’ll find someone else. In certain markets, there’s plenty of work available. At times, all contractors suffer from “burn out,” or they just don’t want to deal with certain jobs. This is understandable. If you find yourself in a situation where you don’t feel comfortable with a contractor’s quality of work, it’s best to ask him to finish what he started and let them go. Don’t hire him again.

 

The Local Big Kahuna

Once you have been in the remodel business for even a short time, you’ll start getting calls from every Tom, Dick, and even Mary looking for work. Some call you cold, some got your phone number from a for-rent sign while others are friends of one of your contractors. You may not be the best paying boss in town, but they’ve heard that you’re fair and that you have steady work.

 

You may be buying a house on Friday and your best contractor is finishing a job for someone else and he won’t be able to start for a week. Hmmm, should you just go out and hire these other people to remodel one of your houses? No, absolutely not. If you’ve never seen their work, new contractors are a liability. You may, however, test them out.

 

 

 

Here’s how:

The remodel on every house must meet a certain level of workmanship for the house to appear its best. When testing out new contractors, I always use rental houses and entry-level homes. Choose a job where the buyer’s expectation is not all that high. Expect the best work from the contractor, but choose a job that will not affect your bottom line if it’s not done as well as you expected.

 

The following example shows how my project manger tested out a new handyman. The new handyman was experienced and knew everything, yada, yada, yada. Unfortunately, contractors will always tell you what you want to hear. This handyman was repairing some basement drywall in a moderately-priced home. Because it was the basement, the owners paid little attention to his work.

 

The handyman’s solution to repairing the basement drywall was to “texture the whole wall.” Often texture is not used for aesthetics but rather to hide shoddy workmanship. The instructions from my project manager were specifically to finish the drywall with a flat finish, which takes some expertise.

 

This was my handyman’s test. After five days of sanding and spackling, the handyman put his heavy textured layer on the basement walls to cover his mediocre repairs. The walls were perfect for a house of that type and neighborhood. Meanwhile, my project manager had secretly tested the new contractor to find out his skill level, which was less than my project manager had hoped, but no harm was done.

Through the years, I’ve fired many contractors. This can be as complicated as trying to hire new contractors and it can become costly. Always trust your instinct. In general, unless the work is terrible, or you’re in the beginning stages of a job, it may be more cost-effective and easier to guide a bungling contractor through a job, rather than let him go.

 

Over the years, I’ve learned that every contractor completes his job differently.  Remember, there are several correct ways and countless incorrect ways to do every remodeling job. Sometimes it becomes necessary to pull contractors off jobs when it’s obviously taking them longer to finish then it should,.

 

Use Licensed Contractors

Never put yourself in a situation that could eventually turn into an ethical dilemma. When you have a house under contract, and the buyer requests you replace an inspection item, you have a choice to either do it or not. This is not the time for you to cut corners to save money. If you agree to some of the buyer’s requests, you must repair or replace the items or reach a mutual resolution.

 

After I agree with the buyer on the inspection items, I always give the specific requests and direction to the proper contractors. There are often items that can be completed in-house. These might include changing a broken doorknob, replacing light bulbs, fixing a small water leak, or even my most common repair—repairing the broken disposal in the kitchen sink.

Speaking of sink disposals, if you install less expensive disposals be aware that they are partially made of steel. That means when water flows through them, they may develop tiny rust deposits. This is normal. That’s why disposals include an Allen wrench. A simple reset of the breaker on the disposal and a small turn of the Allen wrench will quickly correct the issue. If a disposal is used regularly, this doesn’t occur. But when it’s not used for weeks, the rust spots will appear.

 

Other issues that you and the buyer might agree on is the certification of the electrical or plumbing work in the house. Licensed contractors must repair any of these unresolved items. Fax, e-mail, or leave a copy of the request for the specific contractor. When the work is complete, get an invoice with the contractor’s license number on it. The contractor needs to be responsible for his work (which is why the buyers requested a licensed professional) and they may cost you more. That’s why it’s in your best interest to correct any potential issues during the remodel.

 

One house I sold had some questionable wiring in the garage. I hired a licensed electrician do some work on the house, and specifically asked him to inspect everything. Everything appeared normal and nothing looked suspicious. However, the buyers had a few specific electrical requests. Therefore, my project manager faxed a copy of the inspection report over to my electrical contractor and he looked into the issues. I received an invoice for his work, paid it, and gave a copy to the buyers at the closing. Weeks later, I received a letter from the buyer’s attorney stating that the electrical work had been faulty. He said the buyers discovered the faulty work when they hired their own contractor after closing to inspect, repair, and add some additional outlets The new bill for his work was over $6,000. The buyers wanted me to pay for their contractor’s work and threatened to sue me if I didn’t.

 

However, there were two issues that were in my favor. First, I was not responsible for the electrical work because I had used a licensed contractor, and the responsibility fell on my contractor, not me. Second, the buyers hired their own contractor without regard for my electrician’s work. As a result, there was no proof of neglect on my electrician’s part and the buyer was ultimately stuck with a $6,000 bill.

 

There are two lessons to be learned from this experience; always use licensed contractors when necessary and always get a second and third opinion on the required work. I’ve gotten two or three bids on roofs that were acceptable, although not perfect, before I could find a roofer to certify the roof. I’ve also encountered the same issue with heating and plumbing issues. If you take care of these items before you put the house on the market, you’ll save time, energy, and money.

 

 

 

 

 

 

 

Chapter 7:Getting Bids

One of the single most important aspects of home remodeling is acquiring and understanding bids. Bids for remodels typically become more complex as the age of the home increases. There are several factors to consider when asking for bids on your home remodel.

 

Factors that influence a bid include:

• The age of the house. This usually will determine the general scope of the necessary repairs. For example, when I look at a house that’s over 100 years old, I may expect some structural issues, but I wouldn’t expect those issues in a house built less than ten years ago.
• How well the previous owners have kept up with done repairs and how competently they were completed. Were they done by experienced contractors who did the work to code or done by the homeowners themselves? Were permits and inspections obtained and completed with final inspections.

 

Don’t Put Off Getting Bids, Get Them Immediately

Get your bids as soon as possible. Never wait around to get bids for the following reasons:

• The bids will let you know how much it will cost you to complete the repairs so you can budget your remodel appropriately;
• Getting bids in advance will help you determine what each repair will cost.

Every house you plan to remodel has a certain budget. As a project manager, it’s your role to determine how much money to spend and how to spend it. When you’re on a tight budgets, you must weigh whether to spend $500 on a new stove or to repair the leaky roof. In this case, it’s clear where you should spend your money.

 

It might be more complicated to decide between new shrubs in the front yard, new sod and repairing sprinkler system, or repairing an old fence in the backyard that’s about to fall down. A project manager must continually make financial allocations and management decisions.

 

Knowing upfront how much your remodeling tasks will cost is the only way to use of your budget effectively. It’s invaluable to get bids on everything and keep track of them. The best way to save time and make educated choices on what exactly to remodel, is to know precisely what each task will cost.

 

 

 

 

 

 

 

 

 

The following table provides an example bid sheet I use to cost out my remodeling projects.

 

 

Property Bid Sheet
Property Address
	# of sq ft	per sq ft	Total price
Carpet	900	$ 2.10	1,890
Tile	120	$ 8.00	960
Hardwoods - new		$ 7.00	0
Hardwoods - refinish		$ 2.25	0
Interior paint	900	$ 1.75	1,575
Exterior paint	900	$ 1.50	1,350	double for second story
			0
			0
	Qty	price per	0
Demo & cleanup			0
Demo/garbage removal	2	$ 850.00	1,700	per dumpster
Final clean	1	$ 200.00	200
Doors & Walls			0
6 panel - interior	4	$ 175.00	700
6 panel - exterior	3	$ 425.00	1,275
Bi-fold	6	$ 100.00	600
Change locks (2 doors)	1	$ 100.00	100
Major wall repair	1	$ 400.00	400
Baseboard, per wall		$    22.00	0
Lights			0
Ceiling lights	7	$ 35.00	245
Can lights		$ 45.00	0
Sconce lights		$ 30.00	0
Ceiling fans		$ 35.00	0
Exterior lights	2	$ 50.00	100
Vanity lights		$ 55.00	0
Special lights (dining, etc.)		$ 100.00	0
Kitchen			0
Replace cabinets	7	$ 210.00	1,470	per box
Repaint kitchen cabinets & new hardware		$ 600.00	0
Countertops	1	$ 420.00	420
Sink	1	$ 140.00	140
Faucet	1	$ 140.00	140
Disposal	1	$ 150.00	150
Appliances:			0
Dishwasher	1	$ 370.00	370
Gas stove/oven	0	$ 525.00	0
Electric stove/oven	1	$ 525.00	525
Refrigerator	1		0
Microwave		$ 325.00	0
Exterior			0
Windows:	0		0
Windows - new	9	$ 350.00	3,150
Windows - replace pane only		$ 120.00	0
Screens		$ 30.00	0
Landscaping	3000	$ 1.75	5,250	sq ft sod
Roof	1	$ 4,000.00	4,000	bid
Siding per side		$ 1,000.00	0	ballpark average
Porches/decks/patios			0
Soffet or fascia repair	3	$ 400.00	1,200
Repair or replace gutters	1	$ 1,200.00	1,200
Bathrooms			0
	Qty	price per	0
Bathroom vanity sink, faucet	1	$ 380.00	380
Towel bars	1	$ 50.00	50
Medicine cabinet	1	$ 100.00	100
New tub		$   350.00	0
Reglaze tub	1	$ 350.00	350
2-piece tub enclosure		$ 500.00	0	1500-2500 average
New tile or tub surround		$ 850.00	0
New toilet	1	$ 150.00	150
New tub or shower faucet	1	$ 220.00	220
SUBTOTAL			0
Laundry			0
Add washer/dryer hookup			0
Add vent system for dryer			0