5 Tips for Managing an Out-of-State Rehab on your Rental
Managing a rental property already isn’t the easiest job in the world to do add in being out of state and it can get be quite complicated. One of the more complex things you may have to do is get your rental renovated to put a new renter in there or to sell it, unless you are selling it as-is which will likely require a cash or like-cash offer. Renovations are already sometimes tricky but doing it out of state creates its own set of challenges, but of course, with the right preparation, you will be able to avoid a lot of the stress.
Here are 5 tips to managing an Out-Of-State Rehab
Get boots on the ground
Your boots on the ground are your team that is local to the property. This team you assemble will be responsible for keeping you in the know. It works best when you have people that are there for a specific role and note giving them too much responsibility.
First, you would want a local realtor, the realtor will help with a few different things so they will need some specific knowledge of the market. You will want the realtor to be able to break down for you the rental rates in that area. Depending on where you are located these rates will vary depending on the tier of project you are wanting to do.
They should be able to tell you the desirable features and amenities your rental should have to attract the best tenants. Your realtor should also have a network that allows them to find you referrals for the vendors you need.
Next, you will need your eyes, a photographer, video recorder. This could be a freelancer off of Craigslist, Fiverr, etc you will likely have to pay per visit but the $50-75 will be worth it.
Now you could be asking yourself, couldn’t my agent handle that… The answer is why certainly they could but because of their own working schedule, they may not have the time to allocate. Truly believe it’s best to keep their role separate. The purpose of your eyes is essentially to be a documenter & tattletaler. You want them to document the work that is supposed to be done. Popups to the property should be random and keep your contractor(s) on alert.
Last you will need a project manager to make sure whatever schedule you and the contractors come up with is being met. Your eyes (photographer) will be responsible for documenting the work the project manager is who you are counting on to make sure the work is getting done.
This could certainly be the realtor but understand they will likely require separate accommodation for such services. If the photographer catches something not done, your first call will be to the project manager. Your project manager if separate from the realtor will also likely have vendors to refer.
2. Receive multiple quotes
Now that you have the right realtor and project manager for the job, it’s time to lean on them for vendors needed for the job. The same way you would look to get multiple quotes if you were doing the project at home you should do the same with it being out of state. Keep in mind these prices may be different than your local market so again very important to get multiple quotes. You want to do your best to ensure you are getting the most aggressive price in the market.
3. Do your due diligence on the contractor
“It’s all about due diligence, due diligence, due diligence. ”
One of the biggest favors you can do for yourself handling a rehab project out of state is doing your due diligence on the contractors you are considering. Do not let the fact that it was a referral mean you should automatically do business with them. Things change in life that could change the way that contractor or company does business. Check the internet places like google, yelp, Facebook business pages for recent reviews. Taking time to research litigation records to see if they have anything open with other clients could be great information. You don’t want a contractor who’s always in court draining your pockets in more ways than one!
4. Have an explicit scope of work and contractor agreement
Forget those handshake agreements you need a detailed scope of work with a contract to go along with it! The contract should clearly state what is to be completed, it wouldn’t be farfetched for it to include details about finishes, paint colors, and maximum prices for specific items. I do not recommend paying for the project upfront in fact I am against it. Negotiate a payment schedule that you are comfortable with, this schedule should be set on milestones. Most are going to ask you for some type of deposit to start the work 10% to 20% down.
It’s not a bad idea here to incentivize a well-done project that was completed before the timeline, as well as dedications from deductions from total payment each week the project exceeds the original timeline.
The contract is what holds up in the court of law so be sure you both parties clearly understand what it says & what is expected.
5. Follow up frequently
Just like with anything relationship communication is key. Request weekly reports on the project these can be videos or pictures confirming work. Have your project manager visit the site weekly and gather their feedback on the work completed not just how good something looks but also the quality of the work. Don’t forget to use your tattletale throughout the process. This will come in handy in the instance your team has been distant & you need to know something sooner rather than late. Of course, we hope to stay in regular contact with our team but if you don’t hear from them don’t automatically assume they’ll call… BE PROACTIVE!
To wrap it up
To be honest most of the best practices for handling out-of-state renovations are the same for handling local projects! You need a reliable team, with clear concise expectations and open communication! The better your systems are to enhance those things you will give yourself the best chance at success. However, it is all seems too overwhelming and you are ready to liquidate without the stress of getting the property retail-ready… I would be happy to help you procure multiple cash offers for your property!