Video Transcription
Looking to rehab your property? Here are some Keys to ensure a successful rehab.
1-Right Price
2-Right Contractors
3-Right Project Management/Manager
Download the Rehab Specification Sample below
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Transcription:
Jack: Hi there, this is Jack from Angel Home Solution. I am actually here at Seattle-Tacoma Airport waiting for my partner to show up. Anyway, wanted to shot a content about “What does it take to run a successful rehab“.
I thought this might be useful for you to run your own rehab project or your relative’s and what not. So, there are main three things that you have to consider. First of all is the right price, the right contractor, and also the right project manager. It take a lot of work up front, but it will pay off, in itself, in the long run. What are the pitfall that you should look for and try to set it up for success?
About the Price, it is pretty straightforward actually. Just make sure you have three bids from legit contractors. Three is usually enough and will tell what the ballpark of the project gonna be. Make sure you never select the lowest one. The cheapest is not necessarily the best or good, right? Usually we pick the middle one.
The second one is Contractor. Make sure you vet the contractor as much as you can upfront. There are several things that you can look for. Make sure they are licensed, bond and insured and has work-comp, which is worker compensation, just in case an employee have an accident and stuff. The contractor has something to cover them, otherwise, per the law, L & I will go after you, the owner. So, that covered the work-comp.
Bonded, pretty much it is a fund required by the trade, I guess. It covers if there is an accident and what not and owner, you and us, need to go after them. They have some fund to cover that for any lawsuit and stuff. License, bond and insured. Make sure don’t just look at the truck and trust. They will say license, bond and insured on a truck and give a license number. Don’t take that for granted. Check on Labor and Industry website. They have all the active contractors out there.
So that’s that, make sure you get references, right. Three references from the current customer and previous customer. Make sure there’s no bad Review. Not all of them will be perfect, but make sure they are acceptable to you. So, those are the things that we do pretty much. Let’s see, running a good project from the start, make sure you talk about thing upfront. Talk about the spec, details specification, and what go into the projects. So, we have the list here. If you are looking for one as an example if the contractor does not have it. That would be a flag also if they don’t already have it, but we have a sample of what to look for.
So it serves Two things. One they know what they are talking about per code and stuff. Two, it holds them accountable on what material need to be used, right? Otherwise, they have flexibility on quoting for a high price material, but using cheap material to maximize their benefit. So, watch out for that. Make sure in the upfront contract you have completion date commitment. Usually we have that and also a late penalty if they couldn’t deliver that. It’s pretty simple. Doesn’t matter how cheap it is, but if they never gonna deliver that anyway, it doesn’t matter.
Make sure you talk about the budget and fee structure, how they make money. What are the fetch factor or …what is it called, contingency fee. So, some contractors will typically do 10% or 20%, watch out for that. So, if they factor in 30% and what not, run away. Besides that, talk about what happen if some unexpected thing show up.
I don’t know what kind of rehab project you are looking into, but sometime we open up wall and a surprise show up, right? Make sure you talk about that upfront. How is that taken care of in terms of material and price. Everything come down to price.
Supply also, who buy the supply and then how contractor make money on that too. Nothing come for free of course.
Make sure everything is in writing. Any form of change request, make sure it is in writing. That is the upfront part.
Also, be careful about upfront deposit, right? Upfront down payment and what not. Some contractors ask for material supply, some contractor ask for 50% down. It take a lot of trust so be careful. We usually don’t allow for 50%. We’ll cover all the supply and material upfront. Then everything draw after that. We saw contractor that take 50% or even smaller than that and they just disappear. It’s not a surprise thing, right? So, just protect yourself.
Every time you make payment ask for a Lien Release agreement. Pretty much saying they won’t put any lien on the property. and the project have been paid, even partially. It is important.
The history behind that was, we paid the contractor and contractor supposed to pay subcontractor, they did not. Subcontractor then come sue us. Well not really sued they put the lien on the property. We both resolved that and what not. It is a lesson learned. It goes even deeper. For example, the subcontractors, they got material from supplier and they did not pay the supplier. So, it go even deeper to that level too, so make sure you cover that in the Lien Release contract, and that should cover you legally.
So, those are the things that we typically do and cover ourselves. It’s not a … what is the word, it’s not too difficult. It is workable, but it definitely need some effort upfront. You always want to start a projects … set up a project for success, right? So, any mistake could lead to a very costly project.
So, here you go everything you need to know about running a successful rehab projects. Any question just reach out directly. We are available anytime. We’ll love to help and bring some love to the community. Thank you, talk to you soon, bye