Rehab Order of Operations
When it comes to managing rehabs, one of the most common questions I get asked — from both novice and experienced investors alike — is, “What is the correct order of renovation tasks?”
For some aspects of a renovation, there are no hard-and-fast rules on what comes first and what comes next (for example, whether you install flooring first or paint the walls first). For other aspects of a renovation, it’s absolutely critical that certain tasks are completed prior to other tasks — otherwise you risk failing inspections, creating roadblocks and frustrating your contractors.
Here is a general guide to the ordering the tasks of a typical renovation project (CLICK TO ENLARGE):
There’s not enough space here to go into all the details, but if you want a full understanding of the dependencies, typical time frames and other details around each of these tasks, I wrote 30+ pages on this topic in my book.
Thanks so much for sharing this info J! I was actually about to create a post over on Bigger Pockets asking this same question. I appreciate all the knowledge you share!
Thanks for this J. Very handy.
Great post and even greater timing. Good reminder as I take on a new project starting next week.
Excellent reminder! Shared information is greatly appreciated.
This is spot on as I’ve learned the hard way doing them out of order and sometimes stiil do if scheduling is a poblem. In some cases the subs will try to press for their stuff first but I don’t let them.
Just a quick question…I noticed trim way before flooring…so how do baseboards come into play with that?
Hey Shane –
In some cases, things can’t completely work linearly and there will be some dependencies. This is a great example…
While you can do most of the trim before flooring (baseboards where there will be carpet, doors/casing, molding, etc), if you have hardwoods going in, you’ll need to hold off on baseboards until after the wood is installed. There are lots of little dependencies like that, which is why this business is tough! 🙂
Another great tool. I rely on the rehab company I contract with to manage the rehab, but it’s great to know the basic steps.
I manage rehabs the way that government agencies manage capital projects (I have 10+ years in the Public Works field). I have the rehab company(ies) come to the site, evaluate it and submit proposals (if it is a large rehab) by area. Once I choose the rehab company, I negotiate (on behalf of the investor) each activity to be performed in each area, the time required and the price. Once we come to an agreement on the activities, we then negotiate profit. My standard is 15% of direct costs, which goes towards any indirect costs they may have. We then finalize the activities, time and price.
My price is a fixed price based on time and quality. If they finish the project within the timeframe and pass the quality inspections and it costs them less money, they get the full price. That’s their incentive. If they miss their timelines due to things within their management control, then there are daily penalties, that amount to my investor’s additional holding costs and opportunity costs. We understand there may be items beyond the rehab company’s control that may cause them miss their deadline, but those are spelled out in the contract. Everyone knows what to expect. We also allow for change orders, but they have to be approved in writing by company after consultation with the investor. We also make payments based on successful completion and acceptance of activities by area, but we hold back the last 10% upon final acceptance of the project, which is also spelled out in the contract.
I just bought your book, and am excited to find EXACTLY what I’ve been searching for to start my fix and flip like a pro. Thanks J Scott!
Have you used any type of project management software to keep all the contractors on task? Something they can use as well?
Helpful chart, J. Renovating in proper order is key to maximizing the return on your investment.
My son and I are trying to learn the real estate investing business, which isn’t easy! Your information is invaluable to us and others just getting started. Thanks so much for sharing!