We closed on the purchase of The WI-1 House a couple weeks ago, and I’m up in Milwaukee again this week to continue building the team and preparing for the rehab. Since this is the first time we’ve tried rehabbing a house long-distance (and this is the first time we’ve had to build a team from scratch in nearly 4 years), I thought I was discuss some of the big roadblocks we’re facing and the lessons we’re learning along the way.
This will be my first post on the topic…but most likely not the last…
- You need someone on the ground you trust. We were very lucky in this regard. We found a guy early on who we both like and trust to running this rehab for us (two guys, actually). He has some experience (one full rehab that we saw, and it looked great), but he doesn’t have enough experience to always know what labor prices should look like, what the scope of work should entail, what all the permitting issues will be, etc. So, while we’re in a great spot to have someone we trust, he’s in learning mode as much as we are. You *WILL* need someone on the ground that you trust if you’ll be rehabbing long distance.
- Contractors are hard to find (you’ll need to spend some time at the new location). Difficulty in finding contractors isn’t anything new to anyone who has done a rehab before (and certainly not new to me). But, when rehabbing long distance, you not only need to find contractors, but it helps to actually be around to interview them, get bids, etc. I hadn’t planned to travel back to Milwaukee until the rehab was started, but this is my second trip, and we still haven’t done demo. Unless you can bring yourself to trust contractors you’ve never met, plan to be around the new area for at least a couple weeks in the beginning of the first project.
- Labor prices may be very different than what you’re accustomed to. This has been a slight shock for us. We expected labor prices to be different than what we’re accustomed to, but in some cases, we’re seeing prices that are 20-30% higher. It’s possible we just haven’t found the right contractors yet (in fact, it’s probable), but even when we do, I’m expecting prices to be 10% above what I’m used to in Atlanta. Make sure that you factor the local labor and material prices into your analysis before you buy.
- Contractors will try to take advantage of you. I was really hoping that my experience (and the fact that I could prove my experience through this site and my writing and speaking on several notable occasions) would allow me to portray to contractors the fact that they shouldn’t assume I’m naive or inexperienced. But, apparently some contractors think I’m either desperate or an idiot. I got one plumbing quote for literally 3x what I expected to pay for the job — at $8500, I could have demoed and re-piped the entire house at least once, and our scope was much smaller than that. The contractor came highly recommended from two independent investor sources, so I can only assume he thought I wouldn’t notice. Make sure you don’t get taken advantage of by contractors who assume you’re some rich, stupid, out-of-state investor (even if you are :)).
- Scope of work will likely be different than what you’re accustomed to. The first thing I learned when I went up to Milwaukee a few months ago is that most houses there were built in the 20’s, 30’s and 40’s, most houses have basements, and most houses were built on clay soil. This combination means that you’ll spend a lot of time fixing foundation issues when you rehab in Milwaukee. Now that I’m putting together the scope of work and getting bids on the job, I’m finding that there are a lot of other things that are different as well. Roofs need extra layering material (to protect from all the ice and snow), many plumbing systems use cast-iron drains (which are tougher to tie into than PVC), many houses actually have wells for water (ours used to, and now we have to abandon it properly), electrical codes are different (this should actually help us), etc. In some cases, this means extra work and in some cases this means more expensive work, both of which will hurt the budget. So, make sure you know the local renovation issues and customs.