Lessons Learned (Part 1)

September 18, 2008 · 2 comments

I was asked in a comment what were some of the lessons learned on The Bulge House rehab. As my goal is to scale my business to the point where I can do several houses at once, it’s important that I reflect on my day-to-day efforts (and business strategies) to determine how to optimize, improve, and otherwise prepare myself for doing more than two or three rehabs at once. So, consider this a first of many posts on the subject of “Lessons Learned” and things I’ve realized that will allow me to optimize and scale.

1. Decide Upfront What My Exit Strategy Is: While I don’t expect this will be an issue on most projects, it was on The Bulge House; at first I had planned to rent this house out, and then towards the end of the rehab, I decided instead that I wanted to put it on the market to sell. This indecision caused a few problems:

– Wasted Effort: Much of the extra work that I would have done had I planned this to be a resale property couldn’t easily be done at the point where I made that decision. For example, had I decided upfront that I was going to sell the property, I would have replaced the vanities in the bathrooms. But, after replacing the vanities, I’d like have to repaint the bathrooms, do some plumbing repairs, do some flooring repairs, and upgrade the sink hardware. Unfortunately, I had already done much of this stuff, and if I were to rip out the vanities at that point, I would have had to do that stuff again, doubling my efforts for some rehab items.

– Wasted Time: Doing work out of order (see the point above) seriously impacts schedules. Using the example above, had I ripped out the vanities late in the process, I would have had to have the painter come back, the plumber come back and the house-cleaner come back. This likely would have added up to a week to what was only a three-week schedule.

– Wasted Money: Many contractors have a minimum charge just to show up at your door. If you ask them to come fix two minor things in your house, you might get charged $100. But if you ask them to fix one thing today and then come back and fix the other thing tomorrow, you might end up with two $75 charges. Had I needed to get my plumber, painter, GC, and house-cleaner back on the job to redo the additional items mentioned above, I’d likely be paying more than my originally planned rehab costs because my contractors would be coming multiple times.

2. Decide Upfront What Work I Will/Won’t Do: Because this was a relatively small rehab effort (most of the money was spent in big chunks — new roof, new HVAC, new appliances, etc), I decided against hiring a General Contractor to manage the whole project, and instead brought in individual contractors (specialists) for each part of the project. To save some effort of finding a handyman, my wife and I occasionally decided to do a few things ourselves, such as install mini-blinds and window locks. This wasn’t a big deal, as we decided upfront that we’d do this work and had planned for it. But, then we decided late in the game that we’d also replace the vinyl kitchen flooring ourselves. This was a nightmare — once we pulled up the old vinyl, we realized that there was a moldy underlayment beneath, and that underlayment was cemented to the plywood subfloor. We quickly gave up the idea of doing this ourselves, but then had the issue that we needed the floor replaced, but didn’t have any contractors lined up to do the work. This meant two days of having a ripped up floor before we could find someone to complete the job. It was frustrating and time consuming, and not something I want to repeat. In the future, the (little bit of) work I do myself will be decided upfront, and I’ll plan for any issues I might come across with that work (and have a backup plan in place).

3. If It Needs to be Done, Do It: There were a couple little plumbing issues that we had in this house that I couldn’t decide whether I wanted to fix or not during the rehab. For example, the plumbing under the bathroom sink was apparently patched very poorly from a previous problem, and it wasn’t clear that the patch would last too long (though it was holding up for now). At first I decided that — because it wasn’t an immediate issue — I would not repair it. But, as soon as I put this property on the market, I started to feel bad that there was such a simple fix I could have done that I had ignored. Despite the fact that I was told my buyer likely wouldn’t be getting an inspection, I decided the day after the house was put under contract to get a plumber out to fix that issue, and to fix a couple other little issues that would likely nag the new owner once she moved in. As it turns out, about two hours after the plumber left, I found out that the buyer actually would be getting an inspection, so not only am I happy that I did the right thing, but in the end, I likely would have fixed the issues anyway, had the inspector found them. In the future, if there are little issues that can be easily fixed, there’s no reason not to spend a couple bucks to do it during the rehab; not only will I sleep better at night, but I’ll save the new owner some headaches down the road.

4. Don’t Skimp on Screening: I used four plumbers on The Bulge House. The first was my GC, who corrected some minor problems, but unfortunately couldn’t fix one big nagging issue that needed repair. Next, I called in a big plumbing company (Roto Rooter) to fix the problem. After charging me $300 to do some basic drain cleaning, they couldn’t fix the problem either, but offered to do it correctly for some ridiculous amount of money. Next, with the rehab schedule coming to an end, I was forced to call an expensive plumbing company to come out and take care of the problem once and for all (there was some pipe replacement needed in a very narrow part of the crawl space, and a couple plumbers I called wouldn’t even go in there to give me an estimate). Lastly, I brought in a fourth plumber to fix some minor issues after the house was under contract; he did a good job, and was reasonably priced, but made a mistake or two along the way that cost me some extra cleanup. The moral of the story is that I should have spent a few hours upfront interviewing plumbers to find a good one that could have done all the work from the get-go, saving me the time and expense of having multiple plumbers come out at various points in the project.

2 responses to “Lessons Learned (Part 1)”

  1. Sonya says:

    Great lessons.

    I particulary like the “know your exit strategy.” I have a hard time even evaluating a property if I am not clear about this, as my evaluation process is different, depending upon my plan.

  2. The other benefit to #3 is preserving your reputation. Leaving those little things that will probably go in the next year or so are going to damage your name, and since you plan on scaling and becoming a presence, this is probably not a good thing :).

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