When you rehab a house in a state you reside in, it is convenient to do it because you live close to it. But how about when you rehab a home where you live far away from it? You will not be able to physically look at the work in progress and even walk through the property whenever you want to monitor that the work is being done as required.
How to Successfully Rehab Property Out of State
Two of the best scenarios you can use to rehab your property out of state is to:
- Hire a contractor or property manager to rehab your home
- You manage all the subcontractors, laborers, etc.
You can have a property manager handle all the repairs and rehab for you, or you can manage all the contractors, subcontractors, and laborers yourself.
The following are five tips to follow to ensure you successfully manage out of state rehabs.
1. Trust but Verify Everything
The key to rehab out of state is to trust but verify everything. Talk to your contractors, inspectors, and yard workers of the local area to verify that all the other workers work. You should also verify it with other people. Have before and after pictures of everything in the works send to you. Have your property manager check all the work being done on the property.
People on the ground should know you are checking on them and that you have eyes and ears on the ground for everything going on.
2. Don’t Pay Full Upfront For Work Done by Contractors
You may have heard of stories that a contractor is paid full upfront and he goes away with all the money. To prevent this from happening to you, you should follow a schedule of payment below:
- Pay 10% of the price upfront for a contractor to get started
- Paid 1/3 of the balance once a 1/3 of the work is completed
- Pay another 1/3 of the balance once 2/3 of the work is completed
- Make the final payment when the whole work is completed and verified
3. Manage Your Property Manager
For out of state rehab, you should have a property manager (PM). Look for the best one you can find, and have alternatives — in case you fire someone along the way.
Have your property manager handle all the repairs. There should never be a lack of communication between you and your property manager. Talk to your PM whenever you feel like to stay on top of your property rehab.
4. Manage Property Yourself
You can find, manage, pay, and verify all the sub-contractors yourself, although it can be hands-on and time-consuming. You can ask for referrals to find good subcontractors or search on the internet. Read reviews to help you decide if you should choose a particular subcontractor.
Call daily a subcontractor to stay on top of each job and get progress reports.
5. Have Proper Documentations for the State
Prepare the paperwork, schedule a meeting, and walkthrough with all parties to have proper documentations signed for the state. This also gives peace of mind that everyone involved is on the same page especially with regards to project details, time frames, and the budget.
To get started, carefully put across your goals and identify which rehab best aligns with your situation. Don’t be afraid to start small. Learn the process before taking on your first project.