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5 Tips for Managing Out of State Rehabs

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.

Fix and Flip Your Property with a Hard Money Lender

The concept of the “fix and flip” property loan is one that has grown substantially in the past few years. This is because more and more people are looking to invest in real estate and take advantage of the additional income opportunities this provides. However, these loans are different than the ones given when a property is bought with the intention of selling it one day.

Understanding Fix and Flip Loans

A fix and flip loan mean that the property that is being bought is typically distressed or run down. The investor is purchasing it with the intention of renovating it and then selling the property for a profit.  The lenders providing these loans are at somewhat of a higher risk, since there’s no guarantee the property will sell for a profit, but there are more and more lenders coming into this space due to the demand that is now there.

Finding a Fix and Flip Loan

It can be extremely challenging to get funding for a fix and flip property the traditional way. Also, paying for this type of property out of your own pocket is also pretty risky. The majority of banks aren’t going to provide any type of long-term financing option for fix and flips, nor will they provide short term loans because the returns aren’t very good. The majority of fix and flip properties are sold within 12 months or so of being sold. As a result, a hard money lender may be the best option for obtaining the funding needed to purchase the property in question.

Why Use a Hard Money Lender for a Fix and Flip Loan?

The fact is, hard money loans offer competitive rates. Even better, there aren’t any requirements regarding bank statements, tax returns or a person’s credit score. AS a result, the company is able to help the investor with their fix and flip project.

Finding a Hard Money Lender

In some cases, the real challenge is finding the right hard money lender. Not all of these service providers are created equal and it is necessary for you to take your time to find a reputable company to work with. This is the only way that you can feel confident you are protecting the investment you have made.

If you are thinking about seeking out a fix and flip loan, then don’t rule out the possibility of working with a hard money lender. The fact is, these companies make it easy for you to make the investment and then earn a profit. Just make sure to chose the right company to work with before moving forward with the project at hand.