Renovations 101: Estimating Costs, Working with Contractors, & Managing Rehabs
51:16 Share

Ever wonder what the process is to run a rehab? How to manage contractors? Well, today we are going to get into it.

My name is Ashley Kerr, and I'm here with Tony J. Robinson. This is the Real Estate Rookie Podcast. And welcome to the podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today, we are joined by the wonderful Serena Norris. Thank you for joining us today. Thanks for having me, guys. And we are live in LA in the studio here with Serena.

So thank you so much for driving through the L.A. traffic to join us here today. I'm an L.A. resident again, so...

I hope you're here. So Serena, I think just really quick for the listeners, you've been on the Rookie Podcast before, but for those who maybe don't know your story, how many flips do you think you've been involved in over the last several years? Yeah. So I've been, I've done around like 130, 135 flips and been a part of definitely a lot more transactions, probably up to 200. Yeah.

So, and for the last 10 years, it'll be 10 years in April. And also BRRRS too. You've done rehabs on rentals. Yeah. So about probably 30 to 40% of those ended up being BRRRS. And so I have a, about a dozen long-term rentals right now between single family and commercial retail. And I have one Airbnb short-term slash midterm. So to make Tony proud. Yes.

So with this partnership, what was your primary role taking on these projects? Yeah. So in the beginning, like 10 years ago, I just started assisting with everything with my mentor. And then after a few years, really took on all the design aspects of it, quality control, and then helping with systemization. And then over time, I grew up

grew into just a project management role and then being more close to the numbers than I became underwriting as well for acquisitions and just kind of the glue between going from acquisitions into rehab and then to disposition. Also was our real estate broker of the team. So I listed all of our flips on the back end if they weren't already attached to an acquisitions company. And so, yeah, the design, project management, managing the contractors, everything.

systemizing and basically the operations. So do you think we can use this episode to like completely break down that process of when that property is handed off to you? So is it when it's under contract? Is it when they close on the property? When does it actually transfer to you? And what are the first steps you have to take? Yeah.

Yeah. So our process with our team, we had a main acquisitions person and they were the ones that were analyzing a bunch of the deals, making the connections with either wholesalers or direct to seller themselves. Once a property passed what we call the sniff test. So, you know, they're like, hey, we think we have a deal here. So it means like your buy box.

Yes, it meets our buy box and what the numbers are looking at that they're going to margin. It could be a deal that we want to take down. Then they start collecting all of the information that I say, hey, I need this information in a Z in order to make a decision yes or no. And usually in that checklist, there would be a ton of pictures as much as possible, a preliminary kind of quick floor plan just

just drawn even on the back of a napkin, just so because remotely, I could understand then the flow and kind of see, hey, we have to not add a bathroom here. And I'm like, this, I don't think this is right. So then comps, preliminary comps, what the purchase price would be, how much they're thinking the rehab would be all of that information component. And then pretty much remotely, I wouldn't even need to visit the property, I'd visit virtually, and then be able to make a decision yes or no. So even though I was main project manager and operation, like,

post-purchase, I definitely had a hand in the acquisition. At a certain point where we failed as a team was that acquisitions part and the post-acquisitions part were very segregated and we didn't communicate. And so when construction prices ended up increasing by like 20, 30 percent and just their rehab numbers were not matching mine and

I inherited a couple properties to manage where I go, this doesn't work. This doesn't pencil. This is going to be one where we hope that we can make it back on the back end. And so that's where I say, okay, we need to be more like a Venn diagram and work together. And so creating those processes, I made acquisitions, checklists for them, also acquisitions, like

preliminary scope of work and budget where they could just go in and quickly type in, you know, how many number windows, doors, do you, will it need a separate repair? Will it need this? And, and then a price per square footage. They'll just put in the price per square foot. And within five minutes, they'd be able to give,

a ballpark rehab estimate that I was comfortable with that could translate to post-acquisition. So that's really where it started beginning. When I'm going to be like, okay, we're going to say yes to a deal, there's still some closing time. And so in that time, then we even start the planning process. We know we're going to close. And so to get ahead of our holding costs, that's when we'd get in, see if we can get in someone to take the floor plan.

A lot of hoarder houses. Sometimes we can't always do that. We have to wait for a trash out. But yeah, that's where we'd really begin it. Yeah. I just want to mention one thing. Serena's talking about her team and the different roles. But this is literally things that you can do. Like, don't get focused on having team members. Focus on the actual roles and responsibilities that she's pointing out because everybody

you can do all of these things, but it's just the process that we want you to take away from this that you can follow to actually do your own rehab. Absolutely. When you first get started, you're going to wear all of those hats, what we call it. You're going to be in all of those different positions and understanding...

Get familiar with what that role looks separately and maybe even if it helps you physically, okay, now I'm in my acquisition hat. Now I'm in my construction management hat. Now I'm in my disposition hat if you are also licensed. So that way when you do want to scale or build a team, those transitions are more fluid with the processes.

Tony, you did that in the very beginning of your business. You did your org chart. Yeah, we found that to be a super helpful exercise. And I've told the story many times. The reason that we kind of had this realization is because in our short-term rental business, there was a day Sarah and I weren't together, my wife, and we both replied to the same guest who was asking a question, but we gave them different answers. So they get like two answers at the same time, but like are saying totally different things. Like, okay, we got to pause here. But what you're saying, Serena, is I think a really important point that good

rehab management actually starts at the acquisition phase, right? Because you have to know, hey, what are my costs going into this for my labor, for the different finishes that we're going to use and all these different things. So let me ask you a question. Say I dropped you in a brand new market.

You're actually kind of doing this right now, right? Because you're going through this right now. Exactly. Say I drop you in a brand new market. What steps are you taking to start building out your labor costs for all these different trades? Like if I'm a complete rookie, I've never done this before. What is the first step I need to take to start building out that pricing sheet?

Absolutely. It goes back to your network. Right away when I knew I was going to be here and that I was going to start building a business in here and actively looking for flips in LA, I knew right away this is a different market. I've only flipped in Seattle, Tacoma, and Portland.

And my last flip, I'd been moving around a little bit. My last flip was over a year ago. So even the numbers have changed since. So I want to get close to what is happening in the now. I reached out to all of my connections here in LA and found the people that are active

They're doing deals. They're close to the construction. I mean by that, they're actually looking at invoices. They're getting estimates. They're flipping houses. They understand what the current market costs are. And I actually analyzed a couple deals for a friend here. And I said, hey, can I...

do a scope of work and budget for this deal, even if you don't buy it, you mind taking a minute and looking to see if what my estimates, are they correct? Where am I too high? Where am I too low for this market? And he came back and he gave me great feedback. He said, you can probably get roofing less here.

countertops are going to be more. And so with all of this is just getting information, putting it down. When I get my first deal here in LA, I'm going to get as many estimates as possible.

from contractors right away. Like even if the first estimate that comes back to me is what I want and I'm going to hire them, I'm still going to get more estimates because I'm just collecting that information to be able to understand what the current market rates are. We are trying to get to 100,000 subscribers on YouTube. So go to youtube.com slash at realestaterookie and make sure you are subscribed to our channel. Are you ready to ignite your real estate investing journey? Join us at BiggerPocketsMomentum20.

2025, where top industry experts and investors come together to share game-changing strategies and actionable insights.

Your favorite podcast hosts like Tony and I will be doing live 90-minute calls to go over important topics for investing in today's market. These topics include partnerships, market analysis, building a business, and so much more. My favorite part, though, is that you will get to be part of an accountability group. Don't wait and go to biggerpockets.com slash summit to join myself and other like-minded investors to connect at our virtual Momentum Summit.

That's biggerpockets.com slash summit. For decades, real estate has been the cornerstone of the world's largest portfolios. But it's also historically been complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without all the complexity and expense. That's the power of the Fundrise flagship real estate fund.

Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10. 4,700 single-family rental homes spread across the booming Sunbelt, 3.3 million square feet of highly sought-after industrial facilities thanks to the e-commerce wave,

The flagship fund is one of the largest of its kind, well diversified and managed by a team of professionals. And it's now available to you. Visit fundrise.com slash bpmarket to explore the fund's full portfolio, check out historical returns and start investing in just minutes. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement.

How high is the interest rate for the new Laurel Road High Yield Savings Account? This high. The air is really, really thin up here. The Laurel Road Very High Yield Savings Account. Variable annual percentage yield, APY, is subject to change at any time. No minimum balance required. Fees may reduce earnings on the account. For full terms and conditions, see laurelroad.com slash savings. Laurel Road is a brand of KeyBank. Member FDIC.

You ever thought about diving into real estate, but got kind of stuck on where to start? I mean, of course you have. You're listening to this podcast. Well, we've got something that might just kickstart your journey. Enter PropStream, your secret weapon in the world of off-market properties. With over 155 million properties at your fingertips,

PropStream lets you uncover hidden gems right from your phone, tablet, or computer. PropStream's got over 120 search filters from pre-foreclosures to bankruptcy, helping you find motivated sellers faster than ever. And with public record data and MLS sales estimate accuracy of over 99%,

You'll nail those comps every single time. They're even throwing in a learning academy to get you started on the right foot. Dive in with 50 free leads during their seven-day free trial at PropStream.com slash BP. That's PropStream.com slash BP, like BiggerPockets.

Okay, let's jump back into it. So the network is one piece getting multiple estimates. But let's say that because again, think, you know, if say you're in a unique situation, because you have this network of people you can go reach out to. But if there's a rookie who maybe hasn't built that network yet, and they want to get those estimates.

where have you found is the best place to go to actually source potential contractors, subcontractors for these different? Yeah. So I would look at a networking group. So, um, events that you can go to. And I also look at Facebook groups, um, and get tied into those and see if you can, um,

to shadow someone in their project if they're actively flipping. Say, hey, I want to give you value in the way. Would I be able to drive your property once or twice a week? I'll give you 150 photos in an organized way. Would that help you in their business? And they're like, sure. Someone checking on my project? OK. Or sending me a report. Hey, for that, could maybe a time where could you send me some of the invoices from the job?

There you don't actually have a property for the go look, but you can actually look off of someone else's information. I mean, who's not going to send you invoice? Like, you know, hopefully they're organized enough where they have a good drop box link they can send you over and they're not just in their emails. But off the cuff, I feel like that's what I would do. Right. And I think even if you just post on the bigger pockets forums, like here's my scope of work. Here's my budget. This is for this project.

market, this neighborhood? Does anybody have any feedback on my pricing? And I think there would be tons of investors who invest in that market that would dive in responding and giving their advice because it's not like you're going and asking the investor, can you do this estimate for me? Can you build this budget for me? You've already gone and done the work. You're just asking for feedback on it now. And it's so easy. You know, if someone posted in Buffalo and they said, you know, I think this kitchen would be X amount to remodel doing these things.

my contractor, all on bigger pockets could easily just respond like, oh, no, actually, I think this would be more something like that, too. Yeah, I think also relying on Google as well. Like I, you know, last week when I was going through this, I, I, an AI now, right? And at least give you ranges because an investor, you're going to get better rate, right? You're going to be looking, you're not going to be looking for, you know,

Like high-end. The high-end or the contractor that has like, you know, the pimped out truck with the wrap and whatever. You know, you're looking for like the unmarked vehicle guys, okay? That look like, you know, it's kind of shady, but in the dark vans, yeah. But at least you can get a range from there. And again,

if that's all you do, you're like, Hey, I don't know anyone yet. I haven't even been to a networking group. I'm just going to Google everything. What are the ranges in this, in LA County? Um, and start and just, uh, start plugging that into the scope of work. And there you have, you're beginning a framework that you can always change. I think you'd be surprised at like how easy it is just to pick up the phone and call people.

Especially subs. I feel like GCs are a little bit harder. But like, for example, one of the first flips that we did where we had to install new mini splits, we had never done that before. And we just called all the local HVAC companies and said, hey, here's the size of the property. Give me a ballpark range on what you think it'll cost to install. Like probably $3,000 to $5,000 per mini split you need to install. So that's a good thing.

So, okay, cool. Now I've got a sense of what that costs. That literally was what I Googled. Because in Washington, like I've Googled, I've asked my HVAC guy in Washington, but when I'm analyzing this deal last week and they had this archaic, LA heating and Washington heating are totally different and we don't really put AC in our homes, but you, you know, obviously in a,

flip where our ARV was going to be like 900 plus we want to see and I was like I don't know how to even bid for this and so I just googled it like how much in LA County does like installing a mini split and they were like 5 to 7k and I was like okay well let's put 7k then because

the higher amount. Yeah. Just in case. There's also like going on Lowe's or Home Depot or whatever, even walking to the store, you see the signs that say like get your carpet installed for $1.99 per square foot too. And that just like gives you a range or an idea of what it could cost is by looking at your hardware stores and what they

they have their contractors charged. Yeah, I mean, the material costs are so easy to look at, right? I mean, going on Home Depot and saying, okay, what would the product be that I would choose for this house? And maybe think of a house where...

Find a house on Zillow where you're like, this looks like kind of what a product, you know, an ARV post-rehab flip, the finished product, right? Okay, it's got LVP flooring, not the least expensive, but maybe mid-range. Okay, what is that on Home Depot? As a flip, that's what we're doing. We're going shopping at a Home Depot. Okay, it's...

$2.50 a square foot, then call up flooring installation companies and say, hey, what do you charge per square foot to install LVP? And they're like, we charge $3.50. So just collecting that information, yeah.

The other thing that I thought about the other day is, hey, is there a simple way I could maybe call a few electricians and say, you know, how do you create your estimates? Do you go off price per square foot? Do you have to see the house? Do you count all the circuit? And just trying to understand better how they estimate. And then they're like, oh, by square foot. And you're like, okay, well, then could you give me a ballpark range if I had, you know,

all the drywall removed down to the studs. How much would it be then square foot for you to install? And they're like, I don't know, $10 square foot. And I'm like, okay, that's information. Again, going back into my framework and then collecting it from there and

And having that information just makes you so much more confident that you're going to know the costs post-purchase when you're sourcing. So you masterclass breakdown on how to start building that pricing sheet for potential work you need done. But I guess that next step of actually building out your scope of work and your budget.

Which one comes first? Do you set your budget first and then build the scope work based on that? Or do you try and say, hey, what are the comps? What's the scope? And then what budget do I need to get there? Yeah. Great question. Um,

So I actually have my scope of work and budget together on one sheet. I found that that works the best for our system. So we didn't have to do two separate things. They go hand in hand. And so I have a template. I have probably like a 400 line item scope of work template where I'd rather have all the items there and then go through and delete the ones I don't need for the project than sitting at a blank page.

paper and creating a scope of work. I mean, we used to do that in the beginning and we'd always miss certain things. Like I can't tell you how many times we missed a dryer vent and

And, um, and Tarla would be like so mad. And I'm like, cause I, when you make a mistake more than once, I mean, or twice, three times, four times, I mean, um, and that ended up costing us money right on the back end. I was like, the dryer vent is in the template. If we don't need it, we delete it. Right. And so, um, that was us with P traps. Yeah.

Like we had a property that we had rehabbed and turned into a short-term rental. And we're like, what is going on? Like why is this happening in the restroom? It turns out that the P-traps weren't installed. So now every rehab, we need to make sure the P-traps are in there. It's like a joke now with us and our crews. Did you put the P-traps? Are you sure the P-traps are in there? Yeah. And like the thing about the dryer van is we typically didn't put laundry machines in our flips. We just had the hookups available. And –

but once like the, the dry rent needs to be installed at rough in and not at the end of the property. So we'd end up having to break into drywall and anyway, so building the scope of work template, I would start from there, you know, even if you're just getting started as like write out anything you'd even need, we do it in the order of construction. Um, and, uh, and then

And then what do you mean by order of construction? Order of construction. Well, so actually break it out first into three different sections. So we have initial services. So that's going to be like trash out demo. Those are the stuff that we can take care of in the beginning before we even pull

plan the rest of the scope of workout. Like we just, we know, um, that we're going to need trash out. There's an RV on site we need to remove or a car, a boat we need to remove or, um, Reiki, sewer scope. Um, and so we have those initial services. Then we have our exterior and then we have our interior. Um, and then we have our pre-listing. So about like four different

And then in each of those, we have an order of construction. So let's just start with exterior. Actually, interior is probably easier to explain. So interior, you have your demo, and then you're going to be doing your framing. Then you have your HVAC, your plumbing, then your electrical, then your insulation, then you have your drywall, and then you have the rest of the finishes, right? So as if a contractor...

was gonna go in and start doing all of that work, that's the order of construction that they would do it at. So that way the contractors can kind of go in and follow it, kind of like going down a list. - And I wanna ask, do you do yours the same way, like in that order of construction, or how do you kind of build out your scopes? 'Cause mine's slightly different. - I go room by room. - Really? - I also go room by room. - It's just like easier for me to comprehend, and I physically walk through every room as to like, okay, I'm in the mud room, here's everything that needs to be done.

then i give it to my contractor then he puts it by trade by trade yeah so i do it the same way i go room by room and i just point out everything but then i tag each thing by the trade so i'll say like hey we need to swap out you know eight outlets and outlet covers and i'll attack that electrical i need you know six recessed lights i'll tag that electrical or you know hey we need to reframe this room or whatever it may be but for me just like

And visually, maybe it's so much easier for me to do it by the room as well. That does make sense. I mean, when I'm going through, you know, how I set it up where I have my my whole list. Right. When I am just going through, I've got it set up where I have like the unit price for each and then I'll just go in and put quantities and then I'll add it up at the top. And then that's my list.

projected costs right um but when i'm at the plumbing section i have to think okay how many toilets when i'm like how many bathrooms and i mean that instead of doing it by bathroom but either way and that's like so cool to hear you guys do it differently right it's you can do it either way yeah it's either way we're gonna take one more short break and then we'll be back with serena

Hey guys, it's Mindy from the BiggerPocketsMoney podcast. If you're anything like me, you've got a lot on your plate this year. You've got summer beach trips to plan, a work-life balance to balance, and pickle

pickleball opponents to best. Good thing our sponsor NerdWallet is here to take one thing off your plate, finding the best financial products. Introducing NerdWallet's 2025 Best of Awards list, your shortcut to the best credit cards, savings accounts, and more. The nerds have done the work for you, researching and reviewing over 1,100 financial products to bring you only the best of the

Best of Awards at nerdwallet.com slash awards to find the best financial products today.

Real estate. It's been a cornerstone of wealth building for generations, but it's also often a major headache for investors. You got 3am maintenance calls, tenant disputes, and property taxes to deal with. Enter the Fundrise flagship real estate fund, a $1.1 billion real estate portfolio built for you.

We're talking about more than 4,000 single-family homes in thriving Sunbelt communities. 3.3 million square feet of in-demand industrial facilities, all professionally managed by an experienced team. With the flagship fund, you're tapping into real estate's most attractive qualities. Long-term appreciation potential, a hedge against inflation, diversification beyond the stock market. Check, check, check.

All of this without complex paperwork, massive down payments, or soul-sucking landlord duties. Visit fundrise.com slash pockets to explore the portfolio, check out historical returns, and see just how easy it can be to add real estate to your investing strategy. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's perspectives at fundrise.com slash flagship. This is a paid advertisement.

- When BiggerPockets started podcasting, no one thought we needed a store, but then books, so many books, best-selling books, rookie books, partnership books. We needed the best real estate bookstore ever, so we chose Shopify.

Shopify is the global commerce platform that helps you sell at every stage of your business. From the launch stage to the first order stage to the, did we just sell out the whole store stage? Shopify is there to help you grow. Whether you're selling real estate books or retro clothing, Shopify's platform helps you sell everywhere, online or in person. Now, speaking of online, did you know Shopify has the internet's best converting checkout? Up to 36% better than other leading commerce platforms.

And no matter how big you grow, Shopify gives you everything you need to take control of your business. And that's why we chose Shopify for the BiggerPockets bookstore. So sign up for a $1 per month trial at Shopify.com slash BP Rookie, all lowercase. Again, go to Shopify.com slash BP Rookie now to grow your business no matter what stage you're in. Shopify.com slash BP Rookie.

This podcast is sponsored by Laurel Road. At BiggerPockets, we're always trying to find ways to help you maximize your buying power. So check out Laurel Road. Laurel Road's banking and lending solutions include student loan refinancing, mortgages, personal loans, student loan cashback credit cards, tailored savings accounts, and more. And right now, for a limited time, Laurel Road's high-yield savings account has an annual percentage yield that's up to 10 times the national saving rates. That's way more than the savings rate you could get from some of those giant banks.

The fully digital account they offer features zero monthly service fees. It has no minimum balance requirement and it costs $0 to open. So visit laurelroad.com slash pockets to learn more. Laurel Road, your partner on the road to financial peace of mind. Equal housing lender, member FDIC.

Hey, listen up aspiring real estate moguls. I've got a secret weapon for you. Say goodbye to the traditional real estate grind and say hello to PropStream, the ultimate tool for finding off-market properties. With a whopping 155 million properties in their database, PropStream opens doors you never even knew existed. PropStream also delivers public record data and MLS sales estimates

with pinpoint accuracy, making comps a complete breeze. Ready to seal the deal? PropStream's got lead automation, skip tracing, and top-notch marketing tools to help you close deals like a pro. And the best part, they're throwing in a free learning academy to help you level up your skills. Try it out with 50 free leads during their seven-day free trial at www.propstream.com slash BP. That's www.propstream.com slash BP, like BiggerPockets.

Okay, let's jump back in. So you're building out your scope of work and your budget at the same time. But how do you make sure because there's a balance there, right? Because you have a budget you need to hit, but you also have to make sure that your scope of work is good enough to get you to the after repair value that you're looking for. So how do you strike that balance between scope and budget to get to the actual ARV that you

need? Yeah. So it goes back to the comps. I'm looking at what the original product is. I call houses products, flips products. What the original product looks like. And then I look at the comps that are achievable. And I decide, okay, what's that level of finish then that we need to

um, get into, right. Are we more high end? Can we do more mid-level finishes, lower end finishes? Um, and then that will help me decide what then the scope of work is. Um, and there's still probably going to be, you know, about 80% where I'm sure of, and then another 20% where we're like,

give or take, you know, is it, is that a must have to reach our ARV or would like to have, does it help with, um, you know, um, saleability of selling it fast, or can we leave a couple of things that aren't so great and expect it to sit a couple more weeks on the market that that's kind of, um, where just experience comes in. But, um, you have your before product, you have your after product. That's what's going to determine my scope of work. Um,

Um, and, um, this is where it kind of goes back to the deal analysis pre-acquisition and going, Hey, is this just going to be a cosmetic flip where we could do a full gut rehab and fix everything up? Um, but those numbers don't work.

Can we make numbers work where we just do a cosmetic flip? The electrical is fine. It's not perfect. We can fix a couple of things and achieve a less ARV and the deal actually pencils better that way. So two different options. We typically went to, because of our market, we had to do full renovations. I mean, down to the studs, all new electrical, all new plumbing. And so, yeah,

to go back to your question is I have that scope of work template that's living there. If I'll go through and I will write in all the quantities and have that add up. And if it ends up being a lot more than what it needs to, I go, okay, is there anything I can take off here?

um in my initial and then but once it's good solidified i'll delete all of the other line items that i don't need um from that template and then there you go there's my scope of work there's my budget the biggest thing in the beginning when we started was our scope of works were just bullet points on word on a word document and there's so much interpretation there especially with contractors and we found each other found times that we would send the the

you know, PDF or document to the contractor, they would write us an estimate and their estimate would be, you know, pages long, especially if it was a GC, I'm talking about a general contractor here, pages long, and they're writing out all of the line items in their own verbiage. And, um, and maybe they're even not line items, right? They're all bulked together. And, um,

Then during the project, we'd have all of these certain arguments because I thought drywall repairs went this. They thought the drywall repairs went that. And because it wasn't clear enough in writing, we had two different interpretations of how to fix the same thing. Then we ended up with these arguments.

I don't want to say arguments, but those become stress points where he then wants more money because he has a different expectation. And then we're also delaying the job. And so why I created the template is I'll have, okay, for all of drywall, then I have a description of drywall repairs, this is this, this level of finish. And I'm specific. I treat it like

it's going to be a contract. Like, would this hold up in court? And that has worked so well, and it takes...

the pressure off of my relationship with my contractors. Anytime they would be confused about something on the job, I go, well, what does the scope of work say? And we'd pull it up and I go, oh, right here. You know, it says this and this. And they're like, oh, OK, OK, OK. Right. And I'm safe then. I'm not getting a change order. I don't have to spend more money. Or I'm like, oh, you're right. I only said six of this and there's seven. And I'm like, well, that's an extra cost. I missed it. Yeah.

But there was no conflict between us and it saved a lot of relationships with contractors. So once you've built that scope of work, you're obviously taking your numbers out of it. You're giving them those line items and then they take that to build their estimate that they're giving back to you. What is your expectation for an estimate? So you had mentioned you said you get some that are just like, here's the bulk price, you know,

what do you expect back from a contractor and what should our rookies be looking for when they're given an estimate? Yeah, so back in the day,

They used to send us an estimate all in their own words, in their own format. And one that takes so much of their time to do. They have to, outside of actually being on the job and either working physically themselves or being like a superintendent and managing their crew, they have to go home and spend late nights away from their family to write those estimates. And so a lot of times I would approach them and say, hey, if I just give you the scope of work,

line item, the descriptions, fill in the number. Does that work for you? They're like, hell yeah. Right. And so I would literally export my template into an Excel and

Take away the numbers, you know, what I had, then give them to it. And I'd label like next to them, this is what I, you know, want you to, I'd put like GC next to all of the items I wanted them to estimate. And then they'd come back. And then that way, when we're talking on the phone and negotiating or talking about why something, this line item's this much and why that's that much and negotiating, then we're comparing apples to apples instead of their interpretation, what they, how they bid it. And

that just worked so much smoother for us. Then there were other times where I worked with GCs that weren't good at estimating. And honestly, listeners, you will find this, especially when as a flip and you're trying to find affordable contractors, a lot of them might not be as savvy for estimating. And so I had one of my GCs where he was like, just tell me what you think it's going to be. Because he trusted me that I knew the numbers better

and eventually you might get there where it's like, or you will get there, is I would say, hey, I think that this is really reasonable for the job. And I would send him my numbers. And then he'd be like, okay, it's a little low on this. And then I can do it. So much time and figuring, especially if they are disorganized on their back end too. I call contractors, I think contractors are more like artists than they are engineers. Yeah.

And so by giving them some structure to work off of, it's typically not their strong suit. They really appreciate it. - Let's go into confrontation. - Ashley's favorite word.

How do you handle that confrontation besides like avoiding it? I used to be such an avoider of confrontation. And then I worked in construction for 10 years. So let's let's do like give us a little example or role play of like something's going wrong.

on the job site and you have to confront the contractor, what is a great way to start this conversation and to have it with them where it doesn't feel like you're attacking them or saying they don't know what they're doing? Yeah. I'm probably better at confrontation with contractors than I probably am my personal relationships. But I, you know, I can get when, you know, when...

Say you walk in and like the quality is not there, right? I never assume anything. You know, you never know if the GC has already talked about the quality with his guys. I don't want to assume that bad intentions. I also, I always want to go in with good intentions.

um, or assume they have the best of intelligence intentions. And so I'll just, I'll be curious and seek to understand. I'll ask a lot of questions and I'll say, Hey, you know, um, this looks, do you guys have a plan for this? That was probably what I said, like at least 10 times on the job. Like, do you guys have a plan for this? And they're like, say it was done and this looks really bad. They're like, uh, no, it's good. And I go, okay. Um,

I think it needs to be cleaned up a little bit. You might need to, and so then, and I would try, try to be, you know, tactful and say, actually, I was thinking of this way. Um, and you know, sometimes when it comes to like interpretation of what something looked, that's a, that's not like, I can't really write that on the contract as much as possible. I try to attach as many pictures as possible. So that way we can paint the same picture in our minds and expectations. Um, uh,

But sensei, it's like a difference in, well, I thought you meant this on the scope of work and then it meant this on the scope of work. And that's where I would kind of go back to my accountability and being like, if I wasn't clear on that –

Then I might need to bite the cost or I'm going to say, hey, I messed up. I should have been more clear. We should have had a walkthrough together and talk about this. You're saying that this is going to take you extra time and materials. Like, can you work with me on this? And typically when you're coming from that point of view, they're much willing to work with you on it. And they're like, no, that's what I meant. Like, shouldn't you have known that? Like, look at it. And so...

A little bit of give and take to keep things. Absolutely. And going back to, I can be such a perfectionist with things. And when it was one of our higher end houses, they just needed to be perfect. And they understood. I would be like, this is a house where the paint needs to be top notch. We can't just...

you know, leave, it needs to be perfect. And they understood that. And then there were other houses where lower to mid range, less buyer expectation. And as I'm going through and they're working hard and they're, and they're, you know, we're at our second level of blue tape and,

I remember, okay, what do the comps really look like? You know, what are we going to do to achieve our ARV? And I'm like, I would kind of look over certain things like, hey, next time, guys, like this really needs to be done better. And I would give and take on that. I would definitely say, hey, in the future, you know, can we do this? But this is good enough for this project, right?

And that's the way that I would tackle that. What would you say is the mistake you see a lot of rookies make when it comes to managing the rehab? There's a lot of moving pieces here, but like, is there something that you've maybe seen consistently from newer flippers as they step into this? Yeah. A lot of them is like they get the keys and they just press go right away and they don't do a lot of planning on the onset. I think part of that reason comes from they don't

know what they should be planning for. So they're like, I'll just come, I'll just take the shoes and I can solve them when they happen. Yeah. Like I don't want to waste time. I got to get started. I'm being charged, you know, $250 a day or whatever. And, and you're, um, and what ends up happening is that, um, I've had a client about last year that, um,

that he was like, Hey, I just bought my first flip. And I was like, great. Like, let's talk about it. And he, on the first call he goes, yeah, I already hired a GC. And I was like, and I was like, well, where's your scope of work? He's like, I don't have one. And I was like, how did you hire a GC without a scope of work? And I was like, Oh no. Right. I like knew right away. I was like, okay. And my first thought was hopefully this GC is a really good guy, you know? Um, and so I was like, send me over his SSL.

And I was like looking through it and I go, okay, you know, I'm not trying to freak you out here, but there's a lot up to interpretation and there's a lot that he's, they're just bulking in. Okay. We're going to remodel kitchen. What does that mean? What does that mean? I mean, like what quality cabinets? Okay. The,

materials are included. Well, I mean, is he getting his cabinets? Is there like an allowance for how much you can spend to pick out your fixtures? Exactly. Is he actually going to a cabinet shop and buying the correct size cabinets? Or is he buying them secondhand off Facebook Marketplace? I mean, what are we doing here? And so I said, okay, we're going to need to build a scope of work. And I knew at that point he just went from like,

you know, not so steep hill to like a really steep hill that you might need to step up. So, um, I would say, um, taking that extra time to, um, to plan out a scope of work, look at the comps, um, and get as many estimates as possible before jumping in. And, um, because, you know, we were guilty of it. We kind of sometimes went, um, too fast and, um, and we, we,

we set ourselves up for failure for a few projects for sure. What's that saying? I think it's Lincoln or one of the presidents, but like, if you want me to chop down a tree, I'll spend the first,

Eight hours sharpening my saw. Same thing, right? It's like you got to make sure you're going with a solid game plan. How – because I know you mentioned earlier like that some of these things you're able to do remotely. And we just interviewed Dominique a few episodes ago and she had, I don't know, I think like 12 flips going on, but she like RVs across the country. So there is an ability to do this remotely, but how often do you feel that it's necessary for you to actually be at the job site? And as you're going –

Yeah, I guess what specific things are you looking for to make sure the things are moving on track with the job? That's actually a great, that actually ties into what I wanted to make a point for the second question is the other mistake that I see that is that they feel like they have to be there every single day and that they become much more reactive. Most of my flipping jobs

I spent probably 5% of the time on the job site and 95% of the time on the computer, you know, and being, um, trying to be proactive in planning the next sourcing, um, estimates, maybe walking with walking, um, property with the contractors too. But, um,

planning getting the estimates getting the information down reanalyzing the comps and being proactive and so we were fortunate enough it didn't feel like a time because we were driving a lot but um our all of our flips were about an hour to an hour and a half away from where both tarla and i lived and so we were like we're only going to go down once a week if we can if

if we can avoid it. And so that made us be more proactive and start systemizing and start effectively communicating with our contractors. So what my process was to make sure that contractors were timely and actually showing up and also that the quality control was there. My cadence was I went down once a week to take full pictures of the property. That was like no,

No matter what, whether it was me or someone else, go down. And it ended up going to someone else that did that. And taking full pictures of the property, even if nothing changed for liability reasons, if someone broke in, that is your weekly, even more so. If you have someone burn down, you have

what it looked like. Right before for the insurance company to say, hey, two days before it looked like this, where if you don't have pictures for four weeks, they're like, well, who knows what it actually looked like. Or maybe the last pictures you have were it demoed in those four weeks. A ton of progress happened, but...

No documentation. Exactly. And you don't know what sort of information and picture that you're trying to find until you actually need it. Oh, my gosh. And so I, you know, there were times where I, you know, got lazy because we all do. And I was like, OK, it's the last property out of 10 today. And I'm like going through. And then in two weeks, I'm like, I needed that picture of that wall.

two weeks ago and I was like, dang it. That's what I get for like skipping steps. Right. And so, um, taking full pictures, I mean, 150 to 200 a week. I did, I did it systematically all in the same way. I do all the exterior first, then I'd go to the front door and walk through the house and,

Not clinical, at least psychotic, where it was like every room the same way, but at least that process helped. So when I was going back to the pictures folders, I knew that my exterior was going to be in the beginning of the

in the folder and the back of the house inside was gonna be towards the end. So just saving time. - Super small detail question. - Super. - Well one follow up actually, like do you, were you taking the pictures on like an iPhone or were you doing like old school like digital camera?

iPhone, which meant that I have like 150,000. That's what I was asking. If you're doing like 150 photos a week, like I just wonder like if maybe like a little digital camera. Well, Henry Washington, he has two phones that are on the market and he said all of his work stuff is on that phone because he doesn't want pictures of houses mixed with the

pictures of his kids and it was completely separate for that reason. Back in the day too, the iPhone pictures are so big that I had to then resize all of them just to fit in our Dropbox because then our Dropbox got too big. I mean, it was a whole thing, but we understood the importance of it. I like the second phone thing. That's actually what you're going to do. I got great phones. I

Because I was like, why don't you just get a Google voice number? He's like, it's not about the phone number. It's about all the... Separated. Yeah. So going back to like, you know, how do you keep your contractors on time, making sure they're showing up, quality control, being remote. Yeah.

By the way, listeners, we used to do 15 flips at a time. Towards the end, there were about six to eight bigger rehabs at a time. There were times where I went to South Africa for a few months at a time and had boots on the ground but following the same exact processes. Taking pictures every single week. The contractors know you're going to be there a week. I would never tell them when I was going to be there unless I'm meeting them specifically for a meeting walkthrough.

Um, and, um, or twice a week, um, take full pictures. Um, I would do drive reports on the projects that was especially helpful when I had team members, um, driving the properties for me. So who's working on the job, what progress has been done? Um, is the house secured? If no one is there, check all the windows, check all the doors, check that the heating isn't at 90 degrees. That was, I mean, a couple bills we got, right? Like cadet heater is just crazy. Um,

And so doing that, I also had on the scope of work, like at the top, I would have some like procedures for the contractor to agree to. So like keys always return to the lockbox, right?

The code is never changed without permission or it's told to. Heating's always set below 65 when you leave. That is something I've never thought of is creating policies and procedures outside of the scope of work of how you want the job site to run. No change in designer finishes unless approved by me or whoever is approving them. What else would we have? Make sure all the windows and doors are locked when you leave. It's...

a lot of these interactions I'm having with contractors, especially GCs, but even like electricians, I'm talking to the main guy. I'm talking to the owner of the company, but he has all of his laborers and workers and that information, not my, so I used to have them posted up on the property as well. And so that would help, you know, a level of defense of being there without being there. No smoking in the property. No smoking. Never had that. No peeing in a water bottle. Didn't have that one. Yeah.

Even probably like the storage of materials, like making sure the materials are locked inside the house, not left out. That's the other good thing about having pictures was that sometimes materials walked off our job site. And we, in order to figure out what day that happened, I'm looking, going right back to those pictures. And even though,

maybe the property we're sitting for two weeks because of some reason, um, there were still pictures taken. And so I can, you know, see, well, they walked off between this date and this date, um, who was on site and who, you know, and so, um, the other thing is working into, um, contracts, uh, timelines for, uh, completions. So subs are a little bit, um,

easier when it comes to that because they're really quick in and out. Their install might take just a day or two. Um, and they've got a full calendar. They want the money that, you know, turnover. Um, so, um, not as much a problem with them. Um, but I typically ask my GC, Hey, Tyler, Tyler, the Tyler is supposed to start this day. Let me know if he doesn't show up. Um,

okay didn't show up all right texting so I can get on it instead of waiting like a couple days and I show up and I'm like shit there's no tile now I've lost four days um and then so for the GC contracts we always had um a I'd have them I'd ask them first um

when do you think your completion date will be for the scope of work that we've agreed upon? And he goes, I need eight weeks. And so, okay, that's December 21st, whatever. And I go, how about, um, does December 8th work better for you? Right. Like an extra week or extra two weeks. If I think that they're a little bit too short and then of course they're going to be like, yeah, actually whatever they always need it. Um, and I'd say, okay, um, you get a bonus of,

a day. If you complete before this date, that includes punch list completion, everything, or you will be fined $150 a day. So subtract it from the final payment. With that, though, you have to keep track if you delay them for any reason. And so that only really ever became an insurance to us when

when a contractor was just really going south and we have decided at that point, we're not going to work. We're not going to, um, move forward with them on a different project. Um, at least we could argue with them that we're like, we're only going to pay you half of the thing because it took an extra four weeks to, um,

Complete. And it was like unreasonable, right? Just not showing up, you know. And we only paid the bonus like one or two times. Yeah. Like maybe once. But at least they know it's there. Right. And there's some incentivization, but also some penalty.

Well, this has been awesome. Thank you so much. I love talking systems and processes with you because I always learn something new that I can implement in my own rehab project. So thank you so much for coming and joining us in person. Where can people find you and reach out to you? Yeah. Best place. Instagram at Serena dot Claire.

And from there, I have linked resources and then send me a DM. And if you're doing flips already, I'd love to see them. Send me some pictures. Yeah. Thanks for having me. Yeah, thanks. I'm Ashley and he's Tony. And this has been an episode of Real Estate Rookie. We'll see you guys next time.