17 Steps To Real Estate Investment Renovation

Okay, so all seventeen steps are a little too much to cover in any kind of detail within a single article. But, it never hurts to overview the process so you can see exactly what you’re in for. The sequence of a project is largely dependent on what works needs to be done, and much of what’s listed here won’t apply to every job. Still, even though you may be able to skip some steps from time to time, this sequence will remain basically the same.

1) Obtain a Builder’s Risk Insurance Policy

• To protect against fire and theft. Regular homeowner’s insurance does not cover the same scope as builder’s risk, so protect your investment by purchasing the right kind of insurance for the kinds of risks that contractors and renovation can expose a property to.

2) Develop your work order

• Assess the property and draft your scope of work (SOW), a document that outlines all the repairs needed, by trade. Take your time to walk through the property and room by room, wall by wall, detail every single piece of work that will need to be done. There’s no substitute for getting this document right from the get go.

3) Meet with the contractor

• To define job and review SOW. This step is best done on the job, so the contractor can visualize exactly what you want. That way, you ensure that the bids you receive are all roughly equivalent to one another.

4) Agree on scope and buy materials.

• Some materials like drywall or plumbing you may want to have the contractor purchase since they can receive trade and volume discounts that aren’t available to you. But especially for final fixtures like cabinets, lights, or faucets, purchase the materials yourself so you can control cost and quality.

5) Perform the demolition.

• Obviously, you don’t want to start building on a property that needs to be gutted. Do the dirty work first and clear room for the finer touches.

6) Replace or install roof, windows, and siding.

• These structural elements must be in place before you begin working on the interior. Without proper protection, plumbing and electrical will soon be destroyed and all of your work goes for nothing.

7) Install or refinish plumbing, HVAC, and electrical.

• This part of the job will seem to move very slowly, but remember, these details might be largely invisible in the final product, but they make the difference between a long term investment and a short term junker.

8) Frame the walls and install sub-floors.

• The final elements of structure, framing and flooring make a house look “ filled in” .This is when the renovation can become very exciting. But be sure and have all of your finer work inspected before you add drywall or floor covering, or you may end up having to rip out all of your hard work.

9) Put up sheet rock (drywall).

• Now your house really begins to take shape, and you can start picking out the paint colors.

10) Paint.

• As you do so, think about your end user. Renters generally need the white walls that can be easily repainted when damaged. Purchasers, on the other hand, might appreciate soft, neutral colors that provide more appeal than the standard white.

11) Install new kitchens and baths.

• Now’s the time to pick out the types of fixtures you want to use. Remember to stay consistent throughout the entire house in terms of both fashion and cost.

12) Punch out.

• Walk through to make sure everything in the SOW is done. Be sure to do this with the contractor, and as soon as possible after the work has been performed. Now’s the time to indicate any discrepancies and to refuse payment until the job is finished to your satisfaction.

13) Lay carpeting.

• Now that your structural work is definitely complete, you can start adding the finer touches.

14) Clean-up and landscape.

• Clear out any mess that your contractors may have left, and add some finishing touches to the yard, including long-term improvements like trees and shrubs, but also short-term decorations like annuals or planters.

15) Market for tenants or buyers.

• Whatever you do, do not show the house until this point. Rarely will you come across a homebuyer with the same vision for the future as yourself. Generally, all they can see is a house without a roof, and your efforts will all be for naught.

16) Perform any final repairs required.

• No matter how great a job you have done rehabbing the property, some tenant will want a ceiling fan rather than track lighting. A purchaser may just insist that they cannot buy the house with that color carpet. So be prepared to make some final adjustments based on the property’s end user. Remember, it’s worth it in the long run.

17) Switch insurance to landlord.

• If you’re selling the house, your job was finished at #16, but if you’ve chosen to buy and hold, you have one more step and that’s to switch your insurance from the higher cost builder’s risk to landlord. Remember to continue protecting your investment by performing regular inspections even after the rental. And there you have it—rehabbing in seventeen short steps.

Okay, so all seventeen steps are a little too much to cover in any kind of detail within a single article. But, it never hurts to overview the process so you can see exactly what you’re in for. The sequence of a project is largely dependent on what works needs to be done, and much of what’s listed here won’t apply to every job. Still, even though you may be able to skip some steps from time to time, this sequence will remain basically the same.