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

Ashley:
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 Kehr and I’m here with Tony J Robinson. This is the Real Estate Rookie podcast.

Tony:
And welcome to the podcast where every week, three times a week, we bring you the inspiration motivation in 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.

Serena:
Thanks for having me guys.

Ashley:
And we are live in LA in the studio here with Serena. So thank you so much for driving through the LA traffic. I know join us here today.

Serena:
I’m an LA resident again, so hope you’re here.

Tony:
So Serena, I think just really quick for the listeners, you’ve been on the Ricky 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?

Serena:
Yeah, so I’ve done around a hundred thirty, a hundred thirty five flips and been a part of definitely a lot more transactions, probably up to 200 transactions and for the last 10 years, it’ll be 10 years in April.

Ashley:
And also burrs too. You’ve done rehabs on rentals

Serena:
Also? Yeah, so about probably 30 to 40% of those ended up being burrs. And so I have about a dozen long-term rentals right now between single family and commercial retail. And I have one Airbnb short-term slash midterm

Ashley:
To make Tony proud.

Speaker 4:
There you

Ashley:
Go. So with this partnership, what was your primary role taking on these projects?

Serena:
Yeah, so in the beginning 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 helping with systemization. And then over time I grew into just app project management role and then being more close to the numbers. Then 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 backend if they weren’t already attached to an acquisitions company. And so yeah, the design project management, managing the contractors, systemizing and basically the operations.

Ashley:
So do you think we can use this episode to 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 transferred to you and what are the first steps you have to take?

Serena:
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 themself once a property passed what we call the sniff test. So they’re like, Hey, we think we have a deal here we

Ashley:
Can make, so it meets your buy box,

Serena:
Yes, it meets our buy box and what the numbers are looking at, 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 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 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, 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 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.

Serena:
So even though I was main project manager and operation post purchase, I definitely had a hand in the acquisition where 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% 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 backend. And so that’s where I said, okay, we need to be more like a Venn diagram and work together. And so creating those processes, I made an acquisitions checklist for them, also acquisitions, preliminary scope of work and budget where they could just go in and quickly type in how many windows doors, will it need a separate repair, will it need this?

Serena:
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 trash out. But yeah, that’s where we’d really begin it.

Ashley:
I just want to mention one thing, Serena’s talking about our team and the different roles, but this is literally things that you can do. Don’t get focused on having team members focus on the actual roles and responsibilities that she’s pointing out because 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 rehabs.

Serena:
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.

Ashley:
Tony, you did that in the very beginning of your business. You did your org chart.

Tony:
Yeah, we found that to be a super helpful exercise and I told the story many times and 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’s asking a question, but we gave them different answers. So they get two answers at the same time that are saying totally different things like, okay, we got to pause here. But what you’re answering is I think a really important point that good rehab management actually starts at the acquisition phase 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

Serena:
I You’re going through this right now. Exactly.

Tony:
Say I dropped you in a brand new market. What steps are you taking to start building out your labor costs for all these different trades? 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?

Serena:
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 then. 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 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?

Serena:
Even if you don’t buy it, you mind taking a minute and looking to see 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, it’s just getting information, putting it down. When I get my first deal here LA, I’m going to get as many estimates as possible from contractors right away. Even if the first estimate that comes back to me is what I want, 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.

Ashley:
We are trying to get to 100,000 subscribers on YouTube, so go to youtube.com/at realestate rookie and make sure you are subscribed to our channel.

Speaker 5:
We’re going to take a quick break, but while we’re away, are you ready to ignite your real estate investing journey? Join us at BiggerPockets Momentum 2025. We’re top industry experts and investors come together to share game changing strategies and actionable insights. Okay, let’s jump back into it.

Tony:
So the network is one piece, getting multiple estimates. Absolutely. Let’s say that because again, say you’re in a unique situation, you have this network of people you can go reach out to, but if there’s a riki 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

Serena:
Yeah, so I would look at networking groups, so events that you can go to and then I also look at Facebook groups and get tied into those and see if you can 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 and just would that help you in their business? And they’re like, sure, someone checking on my project or sending me a report, hey for that could maybe a trade 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? Hopefully they’re organized enough or they have a Dropbox 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 and

Ashley:
I think even if you just post on the BiggerPockets forums, here’s my scope of work, here’s my budget, this is for this 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. If someone posted in Buffalo and they said, I think this kitchen would be X amount to remodel doing these things myself, my contractor all on BiggerPockets could easily just respond like, oh no, actually I think this would be more something like that too.

Serena:
Yeah, I think also relying on Google as well, last week when I was going this in AI now, and I’ll at least give you ranges because an investor, you’re going to get better rate, right? You’re not going to be looking for

Ashley:
High end,

Serena:
The high end or the contractor that has the pimped out truck with the wrap and whatever you’re looking for. The unmarked vehicle guys that looked like kind of shady, but I’ve been in the dark bands, but at least you can get a range from there and 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 LA County and start and just start plugging that into the scope of work and there you’re beginning a framework that you can always change.

Tony:
I think you’d be surprised at how easy it’s just to pick up the phone and call people, especially subs. I feel like GCs are a little bit harder, but 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 it. Probably three to 5,000 bucks per mini split you need to install. So okay, cool. Now I’ve got a sense of what that

Serena:
Costs. That literally was what I Googled because in Washington 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 obviously in a flip where our A RV was going to be like 900 plus we want ac. And I was like, I don’t know how to even bid for this. And so I just googled it how much in LA County does installing a mini split and they were like five to seven K and I was like, okay, well let’s put seven K then because the higher amount just

Ashley:
In

Serena:
Case there’s

Ashley:
Also going on Lowe’s or Home Depot or whatever, even walking through the store, you see the signs that say get your carpet installed for a dollar 99 per square foot too. And that just gives you a range or an idea of what it could cost is by looking at your hardware stores and what they have their contractors charged.

Serena:
Yeah, I mean the material costs are so easy to look

Ashley:
At.

Serena:
I mean going on Home Depot and saying, okay, what would the product be that I would choose for this house? Maybe think of a house where find a house on Zillow where you’re like, this looks like kind of what a product an A RV 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 and 50 cents 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 three 50. So just collecting that information. 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, 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 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 dunno, $10 square foot.

Serena:
And I’m like, okay, that’s information. Again, going back into my framework and then collecting it from there 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.

Tony:
So 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?

Serena:
Yeah, great question. 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 a 400 line items 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 paper and creating a scope of work. I mean we used to do that in the beginning and we’d always miss certain things. I can’t tell you how many times we missed a dryer vent installation and Charles would be so mad and I’m like, when you make a mistake more than once or twice, three, four times, I mean that ended up costing us money on the back end. I was like, the dryer vent is in the template. If we don’t need it, we delete it. And so

Tony:
That was us with P trapps. We had a property that we had rehabbed and turned into a short-term rental and we’re like, what is going on? Why is this happening in the restroom? It turns out that pea trapps were in salt, so now every rehab we need to make sure the peach traps are in there.

Serena:
It’s

Tony:
Like a joke now with us in our crews. Did you put the peach? Are you sure the peach trap is in there?

Serena:
Yeah, and the thing about the dryer vans, we typically didn’t put laundry machines in our flips. We just had the hookups available. But once the dry rent needs to be installed at Roughin and not at the end of the property, so we’d end up having to break into drywall and anyways, so building the scope of work template, I would start from there. Even if you’re just getting started is write out anything you’d even need. We do it in the order of construction. And then

Tony:
What do you mean by order of construction?

Serena:
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 trash out demo. Those are the stuff that we can take care of in the beginning before we even plan the rest of the scope of workout. We know that we’re going to need trash out. There’s an RV on site we need to remove or a car boat we need to remove or rekey sewer scope. And so we have those initial services. Then we have our exterior and then we have our interior and then we have our pre-listing, so about four different, so stages. 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 hvac, your plumbing, then your electrical, then your insulation, then you have your drywall, and then you have the rest of the finishes. So as if a contractor was going to 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 going down a list.

Tony:
And I want to ask Ash, do you do yours the same way in that order of construction or how do you kind of build out your scopes? Slightly different.

Ashley:
I go by room.

Tony:
I also go room by room.

Ashley:
It’s just easier for me to comprehend me and I physically walk through every room as to like, okay, I am 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,

Tony:
By trade. 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 eight outlets and the outlet covers and I’ll tag that electrical, I need six recess lights, I’ll tag that electrical, or hey, we need to reframe this room or whatever it may be. But for me just visually, maybe it’s so much easier for me to do it by the room as well.

Serena:
That does make sense. I mean when I, going through how I’ve set it up where I have my whole list when I am just going, I’ve got it set up where I have 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 projected costs. But when I’m at the plumbing section, I have to think, okay, how many toilets? And I’m like how many bathrooms and how many of that instead of doing it by bathroom, but either way. And that’s so cool to hear you guys do it differently. You can do works either way. Works either way.

Ashley:
We’re going to take one more short break and then we’ll be back with Serena. Okay, let’s jump back in.

Tony:
So you’re building out your scope of work and your budget at the same time, but how do you make sure, because 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 RV that you need?

Serena:
Yeah, so it goes back to the comps. I am looking at what the original product is. I call it houses, products, flips products, what the original product looks like, and then I look at the comps and that are achievable and I decide, okay, what’s that level of finish then that we need to get into? Are we more high-end? Can we do more mid-level finishes, lower end finishes? And then that will help me decide what then the scope of work is. And there’s still probably going to be about 80% where I’m sure of, and then another 20% where we’re like give or take is that a must have to reach our a RV or would like to have, does it help with saleability selling it fast or can we leave a couple things that aren’t so great and expect it to set a couple more weeks on the market?

Serena:
That’s kind of where just experience comes in. But you have your before product, you have your after product. What’s going to determine my scope of work, and this is where it kind of goes back to the deal analysis and going, Hey, is this just going to be a cosmetic flip where we could do a full gut rehab and fix everything up but those numbers don’t work? Can we make numbers work where we just do a cosmetic flip, the electrical’s fine, it’s not perfect. We can fix a couple things and achieve a less a RV 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.

Serena:
And so to go back to your question is I have that scope of work template, that’s everything there. 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 in my initial then? But once it’s good solidified, I’ll delete all of the other line items that I don’t need 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 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 PDF word document to the contractor, they would write us an estimate and their estimate would be pages long, especially if it was a gc.

Serena:
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 maybe they’re even not line items, they’re all bulk together. And 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, I don’t want to say arguments, but those become stress points where he then wants more money because it 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 level of finish and I’m specific. I treat it like it’s going to be a contract, would this hold up in court?

Serena:
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 it says this and this. And they’re like, oh, okay, okay, okay, 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. But there was no conflict between us and it’s saved a lot of relationships with contractors.

Ashley:
So once you’ve built that scope of work, you are 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. What do you expect back from a contractor and what should our rookies be looking for when they’re given an estimate?

Serena:
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 a superintendent, 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. And so I would literally export my template into an Excel, take away the numbers, what I had, give them into it and I’d label next to ’em, this is what I want you to, I’d put GC next to all of the items I wanted them to estimate, and then they’d come back.

Serena:
And then that way when we’re talking on the phone and negotiating or talking about this line item’s this much and that’s that much and negotiating, then we’re comparing apples to apples instead of their interpretation, 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. I had one of my GCs where he was like, just tell me what you think it’s going to be. He trusted me that I knew the numbers 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. He’d be like, okay, it’s a little low on this.

Ashley:
I do it a lot of leg work.

Serena:
So much time and figuring, especially if they are disorganized on their backend too. I call, I think contractors are more artists than they are engineers. And so by giving them some structure to work off of, it’s typically not their strong suit. They really appreciate it.

Ashley:
What’s go into confrontation?

Tony:
Ash’s favorite word?

Ashley:
How do you handle that confrontation besides avoiding it? I used to be such an avoider of confrontation

Serena:
And then I worked in construction for 10 years.

Ashley:
So let’s give us a little example or role play of 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

Serena:
Better at confrontation with contractors than I probably am my personal relationships. But when say you walk in and the quality’s not there, I never assume anything. You never know if the GCs already talked about the quality with his guys, I don’t want to assume that bad intentions, I always want to go in with good intentions or assume they have the best of intentions. So I’ll be curious and seek to understand. I’ll ask a lot of questions and I’ll say, Hey, this looks, do you guys have a plan for this? That was probably what I said at least 10 times on the job. Do you guys have a plan for this? And they’re like, say it was done and this looks really bad. They’re like, no, it’s good. And I go, okay, I think it needs to be cleaned up a little bit. You might need, and so then I would try to be tactful and say, actually I was thinking of this way. And sometimes when it comes to interpretation of what something looked not, 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.

Serena:
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 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. 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 being like, no, that’s what I meant. You have known that, look at it. So yeah,

Ashley:
A little bit of give and take to keep things.

Serena:
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 leave. It needs to be perfect. And then 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 we’re at our second level of blue tape, I remember, okay, what do the comps really look like? Or what are we going to do to achieve our A RV? And I’m like, I would kind of look over certain things like, Hey, next time guys, this really needs to be done better. And I would the give and take on that. I would definitely say, Hey, in the future can we do this? But this is good enough for this project. And that’s the way that I would tackle that.

Tony:
What would you say is the mistake you see a lot of rookies make when it comes to managing the rehab? Because a lot of moving pieces here, but is there something that you’ve maybe seen consistently from newer flippers as they step into this?

Serena:
Yeah, a lot of ’em is they get the keys and they just resco 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.

Ashley:
Yeah, I don’t want to

Serena:
Waste time. I got to get started day one. Yeah, my holding costs, I’m being charged $250 a day or whatever. And here, and what ends up happening is that I’ve had a client about last year that he was like, Hey, I just bought my first flip. And I was like, great, let’s talk about it on the first call. He goes, yeah, I already hired a gc. And I was like, I like, well, where’s your scope of work? He’s like, I don’t have one. And I was like, how didn’t you hire a

Tony:
GC without scope, scope of work?

Serena:
And I was like, oh no, right? I renew right away. I was like, okay. And my first thought was hopefully this GC is a really good guy. And so I was like, send me over his estimate. And I was looking through it and I go, okay, I’m not trying to freak you out here, but there’s a lot up to interpretation and there’s a lot that they’re just bulking in, okay, we’re going to remodel kitchen

Tony:
15,

Serena:
What does that mean? K, what does that mean? I mean what quality cabinets? Okay, the materials are included. Well, I mean is he getting

Ashley:
His cabinet? Is there an allowance for how much you can spend to pick out your fixtures and cabinets?

Serena:
Yeah, exactly.

Serena:
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 not so steep hill to a really steep hill that you might need to step up. So I would say taking that extra time to plan out a scope of work, look at the comps and get as many estimates as possible before jumping in because we were guilty of it, we kind of sometimes went too fast and we set ourselves up for failure for few projects for sure.

Tony:
What’s that saying? I think it’s Lincoln or one of the presidents, but 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 on with a solid game plan. I know you mentioned earlier that some of these things you’re able to do remotely and we just interviewed Dominique a few episodes ago and she had, I dunno, I think 12 flips going on, but she 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, I guess, what specific things are you looking for to make sure the things are moving on track with the job?

Serena:
That’s actually 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 career, I spent probably 5% of the time on the job site and 95% of the time on the computer and trying to be proactive in planning the next sourcing estimates, maybe walking the property with the contractors too, but planning, getting the estimates, getting the information down, re-analyzing 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 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 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 matter what, whether

Ashley:
It was also you could somebody else to do that

Serena:
Or someone else go down. And it ended up going into someone else that did that and taking full pictures of property even if nothing changed. And for liability reasons, if someone broke in that is your weekly even more. So if you have someone it burned down, picture it burned down you what it looks like have 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

Ashley:
Like? Or maybe the last pictures you have where it demoed in those four weeks, a ton of progress happened, but no

Serena:
Documentation.

Ashley:
Exactly,

Serena:
And you don’t know what sort of information and picture that you’re trying to find until you actually need it. Need it. Oh my gosh. And so there were times where I got lazy because we all do. And I was like, oh, okay, it’s the last property out of 10 today and I’m 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 skipping steps. And so taking full pictures, I mean 150 to 200 a week, 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, not clinic 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 in the folder and the back of the house inside was going to be towards the end of the, so just saving time.

Tony:
Super small detailed question.

Serena:
Super.

Tony:
Well, one follow up actually. Were you taking the pictures on an iPhone or were you doing old school digital camera

Serena:
IPhone, which meant that I have 150,000.

Tony:
That’s what I was asking. If you’re doing 150 photos a week, I just wondered if maybe a little digital camera, but

Ashley:
Well, Henry in Washington, he has two phones 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 is completely separate for that reason.

Serena:
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, I got two

Ashley:
Phones. I was like, why don’t you just get a Google Voice number? He is like, it’s not about the phone number, it’s about all

Serena:
The separating. So going back to how do you keep your contractors on time, making sure they’re showing up. Quality control, being remote. By the way, listeners, we used to do 15 flips at a time and towards the end there are about six to eight bigger rehabs at a time. And there 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. So taking pictures every single week. The contractors know you’re going to be there week. I would never tell them when I was going to be there unless I’m meeting them specifically for a meeting walkthrough and or twice a week take full pictures. I would do drive reports on the projects. That was especially helpful when I had team members driving the properties for me. So who’s working on the job, what progress has been done? 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 huge. I mean a couple bills we got right? Like cadet heaters, just crazy. And so doing that, I also had, on the scope of work at the top, I would have some procedures for the contractor to agree to. So keys always return to the lockbox. The code has never changed without permission or it’s told to. Heating’s always set below 65

Ashley:
When you leave. That’s something I’ve never thought of, is creating policies and procedures outside of the scope of work of how you want the jobs site to run.

Serena:
No change in designer finishes unless approved by me or whoever is proving them. What else would we have? Make sure all the windows and doors are locked when you leave. A lot of these interactions I’m having with contractors, especially GCs, but even 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 him posted up on the property as well. And so that would help a level of defense of being there without being there. No smoking in the property, no smoking,

Ashley:
Never had that.

Serena:
No be in a

Ashley:
Water bottle, didn’t have that one because I found that a lot, even probably the storage of materials, making sure the materials are locked inside the house, not left out or that’s the

Serena:
Other good thing about having pictures was that sometimes materials walked off our job site and in order to figure out what day that happened, I’m looking, going right back to those pictures. And even though maybe the property were sitting for two weeks because of some reason, there were still pictures taken. And so I can see, well, they walked off between this date and this date who was on site. And so the other thing is working into contracts, timelines for completions. So subs are a little bit easier when it comes to that because they’re really quick in and out. Their install might take just a day or two and they’ve got a full calendar. They want the money turnover. So not as much a problem with them, but I typically ask my gc, Hey Tyler, the Tyler, the Tyler is supposed to start this day. Let me know if he doesn’t show up. Okay, didn’t show up. All right, texting so I can get on it instead of waiting a couple days and I show up and I’m like, shoot,

Speaker 4:
There’s no

Serena:
Tile now I’ve lost four days. And then so for the GC contracts, we always had a, I’d have them, I’d ask them first, when do you think your completion date will be for the scope of work that we’ve agreed upon? And it goes, I need eight weeks. And so, okay, that’s December 21st, whatever. And I go, how about 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. And I’d say, okay, you get a bonus of $150 a day if you complete before this date, that’s includes punch list completion, everything, or you will be fined $150 a day. So

Ashley:
Subtract

Serena:
It, 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 a contractor was just really going south. And we have decided at that point we’re not going to move forward with them on a different project. 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 complete and it was unreasonable just not showing up. And we only paid the bonus one or two times, maybe once, but at least they know it’s there and there’s some incentivization, but also some

Ashley:
Penalty. This has been awesome, Serena, 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. Awesome. Thank you so much for coming and joining us in person. Where can people find you and reach out to you?

Serena:
Yeah, best place Instagram at Serena dot Claire. And from there I have link to resources and then send me a DM and if you’re doing flips already, I’d love to see him send me some pictures. Yeah,

Ashley:
Thanks for having me. Yeah, thanks. Appreciate it. I’m Ashley. And he’s Tony. And this has been an episode of Real Estate Rookie. We’ll see you guys next time.