A new trend is emerging in the world of Real Estate investment. It's a style that empowers the investor to truly control their investment. It's called Wholesale Turnkey and is taking the industry by storm. Experienced investors understand that turnkey has a premium built in and is simply the delegation of taking a wholesale property and bringing it to a cash-flowing property. If you are thinking of taking control of the process and managing the process, a vital key piece to preventing your independence from costing more than going turnkey is the focus on choosing the right contractor. Use these simple tips to help catapult you into this new investment style.
You Get What You Pay For- Don't fall for the low bid money pit. Look for value, not pricing. Value not always obvious but performing your due diligence will help you determine if a contractor is going to "Change Order to Death" our scope of work or stay on task. Perhaps the best way to establish the ethics of a contractor is through references. Ask your bidding contractors for references on similar projects and scopes. This will really help you connect with a source that can give you valuable information (don't forget to ask about the reference's relationship to the contractor).
Details, Details, Details -Details are typically where 90% of the problems occur. It is in the details that clarity and expectations are defined. There are 2 places you need to focus on for details. The first is in the Scope of Work. Look for specifics on material quality and finish conditions. You're contractor should provide you a highly detailed Scope of Work that states they are responsible for issues that may arise during the rehab due to them overlooking a repair with the exception of "unforeseen conditions" that could appear when drywall is removed for instance and rotten framing is found.
In residential rehab construction bids tend to be poorly documented with items overlooked, left out, or poorly defined. If you're the bids you receive tend to be vague or incomplete, help them out if you like the contractor. Create or find a detailed scope of work you can use as a template. (You can contact the author for a list of forms free of charge)
The Vile Change Orders -Rehab construction has one giant element of the unknown, pre-existing conditions. These are conditions that can alter the initial construction plan that are not apparent or inherent upon bid. Even the best rehab contractors in the field encounter unforeseen circumstances. Change orders are a part of the business and when properly handled minimize impact to the overall project timeline and budget. Make sure the change order process is clearly defined and that you through developing a Scope of Work you clearly define what you feel an "unforeseen circumstance" is.
These tips do not cover some of the more detailed aspects of choosing a contractor but can help you in gaining your bearing. Remember that diving into running all the aspects of taking a property from acquisition to rented is complex and sometimes more cost effective to simply use a credible turnkey group. Another option to going it alone is to work with a consultant that will provide you with access to the right service providers for a nominal fee that is far more affordable than going straight turnkey.
Curtis Williams authored this article for Peak Management, a provider of both financial and turnkey services. Peak provides investors with a full suite of services ranging from turnkey properties to promissory notes in order to empower an investor with multiple channels of investment from one source.
If you enjoyed this article, you'll enjoy the constantly updated media streams Peak Management provides: peak_management on twitter, blog @ http://peakmanagement.blogspot.com/ or website @ http://www.peakkc.com/
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Copyright 2010 - Curtis Williams
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