If you ever wanted a concise primer on, “How to get started rehabbing houses,” this would be it. If you didn’t get a chance to catch Part 1 in this series, or if you need a quick refresher, check it out now. I know you hungry, “Rehab Machines” are anxiously awaiting Part 2 in this series – so let’s get started!
WE LEFT OFF AT THE FRAMING STAGE
Okay, so now that the framing is 99% complete, your town will more than likely require a building inspection. Following the green light from the inspector, your framing contractor will be looking to get paid – so here’s a HUGE TIP (are you ready?):
Do NOT pay your framing guy 100% of what you owe him. Think of the initial framing as “rough” framing…if you will. This is where the framing crew will complete about 95% of the job.
What about the other 5%? What’s up with that, you’re asking?
Well, what comes AFTER framing? Mechanicals, right? Your Plumber and HVAC subs-contractor will inevitably add large main-drainpipes, and gnarly, metal air-supply (no, not the greatest ballad band ever) and return ducts as part of their rough-ins. Those rough materials have to go behind walls – unless you’re going for that New York City “industrial-loft look,” that went out of style when Air Supply – yes that -> Air Supply was still cool. Those drains and ducts must be framed-in, in what we’ll call the, “Finish Framing” stage.
Your framing crew will have to return for that “finish framing” work. And, if you pay them 100% upon completion of rough-framing, it will be far more difficult to get them to return for finish framing. Your contract with the framing contractor should include a hold-back of at least, 10% for finish framing.
Yeah…you can thank me now, but I’m just gettin’ started here!
Following the completion of the finish-framing, and just before you pay the framing contractor – you’ll want to have a site meeting with your drywall contractor.
Well, I’m glad you asked. You’re so inquisitive today!
Just like each properly laid brick makes for a strong foundation, properly framed walls make for an easy, fast, and clean drywall install. And, who better to examine the workmanship of your framing crew than your drywall contractor who makes his living nailing drywall to framing studs?
Do you see how these guys can keep each other honest, thereby saving you a lot of time and money?
In addition to signing off on the framing, your drywall contractor should use this meeting to draw up a complete list of materials that he’ll need to complete the job.
I mentioned the plumber and HVAC contractors above. The three “mechanical” systems in every house are: heating, ventilation and cooling
(HVAC), plumbing, and electrical.
During step 4, these guys do their thing. The HVAC installation is the most intrusive, so you’ll want to schedule that first. The HVAC contractor will install all your ductwork and perhaps even a new furnace and condenser.
The plumber will install all of the water-supply lines and drains to your kitchen and baths, as well as, vent pipes. After inspecting each, he may also install a new main drain to replace an old cast iron pipe on the interior, as well as a new PVC drain to replace an old terra cotta drain on the exterior. He’ll also install tubs and shower pans. By the way, your plumber can also be the go-to-guy for basement waterproofing. DO NOT hire an expensive waterproofing company. Most plumbers will do the job for a small fraction of what the big waterproofing companies charge.
For an in-depth view of the mechanical rough-in process, watch the brief video below.
Just as the HVAC and plumbing contractors are about to call for their inspections, call your electrician to schedule him. The electrical rough-in includes wiring all the switches, lights, outlets, smoke detectors, and other circuits in the electrical panel. The electrical rough-in may also include a new breaker panel (if needed) as well as a copper ground from the panel to the gas-main, and a new main trunk line located on the exterior of the house. For a standard row house, 150-200 AMP service is more than plenty, especially if you have gas appliances in the house.
As with all of your contractors, your mechanical sub-contractors should always be licensed and insured – and they should come with several pristine references. These guys will more than likely represent 1/3 of your rehab budget, so you can see how fast they could kill the deal. Be sure to hire only reputable firms who can provide proof of insurance, listing your company as an “additional insured.” Permits should be pulled by each contractor for every job.
Upon completion of their work, each contractor will schedule a rough-in inspection. As soon as they get the green-sticker from the inspector approving the rough-in work, each contractor will be looking for a payday. Upon approval, you should have paid these guys no more than 1/2 – 2/3’s of the total contract. You want to make sure you hold back enough money so that they’ll be highly motivated to return to complete the mechanical trim work. See the video above for additional advice on how to pay mechanical subs.
It doesn’t matter where you are rehabbing houses in the country, your houses will need insulation. And thanks to our federal government, building codes are rapidly changing regarding how much insulation you need – so be sure to check your local building code.
Quick story: My good friend, here in Maryland rehabbed a house about a year and a half ago. Upon approval on the mechanicals, he installed the insulation. When the inspector returned to approve the insulation, he failed the job because the amount of insulation was not up to code. It get’s worse. In this particular rehab, my friend gutted the exterior walls. As such he was required to insulate those walls up to current code. The problem is, walls were originally built using 2×4 lumber. To insulate to code, you now have to build walls using 2×6 lumber. That extra 2″ creates space for additional insulation. My friend was forced to remove the insulation and either rebuild the walls using 2×6″ lumber or re-insulate using more expensive, also more dense spray foam insulation.
This is why you MUST KNOW YOUR STUFF when it comes to rehabbing houses! By the way, we teach a select handful of students in the Baltimore metropolitan area how to rehab houses. If you’d like more information on how you can learn the business of rehabbing houses from The Dominion Group you can email me at email@example.com
As rehabbers, we make a living finding smaller, leaner, hungrier contractors. For most jobs, I’m gonna hire “Chuck with a truck,” over some big company with a big advertising budget. I break this rule only when looking for insulation contractors. In Maryland, I use a company called DeVere Insulation. I can’t buy the materials for what DeVere charges for the entire job; labor and materials.
Upon completion of insulation, in most cases, you’ll need another inspection. That’s right – another day waiting for the inspector to come and wave his magic-wand to say, “You’re all good here.” Hey – it’s part of doing business.
This Quick Tip is for you young rehabbers out there.
Look, I’m gonna be honest, even after rehabbing 150+ homes, I still don’t know what a good electrical rough-in looks like. Hell, it all just looks like wires to me. I have no idea what a top-notch HVAC system looks like. It’s just metal ducts! I know that crap rolls down hill, but when I look at a plumbing rough-in, it all just looks like pipes. That’s why most young investors think, “Well, if the City Building Inspector gives me a green sticker, that’s good enough for me!” NO IT’S NOT!!!
The next time you have a mechanical inspection – be there for it. Watch as the inspector rolls through the house in about 2 minutes. Heck, most of the mechanical subs know the Inspectors – and they’ll be “jawing” with them the whole time – usually about Sunday’s football game, or some new girlfriend. Trust me, the last thing they’ll be talking about is the quality of the workmanship on your job. You subs have relationships with these inspectors because they see them everyday. I’ve seen Inspectors give green approval stickers based on a promise from a sub to complete the work. I’ve seen Inspectors walk into the front door, stand in the foyer, look around, then give the green sticker! These guys are not your watch-dogs! Don’t rely on them to teach you, or to do right by you.
I spoke briefly above about how you can get “the next,” contractor to inspect “the previous,” contractor’s work. This may be the most important tip you’ll ever learn. Always think about, “the next contractor,” in the rehab process, and you’ll never worry again if, “the previous contractor,” did a good job. For instance, who should inspect demo? The framing crew, right? Who should inspect the finished drywall? The painter, right?
But what about the mechanicals? Who should inspect those? I have hired other HVAC, plumbing, and electrical contractors to inspect the work of each sub on my job. For $150, you can hire a reputable firm to come in to inspect the rough work of your sub-contractor. It may be the best $150 or $450 ($150 x 3) you ever spend. Do this one time. Walk with each contractor as they inspect the work of your contractor. Ask them a TON of questions. Your knowledge will increase 10-fold in just one visit – and you’ll have spent a ridiculously low amount to gain that knowledge!
That’s it for Part 2 of The 10 Critical Steps For Rehabbing Houses. As always we’d love to hear from you! please comment in the box below so that everyone can benefit. If you have a personal question that you’d like answered, feel free to shoot me an email at: firstname.lastname@example.org
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