Now let’s talk about what’s involved in managing renovations. First of all, make sure you’re legally covered to renovation real estate. In order to manage renovations, you basically need to be a contractor or you need to know one. The point at which you must legally be a contractor without getting into trouble, of course, depends on the state in which you do business. (For example, in Tennessee, where I live, you can do up to $25,000 worth of renovations without a contractor’s license—at least with any project that doesn’t require a permit. You may need a Home Improvement License, though!)
So assuming that you’ve got proper licensing, here’s what managing renovation projects looks like on a high level. Start by forming a great team renovation team. Once you’ve got the right people in place, get your logistics and communications down. Do this by coordinating with your repair person(s), set your budget, and coordinate with your tenants’ and owners’ schedule.
Use systems? Yes, always use systems for managing renovation.
Why use systems for renovations in particular?
The reason you want to use systems for renovations is quality control and efficiency. It’s easy to get under water in the midst of a renovation project—that is if you don’t have good systems in place. For example, you may forget to account for expenses or underestimate your timeline for a specific renovation. You must be able to assess your ROI for each project with precision. The only way to do this with a systematic approach. A common mistake is to go over budget on the accepted bid amount. This is very easy to do, believe me. For example, someone might spend a few unexpected weeks on a project, which completely throws your profit out the window! In that case, you’ll end up paying the customer, not yourself. It’s a numbers game in real estate, especially with renovations.