This is the third in a series of “The 5 Rehab Contractor Styles” I’ve catagorized, how to identify them, what to watch for, and how to manage them. The 5 categories are  The Salesman, The Perfectionist, The Investor/Rehabber, The Snob, and Hose A & Hose B. This is the third part where we discuss “The Investor/Rehabber”

“The Investor/Rehabber”

I’ve had 2 encounters with The Investor/Rehabber and I wasn’t smart enough in my first encounter to use them. I look back on that experience and kick myself each and every time I think about the bid I got from them and didn’t recognize what a sweet deal, and what a sweet relationship I could have had with these guys. It was my second encounter where I learned what a gem you can have with this category.

“The Investor/Rehabber” does this for a living, and acts as his own contractor. He buys his own properties and knows his market very well. He totally understands what is the least amount of investment necessary to turn a profit. He understands the amount of investment needed that will result in a return. He also knows where too much investment will not give you the return you desire.

This category of contractor is competent in rehabbing for investors and offers the best prices. He will have all of his insurance and legal entities in place and has a routine for billing – and won’t be afraid to place a lien on your property either. He is efficient in the project, and he’s efficient in making sure he is paid. He’s also a good resource for teaching you a thing or two about rehabbing.

This is my favorite category of contractor, but I will admit that even this category of contractor has their issues.

This kind of contractor has a system in place. He has his paint colors, plant choices, landscaping styles, roofing styles, and will fix up your property just as he would his own properties. If you have you’re own preferences, then you must make that clear in the beginning.

He has a crew and they work fast. He will get a house finished within 2 weeks and it will be done well. However, he will trust what his workers tell him about the property and when the workers say they are done, he believes them. The only thing I’ve had to adjust with working with the one investor/rehabber I’ve experienced is to have him, or a trusted 3rd party go through and make a list of outstanding details he needs to go back and do over.

You have to realize, when engaging with this contractor, that you won’t get the highest price for your property in a specific neighborhood. For example, if someone spent $10,000 on a WOW level kitchen with granite, etc. that house may sell for $105,000. But if you spent $2,000 cleaning/repainting existing cabinets, maybe a new formica or tile countertops, your house will sell for $100,000. He knows what investments will get you the returns, but when you estimate the after repair value going into a project, eliminate the highest comps, as they may have the pricier granite kitchens.

This contractor is a professional and you must treat him as a professional. If you are wishy/washy about your decisions, too picky and make him redo things he’s already done, or need and hour-by-hour account of the project, then this guy isn’t for you. You are both professionals and you must respect each other as such.

“The Investor/Rehabber” is perfect if:

– You are not local to the project
– You feel you can trust his decisions when faced with minor issues
– You are flexible with project scheduling

“The Investor/Rehabber” is not a good fit if:

– You need to watch the project daily
– You change your mind often about colors, fixtures, etc.
– You are a perfectionist
– You want to have some level of involvement in the project

Overall, this category is my favorite and works best for me, as I rehab wherever it makes sense, not just in my back yard. I’m pretty easy going and I don’t like working with other two we’ve discussed, The Salesman and The Perfectionist, for reasons discussed in the blog.

Tell me about your experiences – which category has worked best for you?