Day -7: PM and I spoke today confirming Wednesday morning is our new sub day. We confirmed who was notified, and who has yet to be called. We also identified that a few more subs are needed for specific tasks. Therefore, I spent the rest of the day researching people, and reaching out to set-up estimates for Wednesday morning.
Day -6: Super busy day today! Made at least 20 calls, trying to get a few more subs lined up, and was actually pretty successful at doing so. We are still looking for a few people, but I think we are off to a great start. Of course I spoke with PM today, and we went over all of the updates. I updated our Master File on Google Docs to reflect the same (note: I update this document multiple times a day). We also heard from our Real Estate Agent that the title is clear (Yes!!!), and we decided the place and time of settlement. The Title Agency called to provide an update on the Good Standing Certificate and the Corporate Tax Lien. Although we are paying in cash, the Good Standing Certificate is a company requirement for financing and cash purchases. However, the Corporate Tax Lien is not needed as we the entity purchasing this proper is in its first year of business, and has yet to file taxes. The Good Standing Certificate is $75, so at least we saved $90 by just asking the Title Agency to confirm that these documents were absolutely necessary.
Day -5: The big day, Sub Day!!!! I am so excited that I started writing this post before the Subs even arrived. So while we are waiting for their arrival, let me just take a moment to talk about how much I love BP! Several months ago, I connected with an individual, from Pennsylvania, on BP. We hit it off, and he asked me for a good floor guy, and I provided him with two contacts. Since then I have asked him for a few recommendations. Not only has he provided them, but he has been very supportive of my business too. To be honest, I was a bit sceptic about the longevity of BP's community willingness to help others. In my personal experience, outside of real estate, I have seen people burned only one time, and it dramatically affect the way they interact with others. I thought it would not be long for some “bad eggs” to ruin it for everyone. However, I am happy to see that is not the case. Lets get back to talking about the Subs. The Subs arrived, and everyone came, except one who called to let us know something came up. PM took each person around the house and talked through what was needed, and requested quotes to be submitted by the following evening. We also discussed what light fixtures were needed, options for the Kitchen and the master bath. There were a few surprises that we missed in the initial walk-through (note: we saw this house about a month before the offer was submitted). It turns out the flooring is engineered hardwood, and not solid hardwood. Fortunately, the engineered hardwood is thick enough to be stained and refinished. It's worth noting that not all contractors who refinish hardwood, refinish engineered hardwood (which proved to be the case for one of our Subs). All of the other items were minor, but we will need to address them.
Day -4: Estimates are coming in! I am not only keeping track of them for this specific job, but also my Master Sub Tracker. What is that you ask? I keep track off all Subs' estimates for each project. At this point you might be thinking I am just anal retentive, however, the reason why I am doing this is for flexibility and scalability. In the short term we may run into a scheduling issue that requires a new sub. In the long term, if we are flipping more than one house, the need might be overlapping. As Warren Buffet once said, “Someone's sitting in the shade today because someone planted a tree a long time ago”. Remember in last post I mentioned we discovered the flooring is engineered hardwood, and not solid? Well it turns out refinish engineered hardwood flooring is a delicate process (read: expensive). The cost of refinishing engineered hardwood flooring is almost the same as ripping it out, and putting in new engineered hardwood flooring! We also learned that painting cabinets is almost the same as replacing with new cabinets! I imagine the higher end floors and cabinets you have, the more it would make sense to refinish vs replace. However, for builder grade materials, the difference is not that great.
Day -3: We have almost all estimates. Things at this point are looking pretty good. On the last call with PM he said a very good quote, “I am not going to get overly excited about how things are going, as in this business things change daily. There are days that are the highest of highs, and others that are the lowest of lows. I do not want to let this affect me this time, and just approach each day with a balanced outlook.” However, with this being a journal to not only reflect on things we can do better, it is also worth noting what we are doing correctly. To date here are the things that are going well: 1) Sub days, 2) Original Estimate Forecast, 3) Building a good team, and 4) Administrative Organization. First, with the Sub Days, we are able to not only identify who we are selecting, but we are able to both lock down the schedule and the budget. This is allowing us to make decisions on whether or not to move forward with any of the items from our “optional list of improvements”. (Side note: We create an absolute must list for each flip, and then an optional list, which we reassess during the renovation after analyzing both the budget and the cost/benefit). 2) The bids that are coming in are all around the original estimate forecast. I don't think I need to explain the obvious benefits of this. 3) The people we brought in for bids are strong. Unlike our last flip where we only had one option for a majority of the tasks, we have multiple options for almost all tasks. 4) With all of the organization we are doing administratively, we are able to be organized at the project. While we are talking about organization, PM suggested for our future Sub Days, we should create a packet to hand each Sub. Included in the packet would be the following: Information about us, the project and our expectations, and information about the needs for their specific task. This is beneficial as the Sub will have all of the information upfront, for efficiency reasons PM could schedule all Subs to come in at the same time and give them the packet and only answer questions as needed. It will also give the Subs a first impression that we are a serious business that expects the same in return. During the call with PM we discussed some of the bids we received and some pending questions we have. We also confirmed that our final walk-through will double as our second and final Sub Day. Even though it is only the day before settlement, we know that every day counts.
Day -2: Today PM and I had a few calls, one of which was 2.5 hours long! We went over submitted estimates, pending estimates, pending questions, the Subs who are coming tomorrow, the materials that we are providing, kitchen configuration, kitchen cabinet color (specifically differentiating between white and bright white - it was particularly entertaining), and we started the schedule. BP talks a lot about the importance of having a good team, specifically bringing together people with different strengths. PM has been self-employed for over 40 years as a General Contractor. Therefore, it's quite obvious that his expertise is invaluable when it comes to flipping. He knows building code, the proper way to do so many different things, and the order in which to do them. He is very good at finding multiple solutions when a problem arrises. He is very easy to get along with and very well liked both in business and personally. So what do I bring to the table, besides excellent journal writing skills? Previously, I worked as a Global Project Manager, and as a Director of Project Managers in one of the world's top pharmaceutical companies. I also have a Masters in Leadership Development, and I am Six Sigma Lean Certified. I am always researching the latest home design trends and glued to HGTV. Despite how well we work together, we sometimes have disagreements. Typically those disagreements center around budget, or scheduling. PM is responsible for actually scheduling the subs, and keeping the project moving, however, at the onset of the project PM and I set the initial schedule together. Our scheduling conflicts center around building in buffers and allowing for flexibility for weather and project unknowns. If you take a moment and step back this makes perfect sense; PM has the experience to know the high probability that weather and unknowns become a factor during renovation. So we always build in some sort of buffer, but it may not always be as much as PM wants, or as little as I want. The most important aspect of our relationship is we work very well together, and if we disagree, it is very easy to move forward.
Day -1: Final walk-through and last Sub day. Walk-through went well, but there were two large items left in the house. Our Real Estate is agent is asking if they can come and take these two items. We had two Subs scheduled today. One showed, and one was a no-show. We have all estimates in, minus the one Sub who came today, but he is sending tonight. With the pending questions, we are going to decide on all Subs tomorrow morning. Tomorrow is closing day! With next week's posting, I will be posting several pictures. So stay tuned!!
Over the next month and a half (fingers crossed), I will be providing a weekly journal of our latest flip. I will be starting with the day our bid was accepted, until the day we list the property. I am keeping this journal for three reasons: 1) to hold myself accountable for the performance and timeline, 2) to be able to reflect back on the experiences after the house is completed, and 3) to share with you, the BP community. I know every flip is different, but I hope you are able to learn something helpful through these journal entries.
Day -17: Whoohoo! We heard our bid was accepted. Now the craziness begins, as we have approximately two weeks till closing. The very first thing I did was pick up the phone and call my business partner, who also happens to be the Project Manager (PM), and most importantly is the BEST Dad a girl can ask for (note: he's my Dad!). I let him know the good news, and follow with the need to set-up some calls to start outlining our plan for the next two weeks. He is available for our first call tomorrow, so until then.
Day -16: The excitement has worn off, and anxiety moved in its place. Both the Agreement of Sale and Seller's Disclosure are signed-off, so there is no turning back now. I speak with PM and we go over the work we want to do, and highlight the areas for which we need sub-contractors. We wrote in our agreement with the Seller, that we want two days where we can bring in sub-contractors. I thought this would be beneficial for two reasons: 1) we should know a more accurate rehab cost and timeline, as the estimates will come in prior to settlement, and 2) we will not waste time getting bids after settlement. I started putting together a document with the lists of subs from which we would be soliciting bids. I also researched some unknowns (township permit requirements, appliance pricing, and a few subs).
Day -15: Had a call with PM today. We started a list of questions we have for the homeowner, as well as, points to look at in the house when we go there for one of our days. We also made a list of Exterior and Interior work. This is a rough start, and will be finished before we close. We have two semi-major changes: 1) Kitchen, and 2) Master Bath. With the Kitchen we are refinishing the cabinets, moving the counter-top stove (which is currently on the small island), adding granite, replacing the microwave oven combo with a stainless steel, removing the island (as it is too close to the back cabinets and refrigerator) and making a breakfast bar, and potentially changing the backsplash (neither one of us can remember the current backsplash color). With the Master Bath, we are more uncertain of our changes. We are definitely replacing the countertop and fixtures of the vanity (we might change out the vanity all together, or alternatively, we might paint the vanity). We are adding seamless glass to the shower. The unknowns are the bathroom flooring, and tiling around the bathtub and shower. So basically, is it a full gut, or partial? Other more minor changes to the house include: minor exterior stucco work to the front of the house, minor roof repair, paint the entire interior, refinish all of the floors, replace the carpet in the basement, update some of the bathroom fixtures and lighting throughout the house. There are also a few fixes we are not sure if they will be needed: exterior landscape trimming, two concrete slabs near the pool have a few cracks and are sinking, MasterBedroom closets might need some updating, and a few doors might need to be replaced.
Day -14: Had a call with PM this morning. We went over what subs we spoke with and who we are waiting on call backs. We have set-up our first day of contractors to come in for bids, for this Saturday. Although we have used a majority of the subs before, for most jobs we are getting at least 2 bids, to make sure our pricing is still competitive. We also agreed that the Master Bathroom needs the money put into it. So we will find a way to get that handled. We are getting a wide range of quotes for the stucco on the front of the house. This may prove to be a new risk, so we need to look into this a bit further to solidify our plan. Another discussion point that came up during one of the sub calls, concerned the floor refinishing. On the last house we waited to do the floor refinish last. This is quite standard, but what we realized, is during the sanding process, a lot of dust covered the fresh wall paint. Thus, for this house we are most likely going to do the sanding and the first coat of the flooring first, and then after all other interior work is complete, we will come back and do the second coat of the flooring. Administratively, we also needed to pick a new title company. Too long of a story for this posting, but our last deal with our normal title company did not go well, so we now are on the hunt for a new one. Will be decided today.
Day -13: It wouldn't be a flip, without weather becoming a factor! The forecast for Saturday (the day all of our subs are coming for estimates) is calling for a major snow storm. Of course it is! We are going to make a decision on Friday on whether or not we will postpone it till Sunday. Also talked to several Stucco people today and it seems that the stucco issues might be resolved very easily. Possibly even PM can resolve them, but we will know better once we get a few more people's opinions. Not sure if I mentioned the house has a pool. So I got in touch with the company that completed all of the servicing for the owners, and confirmed the history of the pool. There was a comment about the heater being repaired last summer. It was also noted the equipment is the original equipment (2001). We will need to look at that a bit further, as well. Of course I touched base with PM multiple times during the day to provide these updates. He also provided a few updates concerning the subs he spoke with. I once took a seminar (back when I worked in Pharma) that said good project management is 80% communication; I definitely believe we are reaching that quota!
Day -12: Zeroing in on all of the subs that we are bringing in for estimates. It looks like the weather may still pose a problem; however, we are going to wait one more day to make the decision. With respect to the Title Company, they requested a Good Standing Certification and a Corporate Tax Lien Certification. I was a bit confused on the need for the first document, as when I researched it online it seemed to only be for finance purchases, and we are paying in cash. With the second document, I explained we are a newly formed LLC and this will be our first year filing taxes. The Title Company is going to look into both documents with their underwriters and get back to me. Hopefully that one simple phone call, and a quick google search, saved us $165! I will keep you posted:)
Day -11: UGH the weather!!!! We had to postpone our day of bids, as of course the FIRST snowstorm of the season is set to hit Friday night through Saturday. Therefore, we have postponed it to Sunday afternoon. One of our subs went out to the house today (thank you so much current home owner) as they were bidding on exterior concrete and were concerned about accessibility with the snow. Other than a few calls to reschedule all of the subs, not much more to report for today.
Day -10: PM and I failed to connect today. The time difference between us doesn't help (that is for a different posting). So I worked on a lot of administrative documents. If you and your team have yet to learn about Google Docs, I highly recommend you go to the site right now! It is absolutely amazing, as you can share documents with someone instantaneously. With respect to the documents I worked on today, I worked on our Master File on the house. What is our Master File on the house? It is an excel spreadsheet with multiple tabs, so all of the major information is in one place. The first tab has our number analysis. The second tab has the original estimate, when we walked through the house. The third tab has a listing of the Subs needed, multiple options for each job, points we need to look at when we go back for one of our two days, and schedule for when the Subs are coming out to give their bids. The fourth tab is a material list, specifying what is needed, who is responsible (us, or the Sub) and the cost (only tracking if we are providing the material). The fifth tab is one type of Timeline Manager, that looks like Microsoft Project (again if you don't know what Microsoft Project is, spend a few minutes watching youtube videos, and you will significantly increase your project management skills, and thus the project timeline). To be honest, I can't imagine managing a project without it! The sixth tab is another type of Timeline. It is not a project management tool, but more like a calendar by day of what “should” be happening. As an aside, I have witnessed people claiming they are managing a timeline for a project, just because they have a calendar of what “should” be happening that day. That is not project management. The reason why I say this is good Project Managers are able to not only see what is going on at that moment, but how it fits in the big picture (meaning how it impacts other things, good or bad). If you are looking at just a daily/weekly view of a project, you will fail to see the full impact a half-delay on one simple task could have on the entire project. Enough of that rant, and back to discussing the other documents I worked on today. I also customized the following documents: Independent Contractor Agreement, Lien Waiver, and I created a New Sub Checklist document. Ok this post is getting a little lengthy, for what I initially intended, so that is all for now!
Day -9: Good thing we rescheduled the Subs, as the storm hit hard! PM and I don't even know if tomorrow is going to work! We only spoke briefly today to confirm that we might need to reschedule Sunday as well. Decision will be made Sunday morning. We also spoke about the color tone of the house. On our last house, we did the trendy light grey walls, white kitchen cabinets, grey granite, blah, blah, HGTV look, blah, blah. However, for this type of house, both PM and I believe the purchaser(s) will be of a different demographic. We believe a tan/brown clean-look combination will not only compliment the exterior, but will also meet buyers' expectations.
Day -8: We spoke today and LM made the call to reschedule for Wednesday. Now time to hit the phones, and let everyone know.