After the celebrations, we knew that we need to place our feet back on the ground and start the rehab. But how do you start a $550,000 rehab of 48 units in 3 buildings, so how we are going to do that?
We all know those stories of a rehab project that started with a budget of $100K and 5 weeks of time-frame and didn’t finish after 8 weeks and $120K. The bigger the project is, the easier it is to lose track of it and find yourself overrunning the timeline and budget.
As part of the mortgage approval process, we have already had our GC (General Contractor) and other vendors provide their estimates and the scope of work. Our lending bank also asks each one of the vendors to sign a statement for the scope of work as well as the price. We highly recommend any investor that is dealing with vendors to ensure they will sign a similar statement that will define the scope of work as well as the compensation. That will buy you some peace of mind later on during the rehab.
The next step was to build the project and budget plans. Those two documents are critical for every project and can save you a lot of money and trouble. The project plan will have information about the different items required for the rehab and the timeline they will be done. The budget plan will define the baseline for the budget (that was approved by the bank and signed by your vendors) vs. the actual.
The idea behind those plans is not only to provide the guidelines for the scope of the work but also to ensure that the entire team is aware of the expectations and to be able to monitor the execution of the project.
Without a plan, you are basically guessing. You can’t really tell if you are ahead or behind schedule, what is your budget consume rate etc.
- The project plan should be discussed and shared with your GC (and other vendors) as he should know what we expect in terms of timelines and deliverable.
- The budget plan is a great tool to ensure that your project will not overrun the budget (which is an issue with many rehab projects).
On top of those, we have scheduled a weekly call to discuss the progress and plan the activities for the coming week. This meeting will also be used if needed to make decisions and align the project and budget plans. The meeting should not replace the ongoing communication between the partners, but to provide a framework to discuss issues, suggest solutions and raise risks and mitigation.
Again – you might not be good with numbers and can’t create a budget plan or even a project plan. That is why we are working as a team. Every team member will bring to the table his strengths. With all our strengths combined, we will be able to manage the project successfully and meet our final goals.
If you need any help or advise on how to create your plans, we will be happy to help you out.
Below are some of the “Before” photos of our project.
the KERRA team