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Article of the Month for August 2003 Printer friendly version

Rehabbing For Resale

You're probably leaving too much money on the table if you sell your foreclosure without really dressing it up beforehand. A cosmetic rehab will cost you somewhere between 8-10% of the fixed up, retail value of the property. Generally your task is simple and straight forward-do a thorough clean-up, renew most of the interior surfaces (new paint, carpet, tile, etc.), replace worn or outdated fixtures (especially in the baths and kitchen), spruce up the front entrance and get the yard and fences in shape.

You'll discover that the best skill you can develop in this area is that of being able to find quick, capable, reasonably priced individuals to do the necessary work. You will ultimately come to the conclusion that it's cheaper in the long run to hire others to do the work rather than doing it yourself-because your time is much more valuable in the front end of this business (analyzing new foreclosures that are about to go to sale).

Once you understand the evolving nature of a skilled craftsman it won't puzzle you so much that you have to develop the knack of finding new ones all the time. When a handyman starts out in business they start out part-time with few customers and lots of time. So they are anxious to please-both in the quality of their work and their very reasonable hourly rates. They have the time and urge to make their first several projects a labor of love and a testament of their skills. Their early customers are so thrilled that they become evangelists for the new craftsman-praising his handiwork so far and wide that it's not too long before he becomes swamped with work. Being in such demand he does what seems to come naturally-he raises his prices to an outrageous level and develops a "slapdash" orientation to doing as many jobs he can within a given time period. At that point there's nothing unique about him so his business falls back to a level he can comfortably handle. But once he's learned that he can charge high prices for mediocre work and still stay busy he'll continue on that course.

So how do we fill our continuous need for good craftsmen at reasonable prices? Generally we look for new ones just starting out. They are the part-timers who work evenings and week-ends to get their service business started before they quit and go full time. They are so anxious to please that they will frequently put in a lot more hours than what they actually bill you for. They are the ones who circulate flyers in the neighborhood, put notices up on bulletin boards and place those one or two line ads in the local "Pennysaver" paper.

We have gravitated to skilled part-timers whose businesses will always be sidelines for them because they have a career they like in the Navy (both our electrician and our gardener), or in the fire department (our carpenter), etc. So they are very happy with the regular fill-in work we provide and charge us about half what full-timers with lots of overhead are demanding. And yet these fellas are every bit as good and have all the right tools, buying connections, etc.

Another excellent place to look for eager-to-please technicians is at your local trade school (either private or public). Get specific, individual referrals from the various department heads. For example, we bought 9 older units to convert as rentals to wheelchair bound tenants. Thus we needed to measure all the existing doorways, counter levels, reaches, bathrooms, kitchens, etc. We had the whole job done for only $100 dollars by calling up a local drafting school and asking for a student to draw everything up for us. They sent us an eager beaver who had everything done in 4 days! He was pleased to put us down on his new resume and we got a heck of a deal for 1/5th of what we had been quoted by a local architect.

Finally, the best, most fantastic, all-around, handyman is a retired school janitor! Their job has forced them to master the skills of locksmithing, glass work, stopped-up plumbing/leaks, light electrical repair, woodwork, dry wall repair/patching, painting and on and on. Inquire at your local senior citizen center if they know of a retired school janitor doing part-time work.

Information provided by this website is for informational purposes only and is not a substitute for professional advice. Please consult your investment advisor and/or attorney before entering into any transaction. Read our privacy policy.

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