Post image for Marcy Case Study #5: How To Manage a Rehab (in Nice Clothes)

Marcy Case Study #5: How To Manage a Rehab (in Nice Clothes)

by Brandon · 18 comments

  • Sumo
  • CevherShare

This article is part five in an ongoing case study happening in real-time. You can find part one here, part two (with photos) here, part three here, and part four here.   Oh, and the picture to the right is a preview of the new paint in the master bedroom at Marcy (and my lovely wife!)

I like wearing nice clothes, don’t you?

I’m not talking about a suit and tie (though, I do like looking like James Bond on occassion!)

I’m talking about being on the work site without wearing paint clothes, Carharts, and a toolbelt.

The past couple weeks I have been actively managing the flip of the home on Marcy Avenue, and while this is not my first rodeo – I continue to learn new things each and every time I flip a home. I like to think of this Marcy flip as my first 100% nice clothes flip. In other words, this is the flip about managing contractors.

In the past, I use to do all my own work. The first several homes I flipped my wife and I did 100% of the work ourselves. I don’t regret this, as I was able to pick up hundreds of new skills. However, doing a flip by myself was not the most efficient use of my time. With each new project, I have been learning to do more managing and less hammer-swinging. It is my attempt with the Marcy house to do virtually no hammer swinging and instead manage the entire project. The purpose of this post is to share some of the lessons I’ve learned in the process.

Yesterday I wrote a post on titled, “The Secret to Saving Money on Rehabs.” In it, I documented a mistake I recently made in hiring the wrong person for a job.  I hired a young high school kid to fill nail holes in preparation of the interior painting, but failed to adequately teach him how to do so.  As a result, my painting contractor had to go back and re-do all the work the high school kid had done and the mistake ended up costing me a few hundred dollars. So, lesson number one is,

“Sometimes the best way to save money is to spend more”.

In other words – don’t be cheap.

I’m not suggesting you go out and hire the most expensive contractor you can find.  In fact, high school students are often great for certain types of jobs. However, it is important that jobs are performed by right person.  Had I spent an hour or so teaching the high school kid how to correctly fill nail holes, I would have not only saved money, I would have also gained a more valuable member of my team.

How to Find Great Contractors

Finding and maintaining good contractors is one of the most important aspects in flipping a home.

As I mentioned earlier, it is important to find the right contractors for the right jobs.  When I first began working on homes, I called several contractors that I looked up in the phone book and had the biggest ads and asked for estimates. I was blown away at how expensive they were! For example, I needed to replace some windows and was quoted $1200 per window to replace. With twenty windows, I would have spent $24,000 on windows! This was more than my entire budget for the job.  I ended up doing most of that home myself because I assumed that’s just what contractors charged.

To contrast that, on a recent rehab I did, I got my contractor to replace each window for an average of $200 per window – and that included labor, material, and tax!

How could there be $1000 difference between these two contractors?

Both were licensed and bonded (very important!)

Both were insured (also very important).

Both were professional.

The answer is finding the right contractor. The one that bid $1200 per window was one of the largest contractors in my area and has a HUGE overhead. The only reason I found them was from their half-page ad in the yellow pages. In contrast, the $200 per window contractor was someone I knew, worked by himself, and had almost no overhead at all. All his business comes from referrals.

So how do you find one of these contractors?

It’s actually much easier than you’d think.


People love to recommend good service. All you need to do is start asking. Begin building your list right now. Get yourself a Rolodex or even just a spreadsheet on Google Docs and begin recording the names, phone numbers, and description of each contractor you come across. One of the best methods for getting these leads comes from connecting with other real estate investors and finding out who they use.

Most investors love to offer referrals because it looks better on them. When I refer my favorite contractors to others (which I do, often) my contractors are more likely to offer me better pricing and work harder to get my jobs done quickly. It truly is a “you scratch my back, I scratch yours” mentality.


Five Steps for Managing The Rehab (in Nice Clothes)

As the title of this blog posts states, I want to share some of the lessons that I’ve learned in managing a rehab without actually doing the work. I’m the first to admit I’m still a work-in-progress for this type of management, but these are things that I have noticed that help me become more efficient.

  1. Be There
    Just because I am not the one swinging the hammer, it doesn’t mean I can sit at home and catch up on the latest episode of “The View.” Rehabs are not usually simple projects, and only you (well, me in this case) knows the big picture. For example, as I mentioned in that post on, I made the mistake of letting my painter get started spraying without fully ensuring the prep work was satisfactory.
    Managing a rehab is not for the lazy. Contractors need to be told what to do when things change (and they constantly do) and you need to be there as often as possible to tell them what the next step is. Obviously, good contractors don’t need to be babysat – but you need to be available to make things run smoothly.
  2. Get it in Writing
    When I walk through a project with my contractor, it is important that both him and I are writing things down. Often times contractors just like to nod their head and say “I can handle that” but the details are quickly lost. You may find yourself with doors that swing the wrong way, tile arranged in a bad pattern, or carpet in the kitchen. By making sure everything is written down most circumstances can be easily avoided.
    Additionally, it is imperative that you get all quotes and contractor agreements in writing. Details fade with time. Don’t skip this part. 
  3. Get Materials Ahead of Time
    When I run a flip, I generally purchase all the materials ahead of time. I do this for two reasons:The contractor can’t spend the material money on other things or “mark up” the material charges. I can choose the materials used Home Depot and Lowes offer “bulk discounts” when over $2000 is purchased at one time – often up to 20% off.
    I like to get all the materials “curb side delivered” to the job site on the day that the work starts, so the contractor can bring the materials into the home and sort where they want things. It also gives them an idea of what they will be working with.
  4. Offer Both Constructive Criticism and Praise
    Your contractor is (hopefully) working hard, so it is important that you keep a positive work environment by letting them know they are doing a good job. I like to buy them lunch once in a while or bring over a case of soda. However, it is also important that you let them know when something isn’t done correctly. You are paying for the contractor, so don’t be afraid to make sure things are performed to your high standards.
  5. Teach Your Contractor the Big Picture
    Finally, and perhaps most importantly, it is imperative that your contractor has a clear understanding of the “big picture.”  When they understand the “spirit” of what you are doing, they may find ways to save money or make the project better. For example, my contractor understands that I do not want to spend a ridiculous amount of money, so rather than spending the money and time on tiling a backsplash in the kitchen, he suggested just patching some of the holes that were there and re-texturing and painting. The final look is amazing, but I saved several hundred dollars in the process.
    Many contractors are accustomed to working only on a person’s primary home rather than a flip. Just as there is more than one way to skin a cat, there are also many ways to rehab a house. A good example of this is found with drywall. Many times, the walls are un-even or rough and a contractor will often automatically assume they need to tear off all the walls and re-drywall them. However, for a fraction of the cost you can simply re-drywall over the existing wall with 1/4″ drywall and save a lot of time, money, and headache. Again, teaching your contractor to think of the “big picture” and as part of the whole they can help you cut down costs and move faster.

Progress at the Marcy House

Over the past week, the walls were repaired at Marcy and painted a color known as “Hemp” – which is a Martha Stuart Color purchased from Home Depot. Additionally, the bathroom tub-surround and floor was tiled, new casing trim put up around all the doors and windows, and the sub-floor was replaced in the kitchen. Right now, that trim is being caulked and painted, the tile is being grouted, and the exterior of the home is being pressure washed in preparation for paint.

Also, on Saturday the roof was replaced at the Marcy house – in just six hours!  It looks incredible!  The roof is probably going to end up costing just a little bit more than I had hoped (I decided to replace the detached garage roof as well, which I was not originally going to do) but I think I can recoup those savings in other places.

Marcy Case Study Number 2

Before the Tree Removal … “After” pictures coming soon

One of the biggest changes also was one of the least expensive: we cut down all the “Christmas trees” from the front of the home. Notice in this “before” picture, the front of the house had several out-dated trees that blocked the view of the house. Those are now gone for good!

A Slight Change in Direction

Finally, I wanted to share something that I and my partner have been discussing for the past few weeks and finally decided on. We are looking around at some of our competition, and decided to do a little “less” than originally planned. We had originally budgeted $19,000 for repairs, but instead I am going to shoot for more of $12,000 – $13,000 – and list the house a little cheaper than originally planned.

The reason for this change is because already we are one of the nicest houses at our price point, so by “over doing it” I believe we may be spending on things that won’t make a difference. Additionally, I really want to sell this home as quickly as possible, so by keeping the price down – I believe we can sell quicker. The main changes will be not removing the fireplace and not adding a new heat source. Instead, we will focus on “prettying” up those areas.

What do you think of our choice? Feel free to comment below and let me know what you think!



About Brandon

has written 199 Awesome posts in this blog.

Brandon Turner (G+) is the Senior Editor and Community Director and owner of He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

P.S. Looking for more real estate investing knowledge? If you are interested in a top-notch course to help you understand the nuts and bolts of creative real estate investing, I would like to recommend Ben Leybovich's Cash Flow Freedom University. Ben is a close friend and has been my trusted adviser for years. He's a smart guy and CFFU is pretty awesome. The course is waitlisted, but while you wait for an opening Ben will send you tons of FREE content. Seriously. Click here to check it out.

(yes, that's an affiliate link!)

{ 18 comments… read them below or add one }

Jared Olsen October 3, 2012 at 3:13 pm

Hey Brandon,

Great article! This actually is exactly what I needed to hear today. I’m about to start my first flip, and I have been having trouble finding good contractors. Perfect timing! Thanks!


Brandon October 3, 2012 at 3:17 pm

Thanks Jared, that’s always great to hear! Another good way to find contractors is to ask Realtors. They generally will have a good knowledge of who the best rehabers are in an area. Good luck and keep in touch! I’d love to see how your flip proceeds!


Salina H October 3, 2012 at 3:15 pm

I think the change in direction is a good idea. You have to know your market and what sells better or worse. hopefully it works out well for you!


Brandon October 3, 2012 at 3:18 pm

Thanks Salina, I couldn’t have agreed more! I hope it works out well too! The best part is – I don’t really have to hope! If it doesn’t sell now I just rent it out refinance it and wait for the market to improve. So either way I win! 🙂 That’s the best kind of investing!


Azmhed October 3, 2012 at 3:24 pm

What do you think would happen to go the other direction and raise your prices and rehab level? Like put in granite, hardwood, etc.

Good post though!


Brandon October 3, 2012 at 3:27 pm

I’m tempted to think in these terms a lot, actually. But based on experience in the past – the lower priced flips generally work better. I have a house I’m selling right now that is “high end” with granite, hardwood floors, travertine tile, and really really nice. It’s just finally selling after over 1 year on the market! So I’m a bit negative when it comes to those high end flips. In some areas they work great, but in my area the rent-ready style flips seem to sell better.

Thanks for the comment Azmhed! I appreciate it!


Brett October 3, 2012 at 9:37 pm

I feel like a happy medium would be the way to go. Put in some nice touches to set you above the norm for the neighborhood but don’t have to go all out at every turn. Sounds like the house is already one of the nicer ones on the block and I think that’s huge and should allow you to do “less” and not have it impact the desirability.

Good luck…and great blog!


Brandon October 3, 2012 at 9:40 pm

Thanks Brett! I agree, I don’t want it to look crappy- but I’m thinking along the lines of laminate counters instead of granite since no other homes have granite. Thanks for the encouragement!


Tiffany October 4, 2012 at 8:12 am

There’s some awesome laminate that will fool your eye! I noticed our timeshares often use this. We used it in a recent flip. Looked great!


Tiffany October 4, 2012 at 8:10 am

Hey Brandon!
Smart idea on the backsplash area and money saving. Everyone wants a deal right now. If you can sell a nice house (rehabbed Marcy in good condition) for less, that sounds right, especially as winter approaches. Can you get this baby on the market Nov 1 or sooner? Before Halloween is probably best!

Check your local laws on supplying the materials for your contractor. I have “heard” that in some cases this can qualify them as an employee rather than independent contractor.

Are you going to give the HS student another shot?

Your wife is a beauty!


Brandon October 4, 2012 at 7:41 pm

Thanks Tiffany,

Yeah, I agree – I think I can get it listed by Halloween. I know we are approaching the absolute worst time to sell, so it would be nice to have it gone before Thanksgiving. As for the HS kid- yeah. There are not a whole lot of easy jobs left, but he’s going to do some mowing for me and some mild landscaping. We’ll see how it goes!

Thanks for the comment Tiffany! (And the compliment for Heather! I’ll tell her you said so!)


Ryan Ferguson October 4, 2012 at 7:54 pm

I’ll second the comment about buying materials for the contractor – at least where I am if you supply the materials that makes you an employer rather than a homeowner, from a legal perspective, and opens you up to significant liability. Down here, the recommended maneuver is to price it all out, get the exact SKUs and a Bill of Materials and hand that to the contractor already quoted up and gift wrapped – BUT MAKE THEM BUY IT.

Also, as far as rehabs go, I’m told the Master Bathroom will add the most value to a house – what do you think of this Brandon?


Brandon October 4, 2012 at 10:00 pm

That’s a really good point Ryan. It’s true, it can blur the lines between being an employer vs. just hiring a contractor. I think in the future I’ll do that. Thanks!

I agree- the bath is pretty big. We just got finished tiling the whole thing, and added a new toilet and pedestal sink. It’s looking real nice, I think. Pictures will be up soon!


Elizabeth October 6, 2012 at 3:17 am

An hour to teach someone how to spackle over nail holes?! I could spackle every nail hole in a single family house in less than an hour!

After reading this post, I’m scratching my head as to how 1.) the first guy could manage to screw up something so simple in the first place and 2.) the second guy (painter) could not notice that it was done wrong BEFORE painting over EVERYTHING. I wouldn’t pay either of them for the time to redo it right… and I certainly wouldn’t recommend them after those antics!

Stories like that, and personal experience, certainly make me weary of hiring contractors just to keep my clothes clean. (I wear gloves and a white painters suit so my clothes stay perfect anyway ;))

For me, smart sweat equity is the most powerful tool in real estate investing for those who didn’t start with a fortune. Even when paying for help to “save time”, if you have to supervise, you’re often spending just as much time babysitting the contractor. The licensed and bonded guys cost a fortune, the rest tend to lie about their experience and often don’t know how to do it right, or according to code. I’ve hired out several times and ended up with my tools broken, garbage not picked up, arguments about how it should be done (I always follow manufacturers instructions and local codes) and even drinking on the job and one individual who never completed the work because he was arrested half way through. Having worked on a number of properties now, the array of skills I’ve learned across the various trades, from plumbing to electrical = $80 a hour + home equity back in my pocket. Now the only time I will hire help is for specialized crew work (replacing a roof or pouring a concrete slab for example) or a day laborer to help lift/move something that one person can’t tackle on their own while I give instructions (like installing a large window.)

But I’ll be curious to see whether you think the final cost is worth the trade off when you’re done with the remodel.


Brandon October 6, 2012 at 6:27 am

Hey Elizabeth – great comment! I know, it’s ridiculous. The nail holes were pretty crazy. The only man who lived there was an eccentric collector, so he had hundreds of shelves everywhere, with thousands of nail holes. I’ve never seen anything like it. No exaggeration – there were at least 5,000 nail holes in that house. It was insane!

I feel the same with contractors. I do really like the guy I have, and he’s like 95% great. That 5% (like not noticing the bad nail hole fill job) is worth the fact that he is very reasonable priced. I hope.

I had that same dilemma for years, because I know that I (with my wife) can do all that work better, faster, and cheaper. However, it’s come down to economy of scale. I can only do so much in life, and I would have to give up a lot if I went back to doing the labor. For example, I lead worship and the youth group at my church, run this blog, manage rental properties, work out with P90x, and more. So, it comes down to not doing a flip at all or doing one with the expense and headaches of the contractors.

Thanks for the detailed comment though! I love comments like this. Keep in touch Elizabeth!


Elizabeth October 7, 2012 at 12:10 am

You bet!


Danny Johnson October 8, 2012 at 4:31 am

Hey Brandon. Great blog and excellent post.

I’ve always been amazed at the disparity in prices between contractors with large ads in the yellow pages and the types of contractors we typically use. I had a contractor roll up in a Hummer to give an estimate on an exterior paint job. The house was a historic one and was pretty tall. Most of the prep was already done and even had a lot primed. So I was shocked when he called me with a bid of $56,000 to FINISH painting the exterior of the house. WOAH. I had to ask if he intended on removing all of the period siding and replacing it with better quality period siding. Insane. You know if they have enough jobs to bid on, I guess it doesn’t take many to pay the bills at those prices. Can’t really fault them too much for it.

The other side of the coin are the guys on Craigslist. Man you’ve got to be careful with them. Too funny. I had called one guy that said he did pool repairs because I needed an above ground pool re-lined. He wanted to meet me at a pool supply store parking lot. When he arrived, 15 minutes late, he did not get out of his car but instead rolled the window down and looked at me with his blood shot eyes and honestly asked for $20 to get started. Based on his fidgeting, I could guess what he was going to do with that $20. Man what a waste of time.

I think your best step on managing a rehab is the one about being there. This is a must. The only thing I could add is to bring a pad of paper to write notes. I’ve found that I just sort of scan over everything too fast when I am not looking for something to write down. Just something I’ve found helpful.


Brandon October 8, 2012 at 4:38 pm

Hey Danny, Thanks for the comment! That’s so funny about the craigslist guy! I’ve had guys ask for $20 in cash up front too – same reason. Keep in touch Danny!


Leave a Comment

Previous post:

Next post: