As a real estate investor, you carry out rehab in most of the properties you purchase. It is a difficult and costly process that is different with different real estate properties. However, one thing that makes these rehabs desirable is the fact that they add value to a property. But you should not be concerned only with this aspect of rehabs. Yes, your goal as an investor should always be to maximize your profit but rehabs help in running your business more efficiently through standardization. You can earn higher profits through standardization of your property.
Standardization is an exercise that helps in lowering both t he cost as well as difficulties encountered during a rehab. It streamlines the process and makes it less cumbersome. You can save a lot of your time and money through standardization.
Real life example
I learnt my first lessons about standardization while working for McDonald's. During my training, I learnt how to grill the hamburger patty and how to put in just the right quantities of pickle and lettuce inside it. I was impressed with how trainees were explained everything in detail so that every single burger turned out to be exactly alike for the customers. They make their trainees go through video tutorials to understand the process so that they do not commit any mistakes when they are finally making the burgers.
The process of making burgers at McDonald's is the same everywhere whether you are in Memphis, Chicago, or even in Tokyo and Paris. It is said that McDonald's became huge only because of its standardization of various business processes. They were able to streamline their process and also saved lots of money through standardization.
When it comes to rehabs, investors find that they are not easy to standardize. This is because of the fact that every property is unique and different properties need different kinds of repairs. A new problem crops up no matter how much you try to standardize the materials and the process of repairs.
Ingredients of standardization
You can try to achieve standardization during rehabs by learning from McDonald's. You can standardize use of construction materials just as they do with lettuces and pickles while preparing burgers. As an investor, you can choose same tiles, paint colors, electrical and plumbing hardware to streamline your rehab process. This way you can learn costing of your project and also use the leftover materials in your next project. This helps in reducing waste as you can use materials in future.
Checklist is a tool that helps in standardization
One tool that can help you in your standardization process is a checklist. This tool helps in repeating the same quality and same quantity of materials repeatedly in your construction projects. It also helps in keeping a tab on the cost of your project. Without a checklist, it is very easy to forget or overlook important aspects of any rehab project. You find that without a checklist, cost overruns become very common.
It is not static in rehab projects
Rehab projects are constantly changing and evolving. Rehab projects on properties you are buying are obviously different from rehabs carried out on real estate investment properties you wish to sell. This should not stop you from trying to achieve standardization. The only thing to remember here is that it is a constantly evolving process in rehabs. You also need to revise your checklist every now and then. This is because you need new materials while taking up a new rehab project. Adopting standardization will make your job of rehab that much easier and cost effective.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
