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Your host David Dodge is very excited to introduce Van Sturgeon on Discount Property Investor Podcast. They talked about how to save 30%-50% on your rehab projects. Listen to this episode to learn more about the tips and tricks on how to save money on your rehabilitation projects. Van also provides free training and offers a free renovation calculator. Check this episode and start learning!
Things that will cover in this episode:
- Who is Van Sturgeon and how he started his real estate journey?
- Tips on how to save 30%-50% on your rehab projects.
- Finding opportunities and establishing a network
- Understand the renovation and rehabilitation side of the business
- Rehab plan
Van’s Social Media Accounts
David: Hey guys, welcome back to the discount property investor podcast. I am excited today to bring Van Sturgeon on the show, and Van is going to talk to us today about how to save 30 to 50% on your rehab project, so I’m super excited to hear some of the fascinating things that Van has to teach us today as well as get the opportunity to you know, network and learn more about Van. Van, welcome to the show. How you doing today?
Van: Well thank you for- I’m very good David. I’ve been looking forward to this interview so I really appreciate you taking the time for little old me and having me on your great podcast. I listen to you two boys for a long time and so I really appreciate the opportunity being on and share some of the grey hairs of wisdom that I’ve obtained over the period of time of 30 years, over 30 years of being in real estate so I’m looking forward to great conversation.
David: Hey, we’re happy to have you here Van. So tell us a little bit about, you know, what you are doing currently as an investor or what you have done, you know, so on so forth. Who is Van Sturgeon?
Van: Well I’m going to tell you that Van Sturgeon is a kid that grew up in Chicago back in the late sixties or so, and I was living over there with my parents and my younger brother in a one-bedroom apartment in Chicago and what my parents were doing is just like every average folk who’s trying to put- you know, save up all their money to buy you know, the American dream to buy their own home. So ultimately what ended up happening was is they’re saving their money, they discovered that the building that they were renting from, the apartment was actually went up for sale and so instead of buying that dream home, they ended up becoming landlords. So they bought that- they put their money down with some help of friends of the family and were able to become landlords and actually purchased the building that they were renting from. And so, they became landlords.
David: And this is your parents we’re talking about, right?
Van: Pardon me?
David: This is your parents you’re talking about?
Van: Yes, yes, may parents.
Van: So what ended up happening was they ended up taking over and it was around that time when they moved in the late seventies. You’re too young to remember, back then it was a pretty miserable time. [inaudible] we’re all over like we’re 18, 20%, the economy was going down the tubes and I remember standing in line with the old man pouring gas in my- waiting in line to pour gas in our cars cuz of the oil shortage, the gas shortage. So it was during that period of time, the buildings around us that should be a nice little neighborhood in Chicago where we where we were, landlords were starting to torch their buildings so that- to collect insurance money cuz it was such a miserable time and my parents had to go through 40, it was around 40, 50% of vacancy because of how bad it got.
Van: So as a result, as a family we had to sorta get together and buckle up and we did everything ourselves. So that’s- from painting, the plastering, cleaning toilets, you name it, we did it and that’s the background that I got came from is I got that the renovation side, a component experience right from an early age. So fast forward, I went to university, graduated and then eventually I decided to stop being a lawyer, went to become a general contractor, wanted to stay in the real estate industry in renovations so I opened up a general contracting company in Chicago and then started to grow that business. It was developing early 90s and then things progressed, I kept bumping into the same types of cats, the same types of people that would buy and flip homes or buy and hold, create buyer portfolio’s, real estate portfolios and grow them and so I started to dabble in that as well. So from growing my general contracting business, eventually along the same side, I was developing, you know, flipping homes I started and then started growing into buy and hold so approximately now I’ve got over a thousand rental units or doors as we say in the industry, and I still have a general contracting, business property management, I have restoration company, general contracting. I still do that, but I’m sort of in that- I’ve got really great people in those businesses. Right now, I’m sort of semi-retired and doing what I did over the last 30 years have taken a lot out of me so I just wanted to dial shift in my life right now and spend more time with family and I’m looking forward to helping people. I- this was one of my passions, just telling people about my experiences and walking them through with the hopes of trying to plan and manage a renovation so that they can save a lot of money and also learn a skill set at the same time, right?
David: I love it, man. So you currently have over a thousand doors. You had mentioned that you’re still in the general contracting business, what other businesses do you own and operate? You have a management company too.
Van: Yes, I’ve got a property management and none of this David was sort of planned out, it sort of evolved. So, from the general contracting, I started building a portfolio. When I hit 7- 80 doors, I realized why am I paying a property manager? Why don’t I create this company and look after it? And then also, I had these relationships with other real estate investors where they had portfolios that I actually got started dabbling in and looking after there portfolios, so it became a natural progression and from there, got into some land developments. I still built homes from subdivisions to custom homes, and I also do restoration work on high-rise commercial buildings so if you ever see a crew out there hanging off of balconies up in 18 story apartment building, condominium or underground garage, that’s the kind of work I also do. So I’ve got a number of different companies but I’m sort of devested myself. I let good people like I got really good people running them and I sort of jump in every once in a while, see how things are going. So that’s what I do.
David: Wow, it sounds like you got your hands full but you’re retired. So you got people in the right places running and managing these companies for you, I love it, very very fascinating. So, background in general contracting, multiple businesses, you’re obviously a super successful entrepreneur and yeah again, you started in the general contracting as well which is a good thing in order to you know, really have a good understanding of the rehabs and that’s really the main topic today was you know, how to save 50 or 30 to 50 percent on a rehab project. So Van, what tips and tricks do you have that you can share with us to help us save some money when it comes to us renovating or rehabbing you know, our property? And most of the investors on this podcast are going to be new investors that are going to most likely be doing you know, wholesaling and/or small buy-and-hold of course, typically single-family or small multis. Again, I would think would be the majority of the audience that we have just based on the previous 264 episodes of content, right?
David: So yeah, fill us in man, what kind of tips and tricks do you have for us today? I’m super curious to hear all about it.
Van: One of the things that we talked about off- before we got on this interview was if you really want to be a successful, real estate investor, what you guys are doing and getting the word out on the wholesaling side is extremely important. I think that being able to find opportunities off market and not just run to the internet and MLS to try to find a deal. You and I know and everybody should know who’s been listening to this podcast religiously, we know that there’s no deals or very rare there’s deals on MLS, you got to go out there and figure out other ways off market to find these opportunities.
David: That’s exactly right.
Van: And once you’ve established that network and that ability, it’s amazing what things can happen. You can become very successful right away and also the same time, you track people with money and opportunities and you create the power team where you could then really can kick it up a notch and grow your business. That being said, one of the pillars I think of a successful real estate investor is that you need to also know and understand the renovation rehab side of the business. For example, if you right now get this hot lead on a property and you’re walking through it and where you only have a couple hours to make a decision whether you want to make the deal or you don’t, you got to be able to have a full understanding of how long it’s going to take, what the cost is going to be, evaluate that in terms of what the value of the property is that you’re looking to put an offer in on an off-market basis, right?
David: That’s right.
Van: That can go on MLS or on something that’s off market, right?
David: Yes sir.
Van: And so you can’t make up- you can’t call up your brother-in-law, the contractor. You can’t call in a property inspector. You need to be able to go in there, look at the place and in 20 minutes, be able to come up with a value to throw at this potential opportunity and walk away with a deal. If you wait too long, somebody else is going to come in and swoop that from you, so I think that this part of the elements that you need to become a successful real estate investor, you need to be able to make that assessment on what- how long and how much is it going to cost to do a rehab rental on a property. So that’s where I start- that’s the basis I start off my education with people helping them out is try to figure out what is the systems and strategies that you need them implement in every single rental rehab that you’re looking at doing so that you can produce the same consistent results time and time again. I’ve done- I’ve literally have done thousands of renovations from apartments to single-family, commercial, residential. Whatever walks and crawls, I have- I’ve done, so I understand and have a basis and I’ve created systems that I use in my business to be as successful as I’ve become that I think that people need to actually implement in their lives if they want to become successful real estate investors, whether that’s wholesaling, whether that’s- all that. All that stuff, you need to have these critical tools like the systems, you need to have them. So to really bounce into it, one of the first things that I find that many new real estate investors struggle with is that they don’t have a clear to find goal of what it is they’re electing to accomplish with this renovation, with this rehab that you’re considering doing on a property. So if you’re looking at flipping a house or if you’re looking at renting it to, you know, renting it out, you know, buy and hold strategy, you got to have an understanding of what is that, what does this property need? You got to get out there and get out the information. You got to, you got to visit other properties. So for example, you got a- you want to rent out this particular property for $1,200 a month. Well, if you want to rent that out, you need to go out there and validate that, you got to do your research. You got to go look at other properties that are renting for that mark or more or less and understand what it is they need in terms of rehab.
Van: Whether you’re looking to flip a house and make 59, 80 grand on it, you got to also understand what is it you got to put in that property, and a lot of folks don’t do that and it’s really a fundamental step that you need to have to- that you need to do and often they rely on other people to figure this out for them and you can’t. You got to do that yourself.
Van: So once you’ve got- able to- [inaudible] the goal and you’ve written it down, you stare at it. Everything that you do, you gotta filter through that goal. So if I’m looking to rent it for $1,200 or make- look in the flip and make 50, 60, 80 grand, everything that we do has got to be through- used through- you got to filter that through that goal. The next step is once we validate it, understand okay, what is out there in the marketplace that we could get real stickley $1,200, $50,000, we move to the actual property itself where we go and do an overall physical assessment of the property and determine, create two types of lists, one’s a needs list, one’s a want list. What that means David is needs are something to have to be done. So when you walk through a property and you see a gaping hole in the roof and there’s water’s coming down, rain’s coming down, that’s a need, you got to address that. But often times when new real estate investors come in, they jump in and they merely assume that the windows of a property are 46 years old, that they have to replace them and that isn’t a need as far as I’m concerned, that’s a want. Unless that windows broken allowing mother nature to come in, that’s a want. That red shaggy carpet, it’s from the nineteen-seventies, you’re too young to remember that beautiful red shaggy carpet. It’s in the living room, you know that carpet sometimes if it’s still functional, it’s not causing anybody trip hazard, you hold on to something like that because again at the end of the day, we need to save as much- we need to keep as much money in our pocket and there’s only so much that you can do to a property perhaps to get to that point where you’ve maximized value whether it’s cementing it or flipping it.
David: Got it.
Van: So when you create those two lists, that’s when you’re really gonna understand and appreciate what it is that you need to do in the project and then you move on to the next step which is budget. Like, how much money do you have in the kitty? And when you get that dollar value of how much you know and there’s things that you can do that a lot of people are not really exposed to unless you’re experienced. Like there’s opportunities with lines of credit, there’s opportunities with hard money lenders, there’s also even government programs depending on the municipality and are you live in, sometimes you can tap in to some free money. There’s also opportunities where credit cards sometimes or home improvement centers give out these credit cards will give you six months, no payment, no percentage, no nothing. Now these are the opportunities that perhaps that you can use to be able to get the money together to do whatever it is that you’re looking to do whether it’s flipping a house or renting it out. So those are the types of things that [inaudible] in the planning stage that I really encourage people to- that I often times see people not completing that leads into- it’s like that foundation on a house, you know. When you’re building a nice strong house, you need a nice strong foundation and planning is so critical. The goal is so critical. And then after that, if you got that solid foundation, it’s really easy to build that house.
David: Love it, very cool. So, start by putting together a rehab plan and separate the needs from the wants. Next step you had mentioned is, you know, your budget, put together your budget and then what was the third thing you had mentioned? After the budget.
Van: Well, once you’ve been able to put that budget together, then you’re in a position where you are now are able to move on to the next phase which is still part of the planning process and I want to really spend some time on this because it’s often missed out there with folks whether they’re new real estate investors or seasoned real estate investors. It’s like I keep seeing the same issue time and time again. As I mentioned right from the beginning David, I am a real estate investor but I’m also general contractor like that’s where my background is. So whenever I have walked into proper- opportunities whether it’s on the commercial side or on the residential side. When I’m bidding on work, as a general contractor, it’s amazing how things are so similar on the commercial-residential side, but at the same time so completely different. On the commercial side, when I am called to price out something, I get a document, it’s called the scope of work and within that document is itemize every single minutiae that’s associated with that project, that renovation so it could be from the point of what the color of the walls are, drawing specifications, the type of appliances, hardwood, all that good stuff is put into the actual document and is broken into different disciplines. One for the electrician, the painter, the plumber, whoever is involved in that project, right? That’s on the commercial side. Unfortunately the residential side, that is almost never is the case where an actual document is created for the renovation that you’re contemplating, that’s supposed to be initiated and often times new real estate investors will just make a phone call to several general contractors and assume that they’re going to plan and manage the renovation and come up with a price. And the difficulty- I’m touching- you’re understanding what the difficulty is that how me as a real estate investor who’s looking to save money, make the most amount of money out of this opportunity, how am I going to be able to do that if I’ve got- I don’t have a comparison of apples to apples, meaning if I just call up a couple general contractors to give me an idea of how much things cost without an actual- being able to compare it to all the same thing, I end up with the disaster. I’ll end up with guys who’ll give me a quote of $50,000, another guy $80,000, another guy $120,000. And it could be that the guy who’s 80 thousand is a much better deal that the guy who was at 50 thousand or 120 thousand based on what he’s included in that renovation. So, one of the things is incredibly important on the residential side as it’s happening in the commercial side- unfortunately on the commercial side, you have architects and engineers are putting that scope of work but on the residential side, you don’t have to be a detailed but nevertheless you still need to create that document so that once you have it and you have all the disciplines identify what it is you’re looking to accomplish, you tender that out to the electrician, the plumber, the painter and all of a sudden, these individuals are pricing out apples to apples. Every quote that you’re going to get back, you can compare them. Ultimately at the end of the day, the true savings in this and what I’m proposing to everybody listening is that I want you to become your own general contractor on your renovation or develop a skill set and/or develop a skill set so that you’re wholesaling, you’re out there looking at properties, you have an understanding what it is that’s going to take time and money and what you need to accomplish within that property to be able to put a value on it so that you got a number to be able to offer that potential wholesale deal or opportunity And so these are the types of things that I see out there that is really important is to create that document that people can use.
David: Nice. So you have some examples of people can use then?
Van: Absolutely. Like, I’ve got a library like I’ve done- I think I said I’ve done thousands of these and I got a library of clauses and things in the system. I literally assist them to be able to walk people through a property and identify the things that they want in conjunction- prior to that, you figure out what your needs are, what your wants are, how much money you got in the kitty? Once you got all that figured out, then you create the document and you put all of that stuff in and you take a couple of photographs, you scratch out some drawings. Every piece of information that you include that scope of work further defines all the people that are looking at it. You know, all the contractors, the trace people are looking, all the electrician’s know oh you want four plugs or the plumber, oh you want this type of faucet? Or the painter, this color? Do you know how many different types of paints there are? Do you know how many different finishes there are on paint? How many different qualities there are? So if you just go call up a painter, say yeah I want my house painted with a white color, that doesn’t mean anything. To me as a contractor, I need to have that in order for me to accurately quote it, because guess what? If I don’t, I’m just going to use the cheapest material and me as a contractor that’s been doing it for over 30 years, I really don’t like involving myself and I do good work and I do quality work, I stand by where I work. I really don’t want to get involved in projects when people don’t have it figured out cuz I have discovered in my life and it’s been- you know, I’ve gone through the ropes, I’ve done a lot of these. That when people are prepared, I like doing business with them because it’s bang bang, I flip my- I do the job and move on to the next project. The projects that bog me down where I lose money or the ones that people, there’s indecisions, we don’t know what’s going on, we try to figure it out and that leads to chaos which me, I just want to get my work done and move on it. Any good qualified trace person or contractor always wants to be in the situations where everything is understood, just go in there, do the work and get the hell out. They get paid and they move on to the next project and that’s why you see so many horror stories. There’s channels, there’s tv shows dedicated to contractors and disasters where people- contractors start things and they disappear just because there’s a lot of uncertainty, there’s a lot of things that you the principal, the homeowner, the investor, the real estate investor that needs to have figured out the prior, in the planning process, in managing it that I rarely rarely come across situations where it’s not a successful process where I’ve saves money and I get the final product done on time in budget.
David: Love it, very cool. So guys, put together these scopes to work. Van, it sounds like has some free giveaways or some tools to help you put together these scopes of work cuz if you are new, you know, that can be very overwhelming like where do I even start, right? So Van, what do you got for us, man?
Van: Well, I got a- I got a website that I’ve developed where I’ve got a- I’ve written a number of articles over my- over by years that have been published in a couple- a bunch of different places. I suggest- I encourage people to go on my website as a source of information. Also I think that there’s a free training that I’m providing also that gives you sort of this- it won’t be discussed right now but a little bit further in-depth about why you should be your own general contractor and not give it- try to manage the process on your own and it really- what I really would encourage people is go download, I got a free renovation calculator that I’m offering. You download it and it’s a beautiful piece of machinery that took my team and I a couple of months to put together and ultimately what it is is a thing where you can enter what it is that you’re looking to accomplish in that property and it’ll spit out what the renovation budget should be.
David: What’s the URL? What’s the website?
Van: It’s www.vansturgeon.com so V-A-N-S-T-U-R-G-E-O-N.com.
David: vansturgeon.com, awesome. So over there on that website, you have a free sounds like a calculator?
Van: That’s correct.
Van: So it’s a program that you enter your email, it’ll email it over to you and that way you’ve got something that’ll give you a good sense of what the cost would be associated with this rental rehab that you’re looking or contemplating doing, it’s a good start point. Now, I’ve developed it for all across North America so it’s a generalized kind of idea. To get really more specific, you need to get into every single, you know, every locale has got their own minutiae, right? And especially now with the commodity prices have skyrocketed, you know, some areas might not be as accurate as it should be because of what we’re going to right now, it’s craziness right now.
David: Right, yeah.
Van: Nevertheless, it gives you the rule of thumb what you should be expecting in a rental rehab.
David: Interesting. So you have a free calculator and then do you have- do you have some tools over there in terms of you know, teaching people about scopes of work, how to generate them, so on so forth?
Van: Yeah, all the stuff that I talked about I’ve got online on my website where there’s actual section, as well as articles that I’ve written as well. I’ve got a blog area where people are more than welcome to go and read the stuff that I’ve written and it gives you a good idea of the sense of why- what are the steps you should be taking in the planning and execution of a successful rental rehab, how you can save 30 to 50% on your renovation. And people ask me well how can you do- How can you save that much money? It’s very simple. We eliminate the general contractor out of the equation and we insert you in and you plan and manage your renovation, and not only are you going to save a lot of money, you’re also going to learn a skill set which is going to- which is going to help you. If you’re a success- if you want to be successful real estate investor, it’s a critical component, a critical skill set you need. Like I had mentioned earlier, when you walk into a property and you got a snap decision to make on what, you know, whether you buy or you don’t buy. And so I’ve got all that information on the website so I encourage people to go and take a look, and if you ever want to reach out me, they’re more than welcome through social media. I’ve got Facebook and Instagram, as well as a contact page on my website to you’re more than welcome to come and I’ll do what I can to help them out.
David: All right. So guys, connect directly with Van: Facebook, Instagram, and/or there’s a contact page on his website which is been vansturgeon.com, V-A-N-S-T-U-R-G-E-O-N.com and basically, you know, he’s going to teach you over there on that site how to save 30 to 50% on your rehab project and the majority of it, it sounds like is going to be, you know, done by removing the general contractor from the equation, inserting yourself there and in order to do that, you are going to need to learn about rehabbing, you’re going to need to learn about scopes of work. Therefore, when you’re getting your bids like Van said earlier in the episode, you always want to be comparing apples to apples, not apples to oranges, right? So make sure that when you’re putting together your scope of work, you use that to get your bids, right? And he’s 100% right. When you’re doing commercial work, you know, everything is done by an engineer or an architect, you know, and if not, it’s at least put on paper in terms of scope of work, right? What is done? What are materials? When can we expect it done? What are the expected costs? So on so forth, and when you move over into the single family or the small multifamily realm, it’s often not done that way but here’s the deal: it should be done that way, right? I think a lot of times it’s not done that way just because you’re dealing with less sophisticated people, less sophisticated investors and maybe even less sophisticated contractors, but what Van is teaching here today and offering in terms of some free giveaways, you know, is a solution to basically save money but also do it the right way. Last thing you want to do is take the cheapest quote, but then you only get, you know, fifty or sixty percent of the needs handled from the needs and wants list that you had mentioned. Van, I love it man. I totally agree with everything you’re saying, you know. Again, you can connect with Van on Facebook, Instagram, or head on over to his website and there’s a contact page there. He’s giving away a free calculator which will help you, you know, generate basically a scope of work and/or the cost of what that project should be, and again, depending on the market you live in, those numbers may need to be tweaked a little bit but that’s okay, at least it’s going to give you a place to start, right? It’s going to give you a foundation to work on. But again, the main way to read to reduce the cost of your rehabs, you know, by 30 to 50%, even if it’s a little less than that, savings are savings. Who doesn’t want to save money, right? You do so essentially by removing the GC guys so become that person and again, it’s not just something that you can just do overnight but, you know, start learning, right? Start putting in the pieces of the puzzle there, right? To learn how to be that person and it’s probably not going to be easy, let’s be honest right? This may be difficult to do but if you can learn how to do this, right? That’s the thing. If you can learn how to do this, you’re going to save a substantial amount of money, especially, if you’re doing multiple rehabs guys. If you’re doing one or two rehabs, hey might not be, you know, something that you’re looking to do, you may be willing to just pay more money for ease-of-use, right? Pros and cons. But if you are looking to become, you know, the investor that’s doing tons of rehab, your adding rentals to your portfolio or you’re just doing lots of fix and flips, you need to become that general contractor because it’s going to save you money. I love it. Van, what’d I miss?
Van: No, you got it nailed. We can talk for longer about the actual- what are the things that you look in contractors and hiring them but pretty much-
David: Let’s talk about some of those things. I’m very interested.
Van: Well, with regards to like the contractors, it’s interesting that I- one of the biggest issues that I find with a lot of new real estate investors is that they end up giving out too much money on the initial deposit and then in progression payments as, you know, the work goes on with the, you know, during the duration of that project and I strongly discourage people in doing that because ultimately- you know, listen: contractors and these trace people are not like McDonald’s, like they- McDonald’s the only place where you pay ahead of time to get your hamburger and it’s often an analogy that I use. As an investor, we try to minimize the amount- the least- we try to- you know, the least amount of money that you want to put out. You want to see service provided and that’s when you make payment and if you get into this habit of doing that, it’s amazing how attentive contractors and trace people are when money is owed to them versus you, you know, in the red in terms of the amount of money that you’ve dished out versus, you know, the services they provided and when you are in that situation, you created that- that means that contractors will show up, they’re going to produce quality work and you don’t have issues, you don’t have these issues and it all comes out to money. That’s how one of the things that I see often a lot of times, new real estate investors do, the mistakes that they make and I strongly- one of the things I have the key for that could hold on to your money as much of your money as possible and part of that whole scope of work when you’re creating in an agreement, when you reach a contractual agreement with a trace is to create a payment schedule so that everybody understands what’s happening, like if you produce this- when you produce this I’m sorry, this is- that’s when you’ll get paid. And there has to be milestones put within the whole process of the contract or the whole project, and often times another thing that I find, one of the mistakes that people make is that they don’t leave enough money at the end to hold back to make sure that the contractor finishes. Me as a contractor, this whole contract thing, I’m telling you that the last five percent of a project are the most daunting, the most difficult because there’s a little bit of this, a little bit of that and fix this, you know, these little things that add up to a lot and as contractors if you are able to skedaddle your way out of there which some contractors will, they will get out of it even if- because it’s not worth it for them to waste that much time in fixing the little doo dads. So what I again encourage is to hold back as much money as possible, that forces that contractor or trace person contractually and morally and all that good stuff, money that they better complete everything and then get paid. So those are just some of the things that I teach people that I walked- explained thoroughly to people that it was one of the reasons why they’re so successful in saving money and it empowers them, they learned a skills set, so it’s an amazing process and I enjoy- I enjoy engaging people. I love- I love walking people through it and it’s a great process, I enjoy helping people.
David: Nice, very cool. So guys, that’s a great tip that he just had it in there. Don’t pay too much upfront, minimize your out-of-pocket and I like to refer to that money at the end as the comeback money, right? Or the holdout money, right? So basically, whenever I’m doing any of my renovations, you know, I don’t put a ton of money up front typically. I usually put up about a quarter which will go towards materials or I will even- if it’s a new contractor, I will go to the store with them and buy the materials that they need and I don’t pay them any money typically until the project is about half of the way through. Again, it depends on your relationship with your contractor, you know, and the scope of work as well too. These things are going to definitely be variables in the equation here but regardless, we hold 15% no matter what until the very very very end, until every single thing is done and if it’s not on the scope of work, well then we may need to make an adjustment to the scope of work or add new stuff on, right? You don’t want to try to add stuff on for the same price, that’s not really fair to the contractor, right? So if there are modifications, then there may need to be new negotiations but essentially though, if you get really good at getting your scope of work, you know, finalized or you know, another word would be- or another way to describe that is complete before the project even starts, and you’re not having to add additional stuff to it, you need to have the hold back money or the come back money and I typically hold about 15% out until every single item, not 95% of those items or 99% of those items, 100% of those items, all of them are complete, then they get that last 15% but not a moment sooner than every single item is complete and if they don’t want to finish one of those items, well then they don’t get that extra 15% and again that’s really where a scope of work comes in and it’s also a good idea to you know, have a little agreement in that scope of work on the payment terms, right? The scope of work is just basically what needs to be accomplished. It’s also good to have in there those payment terms and define and describe to them that you have this, you know, close out or hold out money, we call it the internally the comeback money, right? They’re not going to come back if you’ve paid them a hundred percent of the project when they’re 75% done, right? They may stop right then and there or they may just finish it up to the 95% mark and they’re done, they’re out. It’s going to be impossible to get them to come back so great advice Van. I absolutely agree with everything you said today, I don’t always agree with all- with everything people say that come on my show but in this case I did. I think that you definitely would make for a great teacher. Guys, if you are looking to learn more about, you know, scopes of work and reducing your rehab budget, Van has an amazing program, go check it out, you can find it over on vansturgeon.com. He even gives away some freebies if you know, aren’t ready to jump into doing a program with him but you want to get a free calculator, you know, or learn more about, you know, generating your scope of work and learning more tips and tricks, you can find all that stuff over on his website. Again, it’s vansturgeon.com. It’s his full name and then if you want to connect with Van: Facebook, Instagram or again, head on over to the website and check out his contact page. You can connect with him via email over there but again guys, remove yourself from being- I’m sorry, remove your GC and become that person, right? If you become the general contractor, you are going to save money because you’re not paying somebody else to do that job. You’re also going to learn a lot about the business. I highly encourage people to be their own general contractor. Van, highly encourage, right? And maybe after a while you decide that you don’t want to be and cost isn’t the issue. Saving 30 to 50 percent of rehab doesn’t matter to you anymore. Well that’s fine, right? But if you don’t know these things guys, it is also going to be one of these things when you’re going to get taken to the bank or the cleaners, how are we going to look at it? By GCS, right? Because if you don’t know these costs of certain things, they’re going to just tell you what these costs are and you’re going to believe them and then you’re going to end up paying 50% more for a rehab, right? So again, highly encourage you guys to learn, you know, all these different things: how to put together that scope of work, how to get a- an agreement signed by your contractor that lays everything out because then there’s no arguing down the road. It’s: let’s reference our paperwork that we both signed, right? It says here that we’re going to do this if this happens, has this happened? No, well then we’re not doing this, not yet, right? It’s very simple, it’s very clean, cut and dry, black and white, and that’s really what we want especially when we’re dealing with contractors because if you’re listening to this and you’ve dealt with contractors already, you probably aren’t thinking that this is most fun experience, right? It’s not always the most fun experience because people are going to have a difference of opinions and what not, right? But again, having a scope of work, having an agreement with that contractor is going to eliminate animosity and/or arguments down the road and guess what? The first time you do this, it’s probably not gonna be perfect guys, let’s be honest. But you’re going to learn and by the fifth or sixth or seventh time you do this, you’re going to have a pretty awesome template for your scope of work and you’re gonna have a pretty awesome template for your contractor agreements, and you’re going to keep learning as you go. Van here has a thousand doors so he’s probably done thousands of rehabs so he is going to also be able to get you guys on the fast track, right? So you’re not having to make all the same mistakes that he’s made. Van, thanks for coming on the show today, it’s been a really good- it’s been a pleasure. I’m grateful for your time. I learned a few things. I typically, you know, I typically do. I’m not perfect by any means, always trying to learn new things and I’m confident the audience and the listeners and the viewers here learned a few things as well man. Very, very helpful. You have a very impressive background I have to say. Anybody that’s got a thousand doors is a master at this business in my eyes so again, thank you for coming. It was great to get to know you and network with you. Any parting tips, tricks or words of advice for our audience today?
Van: I continue to listen, a great podcast like yours. You’ve got a lots of great information. I’m a fan of yours and I encourage people to keep listening and you put out great content and by the virtue of that and going out to your local REI’s, your meetup groups, you start to create- shard to get all that information together and really the next step is if you really want to be successful, you need to take the next step and actually get mentorship, get coaching and unfortunately sometimes it costs money, but you should start making that investment first in yourself before you start making an investment in a property or whatever. By making an investment in yourself, you will see tremendous dividends in you being able to navigate through treacherous waters, become a successful real estate investor. It’s like learning how to play an instrument, you can go grab a guitar without any- and just sit there bumbling along, you’ll take a couple years and maybe you’ll figure out a chord or two.
Van: But if you have a musical instructor, guitar instructor right beside you that’s gonna show you how to hold a guitar, what to do, what not to do, whack you over the side of your head if you’re making a mistake, that in itself is tremendous and it’ll get you from point a to point z a lot quicker than you fumbling and struggling around so those are the types of things I encourage people. So I really enjoyed the conversation, I think there’s lots of great information people have been able to get from our conversation and I’d love to come back on to talk some more so thank you very much for having me.
David: Hey you’re welcome Van, thank you for coming on, again I’m grateful for your time. Guys again, if you want to learn more from Van and/or just take advantage of some of the freebies that he has, head on over to vansturgeon.com, he’s got some really cool stuff over there for you. This guy is a pro so if you want to learn how to really take it to the next level and deep dive on how you can save between 30 and 50% on your renovations or your rehabs, he is the guy that’s going to teach this stuff to you and again, I agree with everything you said on this. Great tips and tricks. Thank you so much for coming on. Van, you have an awesome day. Guys, thanks for listening, until next time. Signing off.
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