Based in Los Angeles, The Money Smiths is a blog comprised of thoughts related to personal finances, real estate investing, and musings on early retirement.

I Managed To Renovate Our Bathroom From Across The Country!

I Managed To Renovate Our Bathroom From Across The Country!

It’s done! The bathroom renovation for one of S Pine’s units is completed :D

This was quite the effort and took more time than I thought it would, but the overall process was a success and resulted in our first ever completely remote renovation. I’ve certainly learned that I will need to create a stronger process for this type of project moving forward and have lots to share, so let’s jump into it!

Why renovate in the first place?

My philosophy on having rental units is that whenever something is broken, I want to replace that item with something of better quality. A few months ago I received a 30 day notice from my tenant letting me know that she planned to leave the property. Her life situation had changed and she would be moving to Florida. She also mentioned that the bathroom had started to deteriorate while she was living there and it was worth checking out. Upon hearing that, my first reaction was “how could the bathroom have deteriorated if it was taken care of?”. That thought only lasted a second, because it was quickly overcome by the thought of getting to experience my first remote project! I was excited to take on a new challenge, as managing the properties had become a relatively automated task and I was itching for some excitement.

The first thing I did was send my buddy Mike (who is acting as our boots on the ground) over to check out the bathroom and let me know his thoughts. He let me know that the paint was peeling on the ceiling and that the bathroom did feel a little dated in general. the bathtub also had some staining on the caulking, and the vanity had seen better days. Overall, it was in acceptable shape, but it certainly wouldn’t show very well for new tenants (and I wouldn’t have an easy time asking for higher rent if we left it the way that it was).

Before you ask - No, I don’t think this was a result of the current tenant not taking care of the bathroom. To my recollection, the bathroom was already pretty beat up when we rented it to her 3 years ago.

I reached out to various contractors, utilizing my favorite resource for finding help, Thumbtack.com, and received a bunch of inquiries over the next few days.

Selecting the contractor

All it takes is a quick Google search to find hundreds of thousands of horror stories about dealing with bad contractors, so this was something that was constantly floating in the back of my mind. I exchanged details with all of the companies that reached out and let them know what I would be looking for in terms of quality and timeliness. I spoke with five different companies - 1 of which let me know that he wasn’t interested in coming out to quote the job once he found out that I’m an investor (he said that he wouldn’t be the cheapest quote and didn’t want to waste time), 1 company only exchanged pleasantries with me over Thumbtack and then never responded to me again, and 3 were interested in coming out to see the bathroom to get an idea for the job.

Flash forward to when they got to the house. Mike let them all know the same details of what we’re expecting to be done and let them poke around the bathroom to their hearts content and I anxiously awaited their thoughts. A few days later, I received quotes from all three of the people that went to the house and received the following three prices:

  • Bid #1: $8,000

  • Bid #2: $8,200

  • Bid #3: $12,000

At first I was surprised at how much the cost came to be, I was expecting close to $5,000 in cost, but I chalked that up as not actually knowing what to expect in price. My next thought was that $8,000 - $8,500 must be the fair price, because two of them came in at that value. The third price of $12,000 seemed totally crazy to me, which was unfortunate because that was quoted by a contractor I had used in the past, and I was hoping I could go with the same one for consistency.

My options were essentially between two contractors who I hadn’t met and were the same price, what was I to do? I called Mike! He let me know that one of the contractors was hard to deal with and had a combative personality but the other one was very professional and took the time to measure and understand our expectations. That was a good sign for me, so we decided to go with that one.

I let the winning bidder know that I would be going with their services and set up a date for them to arrive at the property, a few weeks later. I asked for a contract, and waited for the next steps.

A few days later I received their “contract” and it made me a little nervous because it was a very simple one-page document that didn’t seem to actually list out any stipulations of the job other than what they would be doing. It didn’t specify anything outside of a payment schedule and a list of items to address. This certainly wouldn’t work for me, as I recalled from reading The Book on Flipping Houses by J Scott that I would want to establish the contractor relationship and get some more key details in writing.

I took to the internet to try to find a good sample to start with because I wanted to make sure that I could use a contract that I would be happy with. It’s probably not the smartest idea, but I like to take the best parts of each contract I find and make a frankensteined version for my own personal use. I like to write out each of my contracts for the first time, word for word, so that I know exactly what I’m getting into.

Check out the Contractor Template I created here

When I sent this contract back to them, I wasn’t sure if they would be alright with it, but I was prepared to let them know that if they weren’t interested in working this way, I was happy to find a new contractor. Luckily, they were happy to use my template, and we finalized how that would look.

Pro tip: When dealing with a new contractor, you don’t want to pay them too much on the front end, that’s why my template only allots 10% of the total cost at the beginning. I would strongly urge you not to pay more than this, and if your contractor asks for more, you should stand your ground.

Once this was signed, along with a list of the specific items I wanted installed, all we had to do was wait for the day that they would arrive. While we were waiting, I was sure to reach out to my tenants currently in the house to let them know that they would be coming and that they would be there for a few weeks.

Demo day

What a stressful day this was for me. The contractors showed up at 8 in the morning, which was great, except that my tenants in the unit above this one work second shift, so they were unpleasantly surprised. They sent me some strongly worded texts about how they were unhappy and even demanded that I pay for a hotel for them to sleep in while the construction was happening. Despite the fact that I had let them know that the contractors were coming, they didn’t seem to realize that there would be some demo on the first day, which would result in some loud noises. Ultimately, I was able to calm them down and let them know that I would speak with the contractor about not showing up too early in the morning if loud work needed to be done. Upon speaking with the contractor, they were understanding and that wasn’t too much of an issue moving forward. Other than the one hiccup, demo day was a success and the contractor was able to send me a few pictures of their aftermath!

Contact during construction

Part of the reason I went with this contractor is that I was under the impression that his communication skills were excellent. I think that’s an absolute must have for an out of state project like this. I’m happy to say that I wasn’t disappointed at all with how that worked out. He was constantly in touch with me to let me know how progress was going, and for items that I hadn’t decided on before they started, he went to the store to find various options to take pictures of for me. He did a great job of keeping me in the loop and setting expectations accordingly.

The two issues that came up during construction were: 1- I was very busy at work, so I wasn’t able to respond to the contractor as quickly as I would have liked, which may have slowed him down a bit. 2- The tenants on the third floor frequently reached out to complain about the noise levels. Looking back, I don’t know that there’s anything I could have done differently. I do have a full-time job that takes up my time, and the tenants really just needed to understand that there would be some noise. I apologized each time they reached out and I think that helped, but there wasn’t anything I could do from my side about the noise. Here I have a few in-progress pictures to check out as well.

Finishing the job

The contractor was able to finish, though later than I expected him to, and I think that had to do with a little delay from my side, as well as some delay on his side. Overall, there weren’t any tenants that were ready to move in anyway, so I didn’t feel the need to pressure him to speed up. My one thought is that maybe the color on the walls doesn’t look quite how I would want it to as compared to the tile, but I’m told that it looks very nice in person by Mike and my real estate agent, so I’m happy enough for now and can chalk that up to the lighting in the images. Check out these pictures of the finished work:

Final thoughts and what I’ve learned

There are some key takeaways that I think are work reiterating on:

  • Don’t be afraid to make your own contract if necessary.

If I hadn’t made a contract that established the pay schedule and the contractor relationship I could have potentially opened myself up to huge liabilities. This was something that took me a total of about an hour to draft up and is something that I’ll be able to use and reference for the next project I start.

  • Make sure tenants are aware of what it’s like to have construction near them.

This may have just been a particularly needy tenant, but I’m considering drafting up a letter that explains the potential problems that could come up while living next to a unit undergoing construction. I’m envisioning a survival guide that would empower the tenant to approach the contractor, if they feel comfortable to, ask them about noise levels or work hours.

  • Don’t forget to increase the rent to the appropriate amount!

This one’s important. At the end of the day, the main reason that I took this on was to create more cash flow capabilities from this unit. We were renting the apartment for $1,400/month, but after this renovation we have it listed for $1,500/month. Since we’re in the holiday season the tenant flow has been slow, but I’m confident that we will find a good tenant to rent the unit at the asking price.

The numbers!

Speaking of asking price, let’s talk about what we spent and what I think will be the outcome of this whole ordeal: Total cost of the renovation: $8,221 This includes the quoted price and some postage to send the payments. Total rent increase: $100/mo. Renovation break even timeline: 82 months (6.8 years). At first, looking at these numbers, it did feel like a lot to put into a rental of this caliber, but I think that this investment will pay off in the long run. If we look at the full picture, I think a bathroom like this will help to keep the next set of tenants in the home for a long time.

If we also take into account the fact that our last tenant was in the property for about three years, and paid over $42,000 to live there during that time, I can feel confident that the amount of money we spent was justified. Looking at just the year of 2018 for this unit, even with these expenses, the total cash flow for this unit was still above $5,000 which is pretty great.

In conclusion

This was a great learning experience and I believe that I’ll be much better equipped for the next big project that comes up. I think I’ve also found a great new contractor to use for projects like this which is another added bonus to getting this work done. I’d love to hear your thoughts about what you’re read here. Did I do something weird that you would have done differently? Tell me so I can learn!!

Also, Happy Holidays :)

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