Recently, we saw a movement within the Nationals to try and capitalize upon the rehab portion of the REO/PP Industry. We have been reporting here on Foreclosurepedia for quite some time now about the silent purchases of enormous swaths of foreclosed real estate by private equity firms:
This year, Waypoint signed a $400 million deal with GI Partners, a private equity firm in Silicon Valley. Gary Beasley, Waypoint’s managing director, says the company plans to buy 10,000 to 15,000 more homes by the end of next year. Other large private equity investors — including Colony Capital, GTIS Partners and Oaktree Capital Management, in partnership with the Carrington Holding Company — have committed millions to this new market.
With that said, where do you as an REO/PP Contractor stand to be able to capitalize upon this? First, you need to ask yourself where do you stand as a business overall. Rehabs are far different than the Property Preservation work you are doing currently. For starters, most firms require you to be either a General Contractor or be associated with one. Second, you are going to become involved with a new job title: Project Management (PM). The PM side will make most of your day-to-day PP work look like a joke unless you get it by the horns from jump! We actually have a series on this for New Contractors.
An average Rehab Contract will go something like this: Company A contacts you and states they want 5 properties ramped up. They will send you the specs and timelines. Generally, if you negotiated the Contract properly, they will have materials dropped on site and you will distribute them according to trade. You are required to pull the required permits, sync the subcontractors and turn key the property when done. We are doing a video on this and will get it up here shortly documenting one of our Projects currently underway.
So, while many of the Contractors were out chasing their tails around trying to figure how to fight amongst themselves over the meager scraps left in the master’s bowl, a substantially smaller amount were out courting the Investors. Moral of the story? Get involved with a good Consultant and get into gear. Now, if you are still addicted to the Background Checks ($50), Mandatory Training ($500+ with NAMFS), Auditing ($1000 – $10,000 depending on the files Safeguard Properties wants hauled out of Archive) and the One Way Bullshit Contracts (Priceless — But a guaranteed bunk either at the Salvation Army or your State Penitentiary) get your DUNS and SAM Account up and running and team up with a decent Consultant!