Read our Tips on Communicating with Your Private Money Lender and Contractor Team
One of the “soft skills” that every real estate investor needs to develop is strong communication skills. In a rehab project, there’s a lot to coordinate. You need to make sure you and your private money lender are on the same page on the amount of money being loaned and when it has to be paid back. You also need to work with a contractor or a team to finish the work on the property. The more details you have to keep track of, the more important it is to have a system for communication and to set clear expectations.
Be Sure You Understand your Contract with the Hard Money Lender
Start with your hard money lender. Be sure to read the contract carefully and ask questions about any clauses that are unclear. It’s not a bad idea to have an attorney go over a contract before you sign it. This is especially true for those just starting out or when you start working with a new private money lender. Be sure that everything is spelled out with no ambiguities. Insist on clarification if you need to.
If you’re doing the work on the building yourself or with a small team, you need to have a realistic timeline for completing the work. You should also have a budget laid out. Make sure everyone has copies or access to both the timeline and budget. It’s also vital to have a process for how money will be spent. Who will go to the hardware store? How will you report on what you bought and how much it cost? Be sure to have a plan for what to do if you realize you need to do more work than the initial plan called for. This is so common on rehab projects, so don’t let it derail your projects. All of this applies when you hire out the work, too.
Plan for regular check-in meetings with your team or contractor. Once a week is a good place to start. You should also be clear about the best way to get in touch if there is something that has to be decided quickly. Do you prefer calls, texts, or emails? What about your team members? Be sure to protect your check-in times, too. They should be a dedicated time each week. Don’t put them off or change them constantly, as that will just confuse everyone. If your contractor doesn’t have great communication skills or resists telling you about the project, discuss the importance of communication with him. Find a new person to work with if you can’t get good communication with your current team.
Contact LendingXpress to work with a team with tons of experience in rehab loans in California.