On the show today we talk… Rehab & Construction Tips with Christine Kwon.
Listen on: iTunes | Stitcher | Google Play
Show Links:
– SIC 032: Husband & Wife Powerhouse Team Christine Kwon & Olivier Rigon – How we “Do It”
– Rock PI on Facebook
– Nick Sooy Insurance broker in podcast 50
– Drew Kniffin in episode 70
– Contracts Attorney Steve Contos with McFerran Law
– Evictions Evan Loeffler
Show notes on Rehab & Construction Tips w/Christine Kwon
The Vantastic Life is…
– is back in Seattle to catch a flight to Israel
So, how are you doing, and what are you guys up to right now?
Christine
Still flipping, and they have 3 kids, so busy, busy, busy!
Julie
What about summer fun trips?
Christine
We have people coming to us from Texas, Korea , etc.
Julie
I have twin girls that are pre teen. How do you guys figure out family time?
Christine
I’m a planner. I used to have a calendar for every 15 mins.
We recently started having family movie night in the movie theater. Also, every Friday night we have a movie night at home. We make popcorn, and we get to spend more time with the kids.
When the weather is good, we try to hike on the weekends.
We really try to get extra one on one time with our kids.
Julie
My tip is to make your house the “hangout” house. It keeps me plugged in to all of the kids and what they are up to.
We had a lemonade stand last weekend that they turned into a drive through, and then went door knocking for their lemonade and cookies. Good stuff!
Christine
That’s awesome!
Julie
Christine and Olivier just crush it!
They continue to blow my mind. They know when you pivot, and are leading the forefront for all of us in Seattle.
We are going to go over some best practices for managing a construction deal.
You are general contractors. Do you hire subs directly, or have GC’s?
Christine
We do both. We usually don’t like hiring subs directly though because it’s not our expertise.
It depends on the contractor that we hire.
We just like to protect ourselves by having a contractors license in place.
Julie
Even if you’re kicking butt and you need to hire someone… you really need to know… what are some questions that you need to ask these people when hiring them?
Christine
One of the things we do… we don’t do phone interviews. We ask them to meet us at the site to do a walkthrough. This will tell us how much experience they have. There are a lot of different questions we ask.
We need our contractors to be able to follow the process that we’ve laid down. It’s more than just the cost, or how much they charge.
Julie
I totally agree, and you should do this with your own homes as well.
Let me ask you, do you have any trouble getting people to bid jobs? Because all of the contractors are so busy.
Christine
First of all, you want to work with someone that will answer their phone right away. If not, we don’t work with them.
You should always work with someone who’s experienced on your first one or two deals.
Julie
Did you know that if you’re a realtor in Seattle and haven’t done 3 deals in the last year they want you to have a mentor.
Do you have any employees?
Christine
We have 1099 contractors, not any W2. Everyone that we work with is more of a partnership relationship.
Julie
Let’s talk about a project from the construction side.
How about a scope of work. Do you do a custom scope for each house?
Christine
We are more of a machine with a little custom in place. Every house gets the same cabinet, counter tops, and floors. This is easier for the contractors.
In the last year there was a shift away from cookie cutter homes.
We still do mainly the same, but we try to change a few things. Like tiles that pop. We customize a few things, but keep it mostly the same.
Julie
The buyer and agents can tell if “it’s a flip”. And it was that buyers would buy anything, but now the buyers are slowed down, and more choosy.
I do think that it requires some kind of differentiation.
Part of that is the emotional mental that your house is different.
Who goes to Home Depot to buy materials?
Christine
The contractors do. We have everything in the scope of work that includes everything. Picture, skew number, where to buy. Everything that they need.
The FortuneBuilders form was a little too hard to understand, so we configured it for us to make it easier.
We avoid any delays, and use a company Pro account at Lowes or Home Depot. The Pro account sends us texts to confirm.
This is great because the contractors don’t have to pay out of their own pocket. This also gives us extra points for credit cards.
Also, most contractors aren’t very good at managing their money. So this takes care of that.
This way we only pay contractors for labor.
Julie
What is required to get a Pro account at Home Depot or Lowes?
Christine
I can’t remember, it’s been a few years.
We have so many jobs going on that Home Depot and Lowes all over Seattle know who we are.
Julie
You should give the people at Home Depot or Lowes a trucker hat or pizza.
Christine
Home Depot actually sent out their corporate rep to our office and are going to get us in tough with their vendors.
Julie
Are there any best practices for who needs to deliver materials, or anything like that for people who get hurt on the job site.
Christine
I think that it’s about who pays for the materials. But I’m not an attorney, so you should contact an attorney.
If you are a flipper you don’t want to buy materials unless you have a general contractors license.
Julie
Ahh, that’s the distinction!
If you do not have a GC license, you should have the GC that you’ve hired buy the materials.
Who do you use for insurance?
Christine
We have a bunch of different companies depending on what type of businesses we have.
We use State Farm for our rentals, and Farmer’s for our flips.
Julie
Checkout our podcast with Nick Sooy in podcast number 50.
Do you get discounts for purchasing a lot of products?
Christine
We do, but you have to buy things a certain way. You need to purchase in bulk to get a discount.
Julie
Do you have any credit card tips?
Christine
We haven’t done that much research. We use AMEX for purchasing everything. If anything happens AMEX is the best at helping you when something happens.
Joe
I’ve experienced this as well. AMEX is great!
Christine
I know there are much better credit cards, and I know people like Sapphire with Chase.
Julie
You should call Adrian Chu who was on the podcast last week!
At what point do you start ordering materials?
Christine
It goes back to when we put our specs. Once we put a house under contract we are super busy to get ready for the project.
So, when we close we are ready to start the project. We’ve talked to architect and GC’s.
When we pick out the specs we try to pick out the materials that are ready in the store. We don’t want to have to wait for materials.
Julie
Is there anything that you keep in stock?
Christine
We try not to do that because we need space to store things. To me any kind of things sitting in storage is costs.
We try to buy per project.
Julie
Is Olivier in the house counting up windows and doors, or do you use money numbers when looking at the houses… How detailed do you get.
Christine
We look at every detail. Custom vs. standard windows, etc.
We know what it’s going to cost and what it’s going to take.
It’s really about having the experience to know the costs.
Julie
Which is exactly why you should partner with an experienced investor.
What materials do have the most lead time?
Christine
Anything that is not standard. Could be windows – 2-3 weeks, and same with the doors, or closet doors (we couldn’t believe this one). And if there is an issue, you have another 3 weeks to get a new one.
Julie
You should stroll through the stores to know what is standard and what is not.
What subs are the hardest to keep?
Christine
In our case the plumber is the easiest, and electrician is hardest (they raise their prices faster). Each month the electricians think they are worth more.
Julie
The free leads are outside of the real estate world. Outside of your investor world is where you’ll find great deals and great contractors.
People will turn their investor game on and off which hurts them.
You hire GC’s right, and do you have one contract?
Christine
We have one contract with the GC, but we write checks directly to subs, and they have to sign the lean release.
Julie
Do you have an attorney that you like?
Christine
We do, but you have to pay me. Haha!
We have a few different lawyers that we have a retainer with. So, for contracts… Steve Contos with McFerran Law. By far the best lawyer I’ve seen.
For evictions… maybe Evan Loeffler (says Julie).
Julie
We have to wind down because I’m heading to Bongos to meet another investor. Bongos (and Matt Smith) is the jam!
If anyone wants to have lunch let me know.
What is the hardest part of the process?
Christine
Keeping good contractors is the hardest part.
You will have a good relationship and then after 3-4 projects they start to get lazy.
When you hire a GC they have to run their businesses as well. They are good at their work, but they are not good at running their businesses.
Julie
I think Tarl’s secret sauce is, he would help setup the contractors to have a more efficient business, and they would be more interested in doing business with him.
Sounds time consuming, but fruitful in getting contractors stay with you.
If you know Tarl with Fixated on Real Estate, or if no, you should know him.
Do you have a punch list so contractors will show up when something needs to be fixed?
Christine
We pay, but have a small reserve so the contractors will come back if they need to come back to fix something.
We have a couple different inspectors that we use between staging and listing. We pay extra for the home inspection.
Julie
Do you provide that on the listing?
Christine
We don’t, but we give a narrowed down work list.
We will send pictures of the fixes to the inspector so they can update the report.
Julie
Do you use an inspector on the front end when buying?
Christine
Sometimes, but most of the time we are buying gut jobs, so we know we need to do everything.
If we buy a cosmetic fixer, we will have an inspector.
Julie
Is there anything that you need help with, referrals or other?
How do people find you, and what about?
Christine
We have 11 single family rentals and airbnb’s. We are reducing our single family rentals, so if you have any types of businesses that you want to sell… we are interested.
Or any kind of commercial deals.
Reach out to me email, Facebook, or phone number.
Julie
If you can’t find her you can message me. Or look up Rock PI.
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