Hi, it’s Lou Brown. I’m back with another of my 101 cash flow accelerators. In this segment, we’re going to be talking about renovations. I’ve made a fortune in renovations. It’s been absolutely incredible. I learned a lot about what to do and what not to do. I didn’t know anything and I didn’t have any background in rehabbing anything. Having been raised by a single mom, being raised in apartments, having no dad, having no background in construction, not taking any classes, or going anywhere to learn about those things. I learned about it through hard knocks and I’ve got all kinds of advice for you on this. But one thing is that, when you do hire someone to do your work, you always start with a good contract. Now, what I recommend you do is actually go through and make a list of everything that needs to be done in the home.
And that means identify everything that you want to be done. Don’t let them tell you, you tell them so that when you are getting bids from contractors, it’s apples to apples to apples. And then attached to that bid should also be the rules of engagement. What I’m letting the contractor know in advance is how we’re going to work together and about advances, about payments, about how they’re going to get paid and who’s responsible for the permits and everything related to that project and how many people they have to have on the project, how many days per week. You see what happens often is that a contractor will go ahead and get your job and then they’ll get someone else’s job in someone else’s job and someone else’s job too. And then they’ll juggle between the various jobs and you don’t get your job attended to and with the right connection and responsibility because you didn’t do the right contract.
So what I recommend and what we have in my volume 11 renovations is an independent contractor services agreement. And in this independent contractor services agreement, we spell out all of the different things that are related to our agreement when they’re going to get paid, how they’re going to get paid, and over what period of time. So then that contract specifically States the length of time that the project is, and it also States that should it go beyond that date, there’s actually a penalty, a daily penalty to incentivize them to get that job done and done on time. And I’ve had contractors literally work overnight work for entire crew overnight to get that job done on time before the penalty kicks in. By the same token, once you look at the contract and look at the length of time that is going to take, we make that an incentive as well.
So every day that they end the contract earlier than the target date, they actually earn a bonus because in this business, time is money. The sooner you can get to market with your project, the sooner you can get your exposure for that property, the better off you’re going to be. I’ve got bunches of different, ideas for you on doing, contracting, doing, renovating the right way, and making sure that you’re in a position to win. You’ll learn more. Go to StreetSmartInvestor.com click on tools, open up renovations. You’ll get a lot of information about what we teach you in the renovation system. Very important you can make a fortune in renovations. I’ve had as many as 26 renovations going at one time in one neighborhood. So it’s the way that you can accelerate your cash flow for sure, but you gotta have the right contract.
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