By Jerry R. Spumberg, The DIY Coach
Introduction
In late December of 2010, I spoke before a business organization in Monmouth County, New Jersey and was asked many questions about remodeling, renovating, home improvement, and the investment opportunities in residential properties. The questions below were sent to me before and after my talk. Many have come up in the past as well. I did not get to answer all of them when I spoke, but they deserve being answered and I would like to share those answers with you. I want to thank those people for raising these questions. They relate to a rather innovative method and approach for property owners for updating existing or building new homes while eliminating the overhead and profit that the traditional construction industry builds in to prices.
1. What is the biggest size project you will take on?
As of yet, we have not refused any project for being too large (or too small) in the residential or light commercial/retail category. The larger the project normally means I’m working less with tools and have a greater concentration on the construction management aspects (from conception to completion). Larger projects have larger budgets. This means that concentrating and overseeing the development of cost effective and efficient design with specifications that meet the client objectives becomes the most important criteria; that’s because of the amount of the client’s money at stake. The interdependency and balancing of the above will be reflected in the projects budget.
2. Please explain the Do-It-Yourself segment of what you do. How involved is the homeowner?
This is a great question with a long answer that I could write a book about. Instead, I will try to summarize a few general concepts. The first of which are the requirements that a client needs to meet for our program. They must be willing to take on the administrative role or assign it to someone else other than just us. They must be willing to define their role in the project and understand the collaborative effort that our process requires. If they will become involved in actual physical tasks, they will need to commit to performing in a timely manner. Our role as a Coach is that of working with you to facilitate the parts of the project that you don’t have the skills, knowledge, or tools for. We are more like your employee and you are the developer (our boss) of your own project. To find out more about this, explore our website and the articles on the blog about a Coach.
3. What is the minimum skill level for a Do-It-Yourselfer?
I’m assuming that this question relates to being physically active in the labor itself. I have worked with people who have never picked up a paintbrush or hammer. Beginners are fine as long as you have patience with yourself and others and are prepared for some hard work. Skills can be taught to most people, but everyone learns at a different pace. The only requirements that are important are a willingness to learn, the time required for us to teach them, and for them to participate. The rest we know and want to share with our clients.
If the question is aimed at the business and administrative side, a little common sense, some easily learned bookkeeping skills, an eye to detail, and the desire to learn are required.
4. What are the steps in the DIY Coach Process?
The components of a successful project start with a dedication to professionally manage any project from its early conception to its completion. Develop clear and concise project objectives and goals into construction plans, specifications, and costs thru the right team to match the project. For more information, visit the planning portion of our website.
5. Does bringing in a coach increase the price of building a home?
If you compare the cost of hiring a coach (the term as defined by my company) to using general contractor or builder, it is much less. Builders and general contractors charge a mark-up for overhead and profit plus the cost of the onsite project manager or supervisor. If it is a small company where the owner directly supervises the project, he usually builds in his time as a part of the cost. For more information please visit our web site www.thediycoachusa.com and click on “9 Home Improvement Facts That Can Save You A Bundle”. To the left are commercial trade magazine’s articles and studies under “Useful Links and Tools” that will give you an idea of what these costs are. The only cost you pay with a coach is that of a project manager on an hourly as-needed bases. You become the developer and are taught to administer your own project.
If you are not a seasoned professional in the construction industry, it is doubtful that you will purchase the various elements of the project (called the buyout) as well as an experienced person, but you can with help. A successful builder, who has become a remodeling coach, could not have become successful unless he had a reputation for honesty. A smart builder continually develops sources for labor and materials, understands how to negotiate in good faith with vendors, and has a reputation for paying his bills. After all, if you were a vendor, would you give your best prices to a person that could provided you with only one sale or to a professional that offers the additional opportunity for future sales as well?
Do not be fooled by clubs that charge high membership fees, delivery charges, and service fees that offer wholesale prices. A recent nonprofit consumer magazine stated that these franchises “lack price transparency” and “You can’t return items”. They have limited showrooms of which you select products from catalogs. There are additional fees that you are responsible for, such as a six percent handling fees, shipping fees from the wholesale distributor to the local center, and additional fees to actually get your new stuff to you house. “There is no cancelation of your membership or a refund” if you’re unhappy after you join and want to quit.
The fact is that an experienced DIY Coach who has developed business relationships with many competing vendors may even be buying from some of the same sources that these buying clubs do. With a Coach’s advice, you can buy at club’s prices or better without all the added cost. I’ve rarely paid a building material supplier a delivery fee. My clients also have a much larger choice of vendors and products that include some companies they personally know, companies that previously did business with myself or The DIY Coach’s clients, and others that are constantly approaching us for business. Read other articles on our blog such as: “Part IV – What A Coach Should Be Able To Do For You.” A DIY Coach will save you money by helping you buy right.
6. Regarding projects, when is it best to hire a builder (general contractor)?
There are many people who do not have the desire to be involved with anything more than picking selections, approving the design, and entering into a single contract. Price and return on investment are relatively unimportant. They make a down payment and stage payments until the project is finished. They want the least involvement possible. They will visit the project site more out of curiosity of how far the project has come, rather than to be involved or even participate in the selection of vendors or participating in some of the work. For these clients, where cost is not as important as the time that would be required of them to spend on administration and budget development, a reliable and capable general contractor is the best choice. A Coach relationship is not for every client.
7. What is the biggest difference between a Do It Yourself Remodeling Coach and a General Contractor with regard to a home improvement project or an addition?
When a general contractor enters into a contract with a property owner, it is binding on all parties. In a legal sense, if a dispute arises the parties are adversaries. The general contractor feels he is entitled to the money spent for labor and materials plus his overhead and profit. The owner feels he is entitled to the project and everything that should be included in the price. Most disputes arise because of what may be unseen until the project is underway, the costs of extras or changes, and the quality of work. As you can see from that mentioned above, the two parties come from very opposite directions for the most part. One builds and deliveries a product, the other pays money to own it.
The building or home improvement coach has a relationship with a homeowner that is quite different. The DIY Coach’s relationship is that of a trusted employee who works for the owner and becomes his own project developer on an hourly as-needed basis. This building expert can be terminated at any time at the homeowner’s discretion, with or without reason. There is no markup, only the agreed upon hourly pay that is due the coach. The coach’s objective is to achieve what is directed by his client. To learn more about what a coach should be, read our five part series about coaches on this blog or at www.remodelingreports.com.
8. I watch all those shows on house flipping……Are they realistic?
They are as realistic as they can be when they compress the time for the project in a half hour show. The viewer is often not aware of how long the project really took as well as many things you didn’t see. Be aware that many of these episodes may be years old and under different market conditions than the present. There are many professional investors who because of their knowledge of the market and remodeling can make money in any market, but there are also many amateurs who lose their shirt.
9. Do you work with investors or people who want to flip houses?
Yes! However, I would rather not limit these people to just flipping a house (buying, fixing it up, and then selling). Flipping usually results in paying straight income tax, where the government takes a substantial bite out of the profits. There are many ways to redevelop properties that can substantially increase you net profits by paying less taxes and also can develop income. Properties when developed, after considering the tax implications, can be qualified for a capital gains or real estate (exchange) 1031 situation. In some cases, clients are looking to develop a revenue stream from renting. We can work with people in many areas of real estate investment and do.
10. Do you become involved in real estate investment partnerships and if you do, what do you expect from partners?
I look for partners that have a reputation for integrity, directness, and can add to the partnership. It goes without saying that credit worthiness and the ability to invest in the project are important. Even though they may not be involved in the day-to-day activities, I look for them to participate during investor meetings, have a desire to volunteer for assignments, and sometimes take on the administrative role. Every partnership is different, so I don’t have a cookie cutter design. It’s determined with the partner(s). The amount of money involved differs for every project as well as the financial structure among the partners.
11. What jobs have you been involved with over the past few months?
A few of them have been simple plumbing repairs, interior trim work, fixing doors that don’t close, repairing cabinets, building a book case, water infiltration and moisture solutions, and entry door replacement. Larger projects include bathroom and kitchen remodeling within the present space, finish basements, and interior redesign of space. Our largest projects include a major home reconfiguration and expansion; a kitchen/great room addition with a new elevation is going into the design stage and a bathroom/kitchen project is being readied.
The remainder of the questions will be answered in my next article (Part 2).
Learn more about how to improve and add more value than you spend by exploring www.thediycoachusa.com and www.remodelingreports.com. Read the blog articles and learn some of the things that professionals won’t tell you. Link to industry studies that will tell you the return on the money you spend when hiring a General Contractor. Read articles of the margins that the industry recommends to be built into their prices. Become informed so you can choose the direction you want to take for your next project wisely.
YOU TO CAN DO IT FOR YOURSELF, BUT YOU DON’T HAVE TO DO IT BY YOURSELF!
May the Coach be with you,
Jerry R. Spumberg
