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For one Missouri family, how they treat their contractors during real estate rehab projects is just as important as the work itself. From a “no swearing” rule to cookies and team lunches, mother-daughter investment duo – Jan and Brittany – take a unique approach to rehabbing in their local market.
“I tell all my contractors it’s really simple to be successful with me,” Jan said, “show up on time, do what you say you’re going to do, and be nice to everyone.”
Jan has used this approach throughout her 29-year career as a real estate rehabber, focusing on high-end homes in the suburbs of St. Louis and Los Angeles.
Though not in the business yet, Jan’s first “rehab” was the starter home she bought with her husband Gary.
The couple purchased a house that was in their budget, but needed a fair amount of work – work she realized she loved doing. The couple renovated the home during the two years they lived there before selling it when the family moved.
“We made more money on the sale than from both our full time jobs,” she recalled.
Using Knowledge and Experience to Drive Retirement Decisions
Realizing real estate’s potential, and the passion she had for rehabbing, Jan became a real estate agent and decided to become a full-time investor.
Years later, after losing an unsettling amount of her 401(k) in the stock market, Jan discovered self-directed IRAs and decided to use her real estate expertise to build for retirement.
“I decided it was time to take control of my IRA…I converted everything (in my retirement account) to a Roth IRA when the account balance was at its lowest.”
Jan was excited about the prospect of using her knowledge and experience to invest for retirement, rather than letting the stock market dictate the outcomes.
“My business is real estate, so I understand it very well,” she says.
“My expertise is in renovating houses — finding properties, hiring contractors, making decisions and selling properties – and I wanted to use that expertise for my retirement investing as well.”
Jan believes simpler is better when it comes to her rehabs. A pen and an envelope are the primary tools she uses. “If I can’t work it out on the back of an envelope, I don’t want it,” she says.
Contractors as Partners – A Novel Approach to Investing
Jan estimates she employs between 20 and 30 people on each rehab and relationship-building is important to her success, in both business and in life.
She focuses more on the character and personal qualities of her employees, believing the trade skills can be managed, learned or improved.
She fosters a positive work-environment, enforcing a strict “no swearing” rule and adhering to the Golden Rule at all times.
Jan uses a partnership model for her projects. She makes the general contractor a partner on her deal, anywhere from a 30/70 partnership to an even 50/50 joint-venture.
Video: Joint Ventures and Self-Directed IRAs
“This is a great model for us, not just because of the IRA rules, but because it makes sure our contractor is invested in our deal’s success,” she explained.
In addition to the motivation it provides, this method can help save on costs as well. “For example, every $100 the contractor saves on the rehab, $30-$50 of it is staying in his pocket,” she continued.
“Golden Rule” Approach to Rehabbing and Management
Jan is quick to praise her contractors and has formed a lasting relationship with her general contractor.
“I strongly believe in the Golden Rule – treating your contractors the way you want to be treated.”
This approach is the bedrock for the close friendships she’s formed in her business – with her contractors and the new homeowners.
Jan is the first to empower her employees and celebrate their successes.
“We really like to think of our contractors as the experts,” she says. “They will know more about plumbing, electrical, tile, and roofing than I will ever know – so it’s really important to ask for their input and use their ideas.”
She notices a change in her contractors when implementing an idea they had. Not only do they feel appreciated and valued but are motivated to do a great job implementing their own idea.
“I go out of my way to tell them what a great job they’re doing,” she said. “I tell them in front of their families, my family, and other contractors – anything I can do to encourage them.”
All are Welcome – “Our Project is Your Showroom”
She wants her contractors to be proud of the work they’re doing for her and to feel comfortable showing it off to friends, family, or potential clients.
She encourages her team to think of her projects as their showroom – encouraging their best work and fostering a positive environment.
In particular, Jan fondly remembers what this meant to one of her tile layers. “He did such a wonderful job adding ornate tile to the kitchen, bathroom, fireplace, and even on the home’s exterior,” she remembers.
“So I encouraged him to bring his family and friends to see the results” she recalled. Surprised by her offer, he responded that no one had ever offered him this opportunity.
“It was the first time his children had ever seen his work, and they were teenagers at this point,” she remembered. “It’s grown into such a valuable relationship now. He knows we appreciate him and he appreciates us.”
This family atmosphere is something that’s important to Jan and her projects. Her family often brings lunch to the work site so the entire team can sit down and eat together.
Empowering the Next Generation – Mother-Daughter Duo
Jan’s refreshing approach to managing her employees is one we hope to see emulated throughout the industry and beyond. But she is also interested in helping others find similar success.