Hi, it’s Dr Ro here.
I’m actually on-site and in the middle of one of the projects, you might have seen some of the videos that we’ve been doing. And I want to just tackle a subject about stress levels that can happen when people are involved with renovation projects.
And having been through this many times over the years I can tell you at the start when you do it you’re like, “Oh my gosh, what’s going to happen? And is this going right?”
So if you’ve got a pen and paper there are three things that you really need to be good at managing when it comes to projects like this, any sort of renovation actually.
The first one is to make sure that you have systems for managing the money. So understanding how to manage the flow of money, meaning how much money is needed initially to start the project, then what is the stage payments of the project? So as you move forward and you’re working on the project, what does the builder need? When does the builder need it, and specifically how much do they need?
And get the specific breakdowns, so you’re not just chucking 20, 30 grand at them. It is really clear you know what the stages of money are.
I have known people that actually pay the full amount upfront on a project. I’ve spoken to builders and they say, “Ro you’re not going to believe this, but one of my clients has just paid me the whole lot of money right before the whole project started.”
Now a builder is going to love that and you might think great, if I look after my builder upfront then they’re going to be fine with me. But you don’t know where that money is going to go, how it’s being allocated. You’ve got no accountability, you’re not seeing invoices etcetera, or whatever the structure is for your particular contract.
So you chuck the money upfront. There is no incentive for them to stay on the project if there are things that need to be sorted out at the end. They go, “Great finished the work.” And you come back and go hold on a minute, there is that, there’s that and you do a snag list, which we will come to in another video. And you find yourself in a situation where “Well you’ve paid me all the money; I’m going to the next project.”
So it has to be paid in stages. The key thing for you is what are the big tranches? So the project you just saw there one of the next phases for us is getting the roof completely finished, which is slates and the cost of the slates and the roofing there. Parallel to that is the windows that go in, you’re looking at about £40 or £50k worth of windows on that project.
So it is a lot of money there.
You go back inside the house, then you’ve got the finish of the floors, underfloor heating, floorboards. Some fairly chunky invoices so I need to know when those payments are needed and how that fits into my cash flow forecast.
So that’s the first thing and this is where people get stressed. And the reason they get stressed and say, “Ah I didn’t realise that was going to happen”. They run away and they don’t want to face it. Credit blur, which I call it. Watch one of my money management type videos. I’m sure you’ll see one out there too, like the Growth Tribes podcast.
Actually if you’re watching this right now and you want to know more about money management, if you go and look up Growth Tribes, www.growthtribes.com or you look up Growth Tribes podcasts, you will find on there will be a podcast where we talk about money, money management, and some of the things you need to do with money management on a personal and business level.
And that is directly applicable to something like this.
The flow of money is really important in a project. Don’t give too much up too early, but equally, if you hold back too much you’re going to frustrate your builder and that’s where stress builds up on both sides of the equation.
Okay, so two other things I wrote down when I was on-site and I’ve kept them with me here.
The second thing is the time.
Managing the time, managing the schedule. This is the thing that people get frustrated about is the time. So there’s the flow of the money and how that flow is great, but there is also the time. You want to get the project finished by a certain date. Maybe it’s a renovation to sell and you want to get it on the market say going into the summer, but if there is a delay on that project by, for the sake of argument, two months, you might find yourself putting it on the market on the back end of July going into August.
Now we are coming back to the end of the school holidays. It might be the markets a bit slow or it might be you started the work in the middle of the summer hoping to get it on the market before the end of the summer, but there’s a delay of four, five, six weeks and suddenly you’re thrown into October, November. And the market generally slows down during the winter months.
All of a sudden the project you thought was going to be sold, cash in the bank maybe by the back end of the year is now going into the New Year. You’ve got the cold, the winter, you’ve got a slow period. You’ve got to look after heating the property, you’ve got to hold the property for the mortgage payment, if you’ve done it as a mortgageable product. So of course, you’ve got a lagging effect and the market doesn’t really start to pick up until February, March. People start putting their properties on the market, other people are coming out of Christmas, if it’s a sale and the excess to renovate to sell to the market for profit.
And these are things you’ve got to be thinking about.
If you’re looking at putting tenants in, it is kind of similar. As most tenants don’t really want to be in the property over the Christmas period. They either want to be in before Christmas, or they want to be out and into a new property in maybe the New Year, January, February.
In terms of that timing period, you have to think about that as well. When you speak to the letting’s agent, when is the optimum period to get it on the markets to get it rented. “Well Dr Ro you need to get it on the market say mid-November for renting so that we can get somebody in mid-November to end of November, and they’re in for Christmas.”
“Oh my god project has been delayed looks like it will be finished on December 15.”
Letting agents says, “Well we can put it on but unlikely people will want to move then, probably going to have to wait until the New Year.”
So timing is really important, so you and your builder have got to be clear on what are the milestones. So if you’re doing the groundwork, how long does that take? If you have to strip the property out, put a new roof on it, if it is a big renovation how long does that take? How long until the roof is dry? How can we get in and start to do the first fix and the preliminary works? And then going into doing the plastering, second fix etcetera.
And that’s on another video.
My point is the timing is really important.
So to manage your stress levels. If you try and compress everything and you try and rush everything you’re going to get stressed. Much better to have a plan, something written up where, you know, stage by stage, whether it’s a calendar there. Or whether it’s a spreadsheet or whatever it is you have this really structured approach.
That’s how you relieve the stress on a project like this. You manage the time and you manage the money in such a way there are no unexpected shocks. No shocks on the time, no shocks on the money.
When I say time it’s like, “Hold on you didn’t tell me it was going to take four weeks. I thought it was only going to take a week to do that.”
“I did tell you that Dr Ro. We are putting fresh plaster on. going back to bricks, got to let it dry out.”
“Yeah, but speed it up.”
“I can’t do that for you.”
“Yes you can. You can put blowers on it.”
“Well if I put blowers on it, it’s likely to crack and it’s not had its natural time to dry out. There’ s a certain amount of time that thickness of plaster takes to dry out per millimetre, per time period. Try and accelerate it you can have issues.”
You can see how this works.
So time is the next thing that you’ve got to manage. If you get the time managed properly and you get that money managed properly. “I can start to relax.”
Well, not entirely because there is a third component.
“What’s the third component Dr Ro?”
Well, the third component is people.
You have to manage people.
“Well surely I’ve managed the time, the money, I am doing really well.”
Yeah but you’ve got to manage the people.
You’ve got to manage the different components. We call them the power team or the different people that come into the project, who, when and where are they needed?
So you might have issues like for example I spoke to somebody recently they had knotweed on a property and they were getting panicky. And I said there are ways to
deal with knotweed and if you do it correctly and you get the right insurance in place, it’s okay. Lenders will lend, again take advice on this.
So what that means is that you have to manage anything needed pre-the project. Think that this who are the people needed before the project starts? Who are the people needed during the project actually going on? And by the way, whilst it’s going on is there another set of people you need to be talking to outside the main project?
So you’ve got the inside and the outside right, that’s the project. These are all the people associated with the project and this is outside the project, who is involved outside.
So caption, notice inside the project. Who are the people we need to manage? Well do you want to manage all of the builders? Do you want to get involved at every level down to the plasterers, down to the electrician, down to the people doing the plumbing, the underfloor heating? If you’ve got bats, there are bat people, believe it or not, infestations bees, wasps. Bees by the way be careful, got to look after them, got to treat them really carefully. Wasps are treated differently in this country, in the United Kingdom.
In other words who do you need?
Roofers, you’ve got the electricians, you name it.
But do you want to manage all of those? Or do you want to have a point between you and those people? I.e. a project manager. It might be that you deal directly with the builder who manages everybody or it might be that you deal with a project manager who deals with a builder, who then deals with the people below that.
So who do you need to manage?
And you’ve got to communicate with impact, just write that down. Communicate with impact. If you haven’t watched any of my free videos out there on communicating with impact, you’ve got to do it. It’s all about here, it is all about here, it’s how these two communicate outwardly with other people.
There are actually 38 components of communication and those are out there, you can go look at Instagram, you’ll see a whole bunch of them there. Start to learn to communicate with impact.
If you get that right, you communicate with impact with everybody that’s amazing. That’s in the project.
Now outside the project are you selling it? Are you renting it? What about the legals? Are you refinancing it? Are you buying it with cash? Are you dealing with angels? Are you having to finance it with a mortgage, you’ve got to deal with a mortgage broker.
So coming from all angles outside of the actual project are mortgage broker, angels for cash, letting agent if I’m letting it, estate agents if I’m selling it. Lawyer up there if there are any legal issues and it might be I need a separate solicitor for my legals, for buying and selling. And another lawyer for other issues as well.
Plus anybody else around that as well.
So there are kind of two lots of people, there is a group of people working on the project, and a group of people outside the project. You’ve got to manage them. “Oh my gosh you mean I’ve got to look at the time, the money and the people?”
Yes, and that’s why these projects can be stressful. And you know what, if that is not you, and you can’t see yourself getting good at just three things managing money, time and people don’t do it.
“But Dr Ro I want to make money.”
Exactly if you want to be an entrepreneur you’ve got to master these skills, you’ve got to grow. I call it the growth process, which is why refer to Growth Tribes because if you go and have a look at what we do on Growth Tribes, whether you look at the free podcast.
There is loads of great stuff that can help. There’s so much content out there in the marketplace that can give you good skills and good tools. Go get yourself educated, find yourself mentors and coaches. And don’t worry about investing in yourself but learn the relevant skills.
There are time management skills, money management skills, people communication skills.
Master those three things around a project and you will start to feel much better.
Three things people, time, money, get good at managing those and it will manage the stressed down.
Dr Ro, signing out, I shall see you on another video.
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