How to Manage Renovations, Contractors, and Budgets as a Philadelphia Landlord
The Philly Landlord Guy Podcast | Guest: Jose Favela, Operations Manager, TrustArt Realty
Most renovation projects don't fail because of bad contractors. They fail because of bad process. No scope of work. No realistic schedule. No payment structure that keeps the contractor accountable. No selections package. No relationship with the neighbors before the permits get pulled.
Today's guest is Jose Favela, TrustArt Realty's operations manager. Before joining TrustArt, Jose spent five to seven years in construction and project management — running renovation projects, managing vendor relationships, building construction calendars, and at one point overseeing over 30 active construction projects simultaneously across two markets. He has seen what works, what blows up, and what costs landlords money they didn't have to spend.
This episode covers everything Philadelphia landlords need to know about managing renovations — from building your first budget to handling a contractor who has gone off schedule.
The Three Types of Renovation Scopes
Before you build a budget or hire anyone, you need to know which type of renovation you are doing. Jose breaks it into three categories:
Cosmetic rehab — paint, carpet, appliances, countertops. No utility work, no piping changes, no wiring changes. A three to four person crew can complete a cosmetic rehab in two to three days. This is what most Philadelphia landlord turnovers and make-readies fall into.
Medium rehab — cabinetry replacement, vanity, toilet, sink, shower head changes. Some piping involved but no layout changes. Timeline is typically one to two weeks depending on crew size and scope.
Large rehab — anything that changes the layout of piping, ducts, or wiring. Anything requiring a permit, an inspection, or panel installation. Timeline is three to six months minimum, and permitting alone can add three months of parallel waiting time before rough work can begin.
The most important thing to understand: know which category you are in before you hire anyone. Buying a large rehab property and treating it as a cosmetic job is one of the most expensive mistakes a landlord can make.
How to Build a Renovation Budget
Start with the scope of work, not the dollar number.
Before budget, before schedule, you need to assess the property and define where it is today versus where it needs to be to go to market. Jose calls this the A-to-B gap — everything on that list becomes your scope of work.
Comp the market to define your end state.
Look at properties in the same neighborhood that are currently rented or for sale at the price point you want to hit. What do they have that yours does not? That gap defines your scope. Do not over-invest — know the capacity of the property and what the market will actually support. A $40,000 kitchen renovation in a neighborhood where rents close at $1,300 per month will not pencil out.
Build your work breakdown structure.
List every task needed to complete the scope. For each task, identify the duration, the dependencies (what has to be done first), and the materials required. This gives you your critical path — the shortest time in which the project can realistically be completed.
Sequence trades correctly.
For any project involving rough MEPs — mechanical, electrical, plumbing — the sequencing rule is:
- HVAC first (hardest to move)
- Plumbing second
- Electrical last (most flexible, can route around existing pipes and ducts)
Violating this sequence creates costly rework.
Account for holding costs.
Every day the property sits in renovation is a day you are paying mortgage, taxes, and insurance with no rental income. Your budget must include a realistic holding cost estimate based on your actual project timeline — not an optimistic one.
Finding and Vetting Contractors
Jose is direct about this: finding a reliable contractor is one of the hardest problems in the renovation business, and there is no foolproof system.
Recommendations from trusted sources are the most reliable starting point. Online ads, sponsored listings, and people soliciting outside home improvement stores carry significant risk. You may get a contractor who performs well for the first several months and then reveals deficiencies — underbidding up front and then issuing change orders mid-project, failing to report, or disappearing once the down payment clears.
Get at least three bids per trade. Bids that are dramatically higher or lower than the others are both red flags. A bid that is three times the market rate signals an unrealistic vendor. A bid that is half the market rate signals either missing scope or a vendor who will make it up in change orders.
Match contractor risk to project risk. Low-risk, low-profitability projects can tolerate a higher-risk contractor. High-risk, high-profitability projects require specialized trades — not a generalist GC. Specialized subcontractors (specific plumbing companies, specific carpentry companies, specific cabinetry companies) give you more detailed bids, more predictable timelines, and better quality on complex work.
Maintain a Rolodex of at least 10 contacts per trade so you have alternatives if a vendor fails mid-project.
The Selections Package — Eliminate Decision Fatigue Before Work Starts
One of the most underused tools for small landlords is the selections package. Jose describes it as the answer to every question your contractor will ask during the project — before they ask it.
A selections package includes:
- Paint colors and brand
- Flooring type, finish, and supplier
- Tile specifications for bathroom and kitchen (with a floor plan showing exactly where each tile goes)
- Countertop material and supplier
- Cabinet style, finish, and supplier (with lead times — custom cabinets can take weeks)
- Appliances with model numbers
- Toiletries — toilet, sink, tub, shower head specifications
- Hardware — knob and pull finishes (chrome, matte black, brushed gold, etc.)
- Trim, door casing, handrails, balusters
Every material in the selections package should include: the technical spec, the supplier, the lead time, the price, and the floor plan location.
Without a selections package, your contractor will call you with questions constantly — and every unanswered question is a potential delay.
Managing Contractors Once Work Starts
For a landlord who cannot be on site every day, Jose recommends:
Weekly check-ins tied to deliverable milestones. Set the schedule before work starts. Every week has specific deliverables — not just "make progress." Connect payment installments to milestone completion, not to calendar dates.
Daily video walkthroughs. Ask your contractor to send a single video walkthrough of every room — walls, floors, ceiling — at the end of each work day. This is more useful than 50 individual photos because it shows the full status of the property, not just the parts the contractor wants to highlight. A contractor who shows you a beautiful new bathroom but pans away from the kitchen full of debris is telling you something.
Project management tools. Free platforms like Asana, Trello, or Monday.com can be used to track deliverables without requiring on-site supervision. Some contractors will resist — but experienced ones in the renovation business are accustomed to these platforms.
Tie payments to deliverables, not to time. A common contractor mistake is front-loading payments. Once a contractor has most of the money, they have less motivation to prioritize your project. Structure payments as: X% at contract signing, X% at rough completion, X% at finish installation, final X% at punch list sign-off.
What to Do When a Contractor Goes Off Schedule
Schedule crunching is the professional response to a delayed project. It means analyzing your critical path and finding tasks that can be done in parallel rather than sequentially.
Example: if painting and trim installation are on the same floor, you can have one crew painting the second floor while the trim crew finishes the first floor — then swap. This parallel approach reduces total calendar time without adding overall labor cost.
Throwing more people at the problem does not always help. Some tasks have dependencies that cannot be parallelized regardless of crew size. Adding workers to a dependent task does not speed it up.
If a contractor is consistently behind after three attempts to pressure them: break the contract, pay for work completed, and bring in one of your backup vendors. Jose is explicit on this point — if a contractor could have finished on time, they would have. Continuing to pressure a failing contractor wastes more time than re-bidding the remaining scope.
The Most Common Landlord Renovation Mistake
Arrogance. Specifically — assuming you can manage construction without understanding it, and failing to prepare the pre-construction documentation that prevents most problems from occurring in the first place.
The projects Jose saw fail most catastrophically were the ones that skipped pre-construction: permits not in order, plans not finalized, selections not made, neighbor relationships not established.
Stop work orders are the death kiss of any renovation project. A neighbor complaint can trigger a stop work order that halts your project for months or years. Jose worked on a property that had been under a stop work order for seven years before he was hired — and required three more years to resolve. A decade of carrying costs because pre-construction was skipped.
Before construction starts, introduce yourself to adjacent neighbors. Tell them what you are doing, give them a timeline, give them a contact number. You are going to have vendors, crews, material deliveries, and utility inspectors coming and going. Neighbors who know what is happening are far less likely to call the city than neighbors who do not.
The Single Most Important Thing to Do Before Signing a Contractor
Have the contractor walk the property in person before you sign anything. During that walkthrough:
- Go through the scope of work item by item
- Go through the selections package
- Agree on a schedule of deliverables with specific milestone dates
- Tie payment installments to those milestone dates — not to calendar time
A contractor who will not commit to deliverable-based milestones is telling you something important before the contract is signed.
Jose's Final Advice for Philadelphia Landlords
Do not use short-term leverage for long-term investment.
If you acquire a property using debt, the repayment obligation is separate from the property's performance. A rental property that is vacant during a long renovation is still generating a mortgage payment, property taxes, and insurance costs. The margin for error on a leveraged property is thinner than most landlords account for.
Understand the full cost of carrying the property through the renovation — and build that into your budget before you buy, not after.
Need Help Managing Your Philadelphia Rental?
TrustArt Realty provides full-service property management for Philadelphia landlords — including turnover coordination, vendor management, maintenance oversight, and compliance guidance.
📞 (267) 929-1500
📧 info@trustartrealty.com
🌐 trustartrealty.com
The Philly Landlord Guy is a podcast for Philadelphia rental property owners and investors. Subscribe on YouTube and wherever you listen to podcasts.
