Home Flipping Houses How to Control Renovation Costs When Dealing with Contractors

How to Control Renovation Costs When Dealing with Contractors

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Most real estate investors have great skills in real estate search, buyer marketing, tenant marketing, and even creative financing techniques. However, I have found that many investors have not yet successfully handled their refurbishment.Keep costs down and predict accurately repair Numbers are an important factor in the real estate investment business.

To be sure, some investors are happy to make a few flips a year and do their own refurbishment. This is a great way to keep costs down, but it’s not a good strategy to grow your business and your potential income. Real estate investors who are serious about growing their business and the number of properties they can afford in a year need to contract a renovation contract with a trusted contractor.

To succeed in Business modification and reversalInvestors need to know exactly how to price a property (or there may be someone who works closely with them). Like everything else, The more homes you remodel, the better you can predict repair costs... A short visit to the property may be able to estimate the actual rehab number within $ 5,000 to $ 10,000, but it turns out that it takes time and attention to detail to accurately estimate the refurbishment. I did.

We’ve hired and fired many different contractors over the years, but we’ve found that the way to manage costs is to manage quotes from the beginning. Once you know the material and labor costs for a particular repair, you can create a work scope template that allows you to accurately predict the repair number for a particular property.

Most investors are burned by the lack of details provided to contractors at the start of work. Even if the work order lists categories such as plumbing, electricity, and painting, most contractors will return to the end of the job with excesses or change orders that can inflate their budget.

The absolute best way to manage refurbishment is to categorize all tasks by item, price them accordingly, and create a scope of work in advance. Rather than asking the contractor for the price of the job for us, we ask the contractor if we already want a priced job. If for some reason it is not, move on to the next contractor.That said, this rarely happens as we did Have a great relationship Over the years, with our contractors, we know how to price your work fairly.

Keeping in mind the fact that you can never explain everything, we also incorporate reserves into all properties.In most cases there is a certain amount Unexpected repair …. However, if you have subscription information in your budget for this, you won’t go crazy when the contractor warns you about additional work. Again, the goal is to be displayed on the same page as the contractor so that the actual refurbishment costs are incurred at that price. you budget.

I think many investors have resigned to the fact that the nature of the remodeling budget is just craps. Exceeding your budget is so common that it will be perfectly acceptable for the contractor to give you an invoice for the excess at the end of the job. We have found that if investors can get this side of the business, they can save thousands of dollars. One job may not be a big deal, but saving thousands of dollars on multiple jobs over a period of time can be a significant amount. Invest time to develop skills for real estate pricing, Manage Your contractor may look like a lot of work cautiously, but in the long run it can be a serious amount.
Photo credit: Manda juice

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