When it comes to renovating investment property, it’s not as easy as they make out to be on television.Most renovation projects are not finished within the first 30 minutes.
No matter if its rental property investing or flipping for quick cash, experienced real estate investors must pay close attention to these five major factors.
Major Factor #1: Who Should I Hire?
I suggest placing an ad in your local paper and interviewing job canidates over the phone. If they pass your first set of questions, arrange to meet them out at the property and talk to them about the project details.
Making the right hire will take some practice, but over time, you’ll develop a good feel for what’s right here. Selecting the right person for the job is one of the more important decisions you will have to make on a renovation project.
When you hire the wrong guy, your renovation project can get expensive in a hurry.
Major Factor #2: What’s The Most I Should Pay For Labor?
If you don’t have a background in real estate investing in the beginning, you’ll be writing some pretty big checks on your renovation projects. Unless you have a mentor to hold your hand, you will pay more.
Workers who know more than you do, will exploit your weakness until you close the experience gap. But as you grow into your role as a property investor, your experience level grows and the labor expenses become much more manageable.
It’s called earning your stripes.
Major Factor #3: How Much Should I Budget For Matertials?
If you’re an experienced property investor with multiple renovation projects to your credit, this should be very straight forward. Prices tend to increase with inflation, but overall are normally predictable. Successful foreclosure and property investors know what it takes to complete the project before the work begins.
Always add 10% – 15% for incidentials and unexpected expenses. If you have the money, those unexpected surprises will not hurt that much.
Major Factor #4: How Long Will The Renovation Project Take To Complete?
I wish we could buy every investment property at a really low price and only have a few little problems to solve. As you may already know, this is not normally the case in most instances. I think we look for cosmetic flips first and then we go from there.
A typical renovation should take anywhere from 30 – 45 days to complete. Whenever you make big changes to the project, the timeframe goes from weeks to months.
Major Factor #5: How Much Will I Have To Spend On The Renovation Project?
The easy answer: always more than you expect. As you grow into your role as a propery investor, the difference between the actual and estimated budgets should grow smaller. Go ahead and overestimate your project costs for labor and materials. When you buy investment properties at really good prices, you should enjoy this luxury.
The quicker you find the right answers to these five questions, the easier your life as a real estate entrepreneur will become.
Related Reading:
Tags: property investor, property investors, real estate investors, rental property investing, residentail investment property