Managing Real Estate Investment Renovations
Investing in real estate projects is one of the best ways to spend your money if you have the right Construction Management Team. Investors (except silent ones) should be able to have a good idea of renovation costs before purchasing a property. Once purchased, you must manage your budget as much as possible in order to guarantee a good return on investments (ROIs). Below are some tips on how to manage construction and save money.
1. Repair and clean first
Try to get the place clean first and repair things that need repairing, rather than diving in to replace everything. Often times you can paint cabinets and save money. It depends on your intentions for the property (selling or renting), but you want to consider your budget at all times. Unforeseen expenses are sure to come up, so save where you can.
2. Always paint with neutral colors
This seems obvious, but you’d be surprised how much a fresh coat of paint can change the impression of a home. Light colors are inviting and give the illusion that there is more area space. You want to invest in a good painter because a bad paint job can ruin a beautifully renovated home.
3. Invest in a ‘main crew’
Outside of the typical contractors that need licensing such as a master plumber, electrician, or HVAC contractor, your main crew should be able to do the following: basic framing, drywall, painting, trim, cabinets, tile/flooring, fixtures, etc. You usually have to engage specific trades for things like roofing and windows, but your main crew should be able to handle the rest. These individuals are responsible for making the house look perfect and should be treated like gold if they’re good. This will save money on your budget for labor tremendously.
4. Manage your contractors intensely
The saying “what gets measured, gets improved” cannot be more true with contractors. There are millions of companies to choose from, but you’re typically looking for reasonable priced or lower priced contractors to renovate a property. Cheap is not always the best option! It’s tempting to go with the cheapest contractor, but don’t fool yourself. It could cost you a lot of money down the road. Research small companies that have great reviews or come recommended by someone who can verify their work. If it’s a new contractor, be very specific with the scope of work and do let them deviate from your plan. You must be onsite every, single day to ensure contractors are on schedule and up to par. If you start to feel uncomfortable, address your concerns with your contractor immediately. If there isn’t result, you need to move on. It never pays to keep people that aren’t looking out for your best interest.
5. Invest in a project manager, rather than a general contractor (GC)
Project Managers (PM) work directly for you and no one else. The benefit of a good PM is that there isn’t somewhere more important for them to be except managing your projects. They hire/fire contractors, maintain budget and contact paperwork, expense accounting, project schedules, etc. They are your eyes and ears on the project at all times. A good PM will naturally become your right-hand. Invest in a PM upfront, and save thousands later.