Finding the right property at the right price can put you on to the road to success. Understanding the area you are buying in and the requirements when remodeling will have a profound after on your bottom line. Establishing a relationship with the right contractor (and agent) should push you over to the goal line.
The Right Property
The right property begins with the right area. Look for an area with good schools and nearby shopping, few rental properties, construction from the 60’s – 80’s, and possibly older homeowners. Note if homes in the area are maintained and the city has kept up with improvements.
Look for a property that needs updating. Do not make renovations that will out-price the other homes in the area. Understand the difference between major and minor repairs and what is necessary to bring your investment up to the neighborhood standard. Some homes might need a floor plan update that requires moving a load bearing wall and/or a kitchen with new cabinetry. Those may be major but necessary renovations. Minor renovations are more along the lines of new flooring, paint, tile and counter tops – mostly cosmetic and in the DIY territory. Try to avoid homes that need foundation work or has dry rot.
Depending on your skills, you may find hiring a good contractor make sense. If you plan to paint, hang drywall or installing cabinetry, make and honest assessment of your skills. Even the most handy DIYer should consider a licensed professional for some, if not all, of the renovations. A good contractor can save you time and money.
The Building and Remodeling Requirements
Have a good understanding of the permitting process in your area. A permit can protect you against critical safety issues (electrical, plumbing, etc) and insure your project is up to code. Find out what permits need to be pulled. Every municipality is different – you may be required to pull several permits or just one. All this can affect your time and bottom line. Most cities will require permits if you are expanding the square footage, installing new electrical wiring, or anything involving a sewer line. Some cities many even require a permit to cut a tree, or add a window or door but not one when installing a new roof. Most lenders either your lender or the buyers lender, will require proper permitting.
The Right Contractor
Get references from friends, neighbors and colleagues. People you know will be honest about their experience. Check with local construction supply houses or online services that showcase work like Houzz. Try to get 3 good contractor references.
When interviewing the contractor ask for references and call the legitimate references (not family and friends). Ask about how the contractors temperament with challenges and if they met deadlines. Make sure the contractor has the qualifications and/or certification for the different aspects of your project. Ask to see licensing if it required in your state and proof of insurance. Check with your state’s licensing board for verification.
Determine what is needed to complete the renovation and create and itemized spreadsheet with material needs and deadlines for each phase. Present this same information to each contractor. The price is not always a reflection of the quality, but how they respond with questions and suggestions will be telling.
Check to see how many jobs and crews the contactors are running and where your project would fall in their plan and will be finished on time. Make sure you are on the same page on scheduling. Remember time is money – holding costs add up with each delay.
Make sure you’re in agreement on the payment terms and have it in writing. Never pay upfront. If this is a new partnership, offer to pay for the materials as needed and provide a weekly draw for completed portions of the job.
Make sure your contractor can pull the permits needed.