With warmer seasons ahead as we enter May, it’s no surprise that construction projects are picking up steam. Longer hours and better temperatures make spring and summer the best time for renovations, meaning now would be a great time to get a hard money loan or use your home’s equity for a house flip. Do you want to avoid miscalculations that delay your timeline? This article highlights 3 preparation tips investors can use before renovating a fixer-upper, so let’s dive in:
1. Importance of Creating a Realistic Budget
To Avoid Overspending
Avoid breaking the bank by creating a realistic budget. Renovations can quickly get very expensive if you don’t watch how you spend, and it’s not unusual for landlords to get carried away with the need to install the latest gadgets and use the shiniest finishing. Quartz countertops may look more luxurious than their laminate counterparts, but they cost twice as much, and the price can quickly add up if you’re renovating multiple properties. Thus, instead of breaking the bank on more expensive materials, settle for low-cost, high-quality, and durable items.
To Know Your Priorities
Ensure your money goes where it is most needed by allocating your limited funds carefully. Another benefit of having a budget is that it forces you to prioritize which renovations are more critical. After all, it might not always be possible to overhaul all the floorings in your house, get new countertops, and repaint the interior. You might have to compromise by simply polishing your existing countertops and hardwood floors while choosing.
To Plan for Contingencies
Plan ahead by creating an emergency fund for unexpected spending. It’s not always possible to get an accurate estimate of renovation costs to the last penny, so savvy investors often leave room for changes. The last thing you want is to complete your project with substandard items because the materials you wanted turned out to be more expensive than you originally budgeted. Having a financial cushion can bail you out of trouble, keep your remodeling on track, and ensure you don’t miss your loan repayments. On a side note, you should work with knowledgeable hard money lenders in Baltimore to guide you during the application process.
2. Dangers of Neglecting Structural Problems
Electrical
Keep your home safe by prioritizing the electrical wiring. One of the most common structural problems of a fixer-upper is often faulty or outdated wiring. Unfortunately, ignoring wiring problems can pose a serious threat to you and your tenant’s safety. By increasing the risk of a fire outbreak and electrocution, neglecting electrical issues is a disaster waiting to happen. The best way to avoid such issues is to pay attention to the electrical system during your renovation.
Even if you recently purchased the house after an inspection, conduct another one to double-check and ensure everything is in order, especially if you have to install new lights or devices that rearrange the current wiring system.
Plumbing
Reduce the chances of water damage when you resolve plumbing issues promptly. Neglected leaks are one of the fastest ways to weaken the integrity of your house’s structure and decrease your resale value in the long run. When water begins to pool under your kitchen sinks, in the bathrooms, or in basements, it can seep into the ground and walls over time. As a result, your walls can develop mold, compromising the residents’ health, and cracks can form in the foundation, making the structure unsteady. Hence, quickly fixing leaks, clogs, and other plumbing problems would be best.
Roof Leaks
Keep your house safe from the elements by fixing roof leaks as soon as possible. When there are holes in your roof, rain, snow, and pests can easily slip through these cracks, compromising your home’s safety in the long run. Additionally, in rainy seasons, water can seep through your walls and floors, causing electrical problems or creating the perfect environment for mold to grow, thereby compromising the health of your tenants. That’s why roof maintenance experts often recommend yearly inspections to ensure there are no roof leaks that can reduce your home’s value.
3. Establishing a Communication Plan with Contractors
Agree on a Channel of Communication
Get on the same page with your contractors by establishing a clear channel for communication. The process of getting a hard money loan is a straightforward opportunity for investors with limited resources. However, the problem often lies in flipping a house on strict timelines and budgets. Thus, one of the best ways to ensure everything goes according to plan is to establish a convenient manner to reach your contractor. Project management software can make it easier, but you don’t have to opt for a fancy app. It would be best to stick with something both parties are comfortable with, such as phone calls or emails.
Provide Regular Updates
Schedule time to provide regular updates with your contractors. What’s the point of being able to communicate without saying anything worthwhile? Staying abreast of the project while it’s ongoing is essential so you can spot any issues before they escalate and rectify them. In the long run, being a hands-on investor could save you money and improve transparency with your team. Besides, it also keeps everyone on track, ensuring you meet your deadlines and maximize your profits.
Clarify Expectations and Responsibilities
Discuss important details about your project, like what you expect from the contractor, and inquire about how you can ensure the renovation stays on track. Having an honest sit-down with your contractor about your timeline, budget constraints, and standards can give them a better picture of what you want, helping them meet your expectations. It also allows them to provide feedback on how realistic your goals are, and advice on how to best reach them.
Conclusion
A lot of work goes into flipping a house, and it’s easy to get off track and run out of money if you’re not sure what you’re doing. However, this article highlighted 3 preparation tips you should know before renovating a fixer-upper that should help you. First, ensuring your money goes to the right things is essential, so create a realistic budget. It can help you avoid overspending while establishing your priorities and giving you a financial cushion for emergencies.
In addition, know the dangers of neglecting structural problems. Double-check for roof leaks, your electrical wiring, and plumbing before finishing a project. Left to fester, these issues can leave the door open for health and fire hazards that require costly repairs and reduce your investment’s value. Finally, establish communication with your contractors. Expert property managers can stand in for you to create an accessible channel, provide updates, and clarify expectations.
