Choose the Right Contractor, Do Renovations with Permits and to Code!
One of the biggest mistakes I have seen novice investors make is choosing the wrong contractor. Price certainly isn't the only factor, yet newbies often go with the lowest price without realizing what is at stake. There are several things to consider before hiring a contractor:
- It's so important to make sure that your contractor is licensed, and you need to check with the state agency that oversees their type of license, don't take their word for it!
- Getting a copy of their workers comp policy, insurance and bond is very important. If something bad happens on the job and they are injured on your property, and are uninsured, you may be sued!
- Get references from several past clients, but don't just talk to the ones they give you, ask for the last three jobs they did, and don't just get the references, call them! Check Angie's List too, that's a great resource.
- Get a timeline for job completion and hold them to it, put an incentive if they complete to satisfaction ahead of schedule, but a penalty per day if they miss their completion deadline.
- Only pay in draws, and the draws should be smaller and more frequent if it's a big job. This ensures they don't walk off with money without completing the job. If you are out of state have a third party inspect and sign off and shoot lots of pictures to make sure everything was done right before the next draw is paid out.
- Another important thing It's said in the renovation business that you can have great quality, fast, and expensive, poor quality, fast and cheap, or good quality, at a good price in a reasonable time frame. That being said, you can't have all three, if you think you are going to get great quality, fast at a cheap price that's hard to do. If something sounds too good to be true, it most likely is, and you get what you pay for!
- Make sure the contractor pulls the proper permits and does things to code, trying to beat the city out of a few hundred dollars can cost you a lot in lost time, fines and may make the rehab much more expensive as the city inspectors may make you do a great deal of updating that they might not have done had you been compliant.
- Always ask the contractor what types of latent defects they think they might uncover during the project, and be prepared for the budget to go over 10-15% on older homes or homes that have major systematic problems.
- Get the figures in a contract so that if the contractor missed something they are bound to complete it, and never pay by the hour unless you have a set hour limit that they must complete the job in.
I hope these tips help you with renovation on your investment properties, and if I can be of assistance in helping you with investment properties we have done hundreds of them and are glad to assist you!
The Rich Life Real Estate Team
404-718-9126
www.richliferealestateteam.com
www.richliferealestateshow.com
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