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Few parts of investing are as anathema to the inexperienced financial investor as dealing with contractors. Our Rehab Consulting Team has boiled the process down into 5 key elements that should be able to guide anyone through their own remodeling job (or let our team do it for you). Our market analysts have done extensive remodeling themselves and would like to share these thoughts:
Contractors do what they are told to do and charge what you have agreed to pay them. When something new is added to their job, they tend to want to be paid for it. This lack of preparation on the investors part causes the loss of contractors, delays in construction and invariably costs more money than having prepared bids the right way. 2) Anticipate construction delays Anticipation does not mean "accept." But to understand that contractors promise faster delivery than is actually performed in 9 jobs out of 10. Contractors are independent and take the next best paying job - oftentimes putting your job at the side. You have two choices - deal with it and wait, or pay top-dollar. This time-shifting can be managed. We suggest agreeing to compensate contractors extra for finishing according to a pre-determined time schedule. 3) Obtain labor and material bids The very best investors in town still manage to screw this part up. All bids should be inclusive of labor and materials. It will change your life. 4.) Break project down into phases No huge start-checks, no fat check on the back to breed distrust. Break the project into phases with payment upon completion of each phase. You will have to pay a start check, but not for the whole project, just start of each phase. If taking out the headache from managing labor and materials saved you time, this one may cost you time. But it will remove a huge headache of an unfinished, disorganized project with no completion in sight. Further, payment for the last phase is held out until final completion, ensuring your final checklist items are resolved. 5) Find contractors that always answer their phone and meet with you on time If they cannot have the professionalism to make an appointment, they will not be able to manage the rest of the repair process either. If you have questions and would like more dedicated and one-on-one/small group education, we can set up live in-person or on-the-job learning sessions - upon request or at a regularly scheduled time. Related Articles -BASIC EDUCATION OVERVIEW - Basic Investing ARV - After Repair Value Birddogging Contract for Deed Dealing with Contractors Estimating Profits Evictions - A Primer Executory Contract Foreclosure Overview Foreclosure Types Overview Hard Money Loans - a/k/a Asset Based Lending* Lease Options Leverage MAO - Maximum Allowable Offer Multi-Family Investing Basics as Presented by David Lindahl on March 4, 2006 No-Money Down Real Estate Investing Options Part-Time v Full-time Passive Investing For Beginners Pre-Foreclosure Profit Calculation Remodeling for Beginners Rent vs Buy Is Really Rent vs Sell Seller Financing as Investor Buying Tool Skiptracing Subject To Wholesaling Return to Listing Return to Investor Education |
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