Last time we talked about why renovating your investment property is different from renovating your home, now we talk about some tips to keep theses costs under control.
The way to profit from a renovation is to keep the costs low and the profits high, so lets look at keeping the costs low.
1 – What’s the timeline? The longer the property is out of commission, the less money you will make. So you need to be efficient. But take into account that the renovation will no doubt take longer than you hope it will. So make sure you are realistic on how long it’s going to take, and factor in some extra time and money to cover this.
2 – What’s the budget? This is hard, there will be cost overruns so make sure you have a slush fund put aside for them. But only dip into it if you ABSOLUTELY have to, the more you dip into it, the less you will make. Make cuts where you need to keep the budget under control.
3 – Make sure everything is ready to go before you begin. Make ALL the decisions before hand. From paint colour to what nails you’re going to use, this will mean there are no decisions to make, all supplies will be bought and you can not slow the process (and therefore profits) by changing your mind midway. This will also help with budgeting. You can see what is missing, and you can tweak supplies early on. Something else to consider, is seeing if you can have everything delivered before the renovation starts. As long as it’s secure that is. This means there’s no waiting on deliveries that can slow things down. You won’t be able to have everything on site most likely but shoot for it anyway.
4 – Discount is the way to go. Can you get hold of a discount card, or do you have a mate with one that will help you purchase items a little cheaper? All the little things will add up. Look at discounted items – everything from hardware to toilet pans are discounted, so check through the piles to see if anything would help. Of course pick over them and see if they are discounted for a reason, or if they are end of lines or overstock. Use these to your advantage.
5 – Think long-term. Don’t buy cheap because it’s cheap. Think about how many years you are going to get out of the product and how many tenants it will service. If you anticipate on having the property for a long time, then paying extra areas such as flooring may be worth your while. Get some good advice on this. There are some things you can save on, and then there are other things that you will regret.
6 – Consider hiring rather than buying. If you are going to be doing the work yourself, you may feel obliged to buy the power tools to get the job done. But unless you are a regular DIYer (and will be doing the maintenance on the property too) it’s probably better to hire – how often are you going to need to use a floor sander? Plus you are likely to buy average quality tools, rather than the really good ones that you would hire, so the job is likely to be finished faster.
When you have a renovation on the books, you need to look at every option to save money, because every dollar saved – and every day saved – is more money in the bank.
What are your tips for saving money on renovations?