Rehab budgets are critical to your success. At the end of the day the two biggest factors which determine your profit for rental houses are the price you paid per square foot and the price you charge in rent per square foot.
Your cost doesn’t just stop at the purchase of a house but continues on into your rehab budget. In order to obtain a larger Return on Investment, You either need a larger rent or a smaller rehab budget. This video we’ll examine a few basic ways you can create and control your rehab budget.
If you haven’t already watched our video on estimating the repairs of big-ticket items, please do that now.
Number one – Control the materials
Contractors are businessmen to they need to find many ways of making a profit.
One such way is including the cost of materials in their quote. Make sure you ask for quotes that involve labor only and materials decide whether or not it’s cost-effective to buy items like paint fixtures orr let your contractor do it.
Number two – Maintain the schedule
If you’re acting as your own General Contractor, then it’s your job to not only make sure the work is done but that is done on time. Foundation repairs need to sit for a week before you do more work. The ceiling fixtures go on after paint and paint happens after the floors are installed. Knowing when contractors need to work in order is key.
Remember hiring one contractor for many jobs can cause your project to run longer. It’s important to delegate.
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Number three – Know your limit
You might save $1,500 by painting the house yourself but will you save time and a headache? My rule of thumb is that it’s easier and more cost effective to demolition than it is to rebuild. Taking down a fence clearing out clutter and ripping up carpet doesn’t take skill and can be done in a matter of hours. installing tile and back-splash, painting walls and hanging doors takes patience and precision acquired over years of practice. Sometimes hiring outside help is the difference between collecting rent next month instead of two months from now.
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