My wife and I had an interesting conversation about money the other night, and how our upbringings (and what our parents think about money) so greatly shapes how we think of it. We also talked about failure, and how our families perception of this affects our psyche.
Now that we have a child of our own, we are thinking deeply about these concepts and how we plan to parent. All of us want to do the best job we can as parents, and instill in our children all the right values. When I was growing up, and my wife echos this sentiment, failure was not an option.
I’m not sure if it was because our parents wanted to shelter us (protect us from failing) or because they believed that the lack of failure = success. I guess technically it does, but now that I am an adult, I have adopted the motto, “Fail and fail fast”. There is a good quote by Robert Kiyosaki that goes like this:
The moment you stop worrying about failing – your outlook changes. You start looking at those ‘failures’ as getting you one step closer to your goals and as learning opportunities.
When I first started out in real estate, I was young (in my mid twenties) and hyped up on Reno TV shows like Flip That House. I didn’t know what I was doing, to be honest, and I was working with a family friend who was a realtor (who also had no idea about flipping). I worked with the wrong contractor (was naive and over trusting) and went all out and over improved the property.
Long story short, I ended up loosing approximately $7000. At the beginning, of course I was devastated. I guess you could call it a failure – all those hours after work, all the hassle and a $7000 loss is what I had to show for it – what would I tell everyone?
The good thing was – it didn’t stop me. I continued to propel forward and I used everything I learned through this experience to help me grow. By no means what this my only big screw up in real estate – there were many more that came.
However I like to consider it as $7000 of Hands On Education which was truly invaluable.
Since then I have gone on to do countless renovations and built much of my business on becoming an expert at this..
Ok so back to the focus of this blog post – renovating tips. Whether you are renovating your personal home or an investment property, these tips will definitely help you. I have renovated over 25 properties of various different sizes – from single family to multi-family with budgets ranging from $1,000 to $100,000!
- Plan Ahead
I try to plan as much detail as possible – I try to get started on things before I even take posession of the property. From getting design drawings done (to apply for city permits) to picking materials (paint colours, flooring). Most of the time I like to stick to the big box stores such as Home Depot, Lowes and Rona. I will sometimes use specialty shops for tiling, flooring and appliances as I can get better pricing One of the reasons I like using the big guys is that I can search for what I want online and just go pick it up (or ask a contractor to do so). I also have multiple projects going on in different cities and it helps to have consistency.
The more you plan ahead, the better your job will flow and you may avoid delays. Depending on the size of the job, I usually get drawings completed by a designer with exact measurements of the floor plan. This way all my different trades know they have to build according to plans. If it a smaller job, this is not necessary but a rough sketch may help.
For example, if you are putting in new flooring, it would be good to know how many square feet you are replacing so that you can calculate how much your contractor is charging per square feet.
- Learn from contractors.
Ask the contractor what their plans are, and ask them about past renovations they have completed that are similar in scope. Every contractor may have a different spin on getting the job done. It helps to get a few different opinions and pricing for the renovations as well. Whether you are hiring a general contractor (G.C) or specific tradesman, they can walk you through the entire job in detail so you don’t miss anything. Hiring the right contractors is crucial to your success. Most of them are very knowledgeable as they know what to expect with the many steps involved in getting the project done.
- Get detailed scope of work with your Quote.
I have personally dealt with this many times. I get a contractor to give me a quote verbally and he starts the work. After a few days, I hear “this was not included and that was not included” and guess what – they usually want extra $$$$. I absolutely hate this and usually will never work with that contractor again – unless the items mentioned were truly unforeseen. I tell them upfront that I hate extra charges and like to know the scope and charges upfront.
I like to get a detailed breakdown of each line item with the price for a specific job That way I know exactly what I am paying for. I also like to get a breakdown of labour and material cost. Depending on the job, I like to pick out the tiles, paint colours, laminate or hardwood flooring etc. and pay only for labour.
- Monitor Progress.
Although I would like to trust my contractor and let them do what they are being paid to do. My philosophy has been “trust but verify”.
Check up on the work as frequently as possible. It’s essential to closely track the progress of the work. If you have a problem with anything, immediately discuss it with the contractor, who will likely have a good explanation.
Also note that it’s possible you will want or need to make changes to the project along the way; for example, you might encounter a snag you hadn’t thought of during the planning stages. Discuss this issue with the contractor and work with him to find a solution; your contract will have to be amended to include a detailed description of such a change and what it will cost.
5.Stick to your budget as best as possible.
It’s very easy to get carried away, so be sure to stick to the budget you used before starting. Little things add up – believe me. That is how I lost $7000 on my very first project. $200 here, $500 there, all of a sudden you have gone over budget by over a few thousand dollars.
And remember – the numbers are the most important thing. Don’t get emotional – the budget has to make sense in order for a project to be profitable.
So there you have it, until next time………………………