One of the first things that you will learn as a real estate investor is that things don’t always go smoothly…
Especially when a reno project is involved.
With most reno projects, it’s more likely that things won’t go according to plan rather than will…
It’s just the nature of the beast.
Your reno budget really begins with your negotiation with the seller, doesn’t it?
Then, it continues through the settlement period, council approvals for the reno improvements, and all the rest.
But the reno process itself is especially prone to, well, disasters of one kind or another.
Don’t get me wrong; most reno projects end up getting done…
But for most beginner investors, the reno phase of the deal is the most stressful and the most likely to give you the most headaches…
And even experienced reno investors know that nothing is certain and that delays and cost overruns are typical.
Everything affects a reno project
Of course, how crazy things get with your reno depends upon many variables…
Even the weather can seem to conspire against you and cause costly delays and run up costs.
So one consideration that most investors don’t consider straightaway is hiring a project manager to manage your reno project from start to finish.
Now, it may seem like an unnecessary added cost…
And it most certainly is an added cost…
But it might bloody well be worth it!
Here’s why…
A project manager is like a property manager
Think about how most experienced real estate investors don’t manage their properties…
They hire a property manager to do it for them.
Why? Because they don’t have the time to do it…
Their time is more valuable finding other deals or being with their families or whatever else.
So usually, a property manager is just part of the cost of owning property.
The same logic applies to a reno project.
If you’ve never project managed a reno before, you’re in for quite a surprise…
Because, as I say, renos almost never go according to plan.
Builders, plumbers, electricians, floorers, plasterers, and other contractors all have to be coordinated…
And unseen problems always come up…
Whether it’s delays in getting the right materials or simply adjusting the schedule due to an out of code electrical issue.
The reality is that most renos come with schedule coordination problems, cost overruns, costly delays in deliveries of materials, code issues…
And other such things that you didn’t count on when you did your cost analysis.
Most renos take longer and are over budget
Sure, you’ve added a bit of a cash cushion in your budget…
But a recent survey found that the vast majority of renos ran way over budget…
And did not add the amount of value that they should.
Of course there are more costs to the investor that don’t get tallied…
For instance, how many days away from your regular job will a reno cost you?
How much marital stress will it cause?
And then there’s the budget issue…
How much extra money will be coming out of your pocket?
Opportunity costs can be high
It’s more than just the added costs of the reno project itself…
It’s also the lost opportunity cost.
If you’re reno is on a cash cow, every week delay is lost rental income that you’ll never get back…
If it’s a chunk deal, ever week delay is a week’s worth of interest lost, or worse, the lost opportunity of picking up your next deal.
For all these reasons, and a few others I’ll talk about, hiring an experienced reno project manager can be the smartest move you make in your reno project.
Choose your project manager carefully
A good project manager will not only take on most of the headaches himself…
But will also be able to save you from making costly reno mistakes, unnecessary improvements…
And even may be able to acquire construction and finished materials at a builder’s cost…
On a $100,000 reno project, that can be a lot of money!
A good project manager may well also know good people to hire for various jobs…
So you’re not taking a shot in the dark, so to speak, on your reno labor.
Now, before you hire your project manager, you need to do your due diligence…
Talk to at least three, and get their price quotes and references.
Talk to other people they’ve worked for and on what kinds of reno projects.
Hopefully, they have done your kind of reno many times before.
Also determine if any of them have ever been found negligent in a complaint or lawsuit.
Leverage your project manager
Choose the project manager based upon his references, his reputation and his experience with your kind of reno project.
Don’t let price by the determining factor!
Then, work out schedule a deadline for completion of the reno…
Add a bonus if it is completed and fully approved ahead of time.
Also, review the precise aspects of your reno plans…
Get his professional opinion as to added value or how greater added value can be had for the same or less costs…
If he proposes to eliminate or change a part of the reno project, give his recommendations careful consideration.
In other words, a good reno project manager will know much more than you about how to get the most bang for the buck…
Leverage that experience; it will be well worth it…
And your spouse will thank you.
You won’t miss days at your regular job, most of the stress will be on the project manager’s shoulders, not yours…
And most of all, your reno project will be completed faster and probably better.