16 Feb Real Estate Investing – Renovation on a Budget
Real Estate Investing – Renovation on a Budget
Real estate is becoming an increasingly popular way in which people are choosing to invest their money. Whether you are into multifamily properties, commercial properties or single family home flipping the trick to making money through real estate is keeping your costs down and increasing the property’s value. You must also have enough knowledge of the real estate market, in my case the Chautauqua NY real estate market, to decide whether rental or sale is the best option to increase your profit margins and make your purchases a worthwhile investment.
One thing that can make the difference between success and failure with real estate is saving money during the renovation process. Keeping the amount of money you spend to a minimum is vital if you want to profit from your investment. Here are some tips for keeping your real estate renovations cost down to maximize your profit potential.
Consult with a local Realtor
No two real estate markets are the same. When considering Chautauqua real estate, the markets can change from block to block. The Bemus Point real estate market isn’t even close to the Jamestown, NY real estate market! The have different price points and the buyers tend to look for different amenities. For example: In Jamestown, NY it might be all about proximity to shopping or schools. Bemus Point is on Chautauqua Lake so it might be more about views or lake access.
Also, Realtors often have contacts that can be leveraged to help save you money. A recent example of this happened with a commercial real estate client of mine. We negotiated a great price on a commercial building but, the building needed a roof. We asked to seller if they had quotes for the roof and they provided quotes for $45,000. We negotiated that off of the purchase price. After we closed, I reached out to my contacts and was able to get the roof done for $21,000 saving my client $24,000!
If there are jobs that you can safely tackle yourself, then doing so will save money on labor costs. Most people can at least manage painting and decorating. However, it is essential that some tasks are only undertaken by professionals for health and safety reasons, and to ensure that the work complies with various regulations. For example, anything involving gas or electricity is not a job for a novice.
Ask for a Favor
If you know tradespeople personally, you could strike a deal with them to complete the work at a reduced rate. If you own or plan to own several properties and offer someone a steady stream of work, you may get a discounted rate. If you have skills they’re looking for, you could also trade favors by asking for their services in exchange for offering your own labor for the day to save money. Also, you could ask them to help walk you through something that you haven’t done before. Framing a simple 2×4 wall might be a good example of this. Expanding your knowledge will definitely help you save money moving forward so don’t be afraid to try new things!
Keep It Simple
It can be tempting to renovate the property to the standard you would expect in your home and in a manner to suit your tastes. However, not everyone will share your taste in interior decor.
Those who are renting a property will expect the property to be clean, functional, and modern. Similarly, people will likely redecorate to suit their tastes after buying the house if you sell the property.
Therefore, fitting out the property with expensive, bespoke fittings and elaborate wallpaper is an unnecessary expense. It is much better to keep things simple and functional. Not only will this save you money, but it will also make the property appeal to a broader market of people.
Buy at Trade Prices
Many stores sell items at a discount to those who are working in the trade. In most cases, all you will have to do is fill in a form, and you will receive a tradesperson’s store card that you can use to get your discount when buying supplies for any renovation work. Some stores will ask you to provide evidence that you are a contractor. Again, if you have contractor friends, ask them if you can buy under their names. This may help contractors since often they get deeper discounts based on purchase volumes and your purchase will help them get there.
In any case, you will want to make sure that all work is done well and completed before marketing the property to real estate buyers or tenants. These are big decisions for the end user and they often consider the credibility of the real estate seller when making decisions. If a buyer sees incomplete work or work that is not up to standards, they will start questioning everything.
It is only by keeping costs to a minimum when renovating that you can maximize the profit potential if you invest in real estate. Some simple ways to do so include completing some tasks yourself, trading favors with a tradesperson, keeping the renovation simple, and buying materials at trade prices. If you implement all these steps, it will help you keep your overall expenditure as low as possible.
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Realtor | Real Estate Broker | CRE Team Leader
ERA Team VP | MLMcVinney & Associates, LLC
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