Review Your Estimates

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If you are putting your hard earned money at risk, shouldn’t you know where that money is going? This may seem like an obvious question, yet most real estate investors have no clue where their money goes on every deal. When it is time to sell and they look at the bottom line, they are often surprised at how little they end up with. The reason for this is that they don’t have a firm grasp on how much and where their money is going. Always make reviewing your estimates a priority.

You can spend months finding the right property to buy, but many investors make the mistake of looking at their contractor estimates for a short period of time. You may also have an idea of how much you want to spend, but you don’t really know where that money will be allocated. Simply getting a few estimates from contractors, even contractors you have worked with, is not enough. You need to break down each estimate and know exactly what you are paying for.

Home Depot and Lowe’s can both be intimidating if you are trying to get materials for a do-it-yourself project. If you are formulating a budget, you would be wise to spend a few hours in these stores to look at the price of materials. You don’t have to know how to do anything with them, but knowing how much they cost will put you in a position of power when negotiating with a contractor. The more you know, the better position you will find yourself in when it comes time to take action.

Investors commonly make the mistake of not knowing what to do with the subject property. You can lean on your contractor for advice, but your vision should be your own. Don’t be discouraged if a contractor tells you that they don’t like your idea or can’t do it quite the way you want to. You should always speak to at least three contractors and get three detailed estimates. You will find that one company may just be trying to do the work as quickly as possible and move on to the next job. On the other hand, another may be trying to do it for the highest price. If the estimates aren’t detailed, you will have no way to compare apples to apples with the other estimates.

Having a vision for your property is one thing, but following through with it is another. With your budget, you need to be able to hold someone accountable for the spending. Either you or your contractor has to be in control of every dollar. If you need to pay for an unexpected expense, there is nothing you can do about it. However, there is a difference between being cheap and frugal. What you spend will directly affect your bottom line. Items as small as a bag of mulch and as high as kitchen appliances are directly taken out of your pocket. If you don’t watch your spending, you will end up going over on most every project.

The more deals you close, the more you will have a grasp on where the best places to spend money are. You have to know as much about the spending process on every project as possible. Learn from every trip to Home Depot and every time you review an estimate. Everything you do with your properties should be a learning experience. The more you know about your spending, the more you can make on every deal.