As experienced fix and flip investors know, it is important to decide on the scope of your renovation before you begin making changes to a property. Without strategic planning, it is easy to experience “scope creep” and spend far more time and money fixing up a property than you intended. But how do you decide the scope of a renovation to determine what needs to be done?
1 – Evaluate the Property
The first step is to evaluate the property to determine what absolutely needs to be done to make it appealing to homebuyers. Note any major issues such as signs of foundation issues, electrical problems or pipes that need to be addressed. These issues are major red flags to homebuyers because they indicate that the home will need serious repairs before it will be livable.
Next, you’ll want to take a look at the kitchen and bathrooms for functionality and appeal. These areas of a home are critically important to home buyers and have a major effect on how much they will be willing to pay. Make a list of all the repairs and renovations that the home needs as well as what you’d like to make.
2 – How Much Can You Afford to Spend?
Once you’ve evaluated the property and the problems that you’d like to address, it’s time to take a realistic look at your finances. After you’ve determined your budget for the project, you’ll need to prioritize your projects. Research the cost of all of the repairs and renovations you would like to do.
Important repairs should be done first to ensure the home is livable and won’t be prone to any significant problems. Be realistic about your budget and don’t try to do too much with too little money. Inevitably, some projects are going to take more time and money than planned, so it’s a good idea to leave some wiggle room in your plans.
3 – Get Specific
After you have the list of projects you hope to accomplish and you’re aware of the costs, it’s time to get real. For each project you propose, compile a list of all of the tasks necessary to complete the projects. At this stage, you need to be very realistic about your timeline and budget. Take a hard look at the information you’ve gathered and find out how much renovation you can realistically expect to perform on your budget within the time you have.
4 – Identify Your Contractors
If you’re not planning to complete the renovations yourself, it’s important to get in touch with your contractors to find out how much they’ll charge to complete your project. Check their references and inquire about their fees. Reach an agreement about the project, its cost, and how long it will take to complete. Once you’ve reached this stage, share your project plan with the contractor you’re considering. You should have gathered enough information and resources to decide the scope of a renovation and the contractor can assure you that is realistic.
Renovations Can Be Expensive
If you are a fix & flip investor and you’re wondering how to pay for renovations to your property, contact Gorilla Capital today. Qualified applicants may be offered a funding opportunity that helps alleviate the stress and financial burden associated with the operation of a fix and flip operation. Find out more now!