Rehabbing and renovating a property can be expensive. Whether it is your own home, or your investment property, saving money while renovating is very important. The following are the steps to follow to ensure your renovations are completed as efficiently as possible.
Familiarize yourself with Permit Process
Ensure that you follow all your local government permit requirements. You may run into trouble when selling if you have not pulled the correct permits for your project. Either visit your local building department or view their website to familiarize yourself with what tasks will require permits.
Educate Yourself on the Rehab Process
You don’t need to actually do the rehab to save money, but you definitely need to know what the task entails. Luckily, Youtube has thousands of videos on any rehab area, showing you exactly what is required. Once you understand the process, you can either;
- Save maximum money, roll up your sleeves and do some of the work yourself.
- Be in a position of power when negotiating with contractors
It is very important to negotiate with contractors understanding the work involved. I have found quotes vary by 1000% on most contracting tasks. Items like installing drywall, and tiling, are not expensive (you could even teach yourself), but some quotes can be as high as $50 per hour for tasks like this.
Save Money on Big Box Materials
The two largest big box home improvement retailers are Home Depot and Lowes. You can easily save 6% – 20% on every purchase from these stores which for a larger rehab will really add up.
- Use gift cards for all purchases. Gift cards are available at Raise for 6-15% off. You purchase the gift cards, and then use the gift card instead of credit card / cash at the register. Raise has a 100 day guarantee, so if for some reason the gift card doesn’t work, they will refund you your money. I have personally had a couple of bad gift cards, and got refunds without issue.
- Use moving discount coupons. Lowes offers a 10% off movers coupon from USPS. Many people re-sell these on Ebay for about $2 each. So as long as your purchases are more than $20 at a time, the coupon will save you more money. You can also find Home Depot gift coupons on Ebay.
Every time you visit the big box store, use the coupon and gift cards to pay, and you will receive the discount. This works on all products including large purchases like appliances, flooring, etc.
Purchase Open Box Appliances
Open box appliances are often exactly the same as new appliances, just cheaper. If someone orders an appliance, gets it delivered, and then it doesn’t fit through the door, or in the space, it will become an open box item. On some appliances there will be a bump or scratch, which often is on a side that is hidden in a kitchen anyway. Open box appliances are often far cheaper than new appliances, you can find open box appliances online at Best Buy.
Purchase Supplies Online
Many materials used in rehabbing a property are now available online, often at large discounts when compared to big box stores and local retailers;
- Faucets are available discounted at stores like eFaucets, and at Amazon. Be sure to look at amazon warehouse deals on faucets, I have purchased a few and saved 50% off retail prices (they are typically returns).
- Door Hardware (locks, handles, etc) are available from Amazon.
- Blinds and window furnishings are available online from Blindsaver and 3 Day Blinds.
- Lights and light fixtures are available from Lighting Showroom, 1800 Lighting, and Amazon.
- HVAC,Air Conditioners and water heaters can be purchased online at sites like Heat and Cool and Amazon.
Don’t go Overboard on High End Materials
You can purchase tile that is $2 per square foot, and tile that is $10 per square foot. The $10 per square foot tile is no better in quality than the $2 per square foot tile. It is just either rarer, from a more difficult location, or a more expensive brand name.
It is easy to go overboard on high end materials, but if you want your property to always look its best, you will probably rehab every 5-10 years. Even very high end materials today, will look dated in a decade as styles change. The trap items include;
- Kitchen Cabinets – Custom cabinetry can get very expensive. But they are all essentially wood (avoid non wood cabinets). Kitchens are an easy place to waste a lot of money.
- Tiles – Tile quality is not dependant on cost (at least once you get past the 50c a square foot bargain basement tile). Don’t go overboard on european imported specialty tile, or your budget can quickly be blown.
- Flooring Materials – When installing floating floor, prices will range from less than a dollar per square foot, right up to over $10 per square foot. Very expensive flooring is more likely to be exotic or a brand name.
- Faucets – The cheapest faucets are unreliably (Especially when the internals are plastic), but this doesn’t mean you should rush out and purchase $300 faucets. There are many reliable faucets for under $100 with internals that will last.
Never give A Single Contractor the whole Rehab Project in Single Bid
Whenever completing a larger rehabbing project, you will get bids from contractors who want guarantee they get the whole project. They will try to give you a single price for the project. It sounds perfect, you only deal with 1 person, and they will get the job done.
This approach will cost you money. Whenever you begin a renovation project, there will be issues that arise there weren’t visible when the project began. You may be rehabbing a bathroom, and once the tile is pulled off the wall, water damage is visible, so you must replace some of the joists or subfloor. When a firm gives you a single price, if they are experienced, they know that these issues arise, and are pricing in a worst case scenario. Therefore if the job begins, and only minor new issues are found, you are paying for a contingency that never arises. The contractor won’t give you a refund for a job being less work!
It is best to break the job down to logical tasks, and get quotes on each task. If a new job arises due to work that wasn’t visible, you pay for that issue to be resolved. This stops the contractor needing to build contingency in, and they can provide you costs for each task. It also allows you hire more specialized workers. Many contractors will offer to put up drywall, but a drywall specialist is faster and cheaper than a general contractor completing the job.
Breaking up a project into logical tasks also allows you to move on from a contractor who is not working out. I have a project at the moment when the contractor lost his subs. Therefore he is struggling to get the job done, and I am free to put out to tender the next parts of the rehab he hasn’t gotten up to yet. If I had contracted the entire job to the original firm, I would be stuck until he organizes more labor.
If a Contractor is not working out. Fire them.
A bad contractor can cost you a lot of money. In both lost time, and poor workmanship. It is very important when trying to rehab on a budget, that you fire any contractor who is not working out. Pay them for their time they spent on the project, and walk them off the site.
Only Pay Contractor After Work Completed
Fly by night contractors who accept money up front, and you will never hear from them again, are so common in construction it is almost a cliche. I like to purchase materials; often providing Raise Gift Cards for the workers to pick up the materials. I only pay for work once it has been completed.
I have made the mistake of paying for work up front. Sometimes the contractor completes the work, and sometimes they will disappear. If a contractor manages their personal finances so poorly, they need money up front, then you don’t need them as a contractor. Some will argue that some homeowners don’t pay, but they contractor knows where your home is, and can put a mechanical lien against the property if you don’t pay. It is far more difficult for you to chase a contractor for money.
Rehabbing on a budget can be tough, but follow the steps above and you can get the job done! What tips do you have for rehabbing on a budget?