Get the most out of an estimate with a contractor
- Vet your contractor
When you are in the beginning stages trying to decide which contractor to use, you should be asking the basics questions to start:
- Are they licensed and insured?
- Do they have references?
- Do they have examples of previous work?
Once you determine their basic qualifications, you need to narrow in on the specifics. For example, have they worked on investment properties before? Can they produce supplier discounts to keep the cost down over the timeline of the project? Do they have subs/how big is their crew? Are they able to pull permits within a timely manner? Do they expect any material delays considering today’s market?
Set clear Expectations of communication and timelines
It is important that you establish your timeline goal and what kind of follow-up you’d like during the length of your project.
- Do you want to be updated as items are completed?
- Do you want a weekly picture update? Phone call? Text? Do they have any online systems that makes things easier?
Who will be supplying materials and what kind of estimate are you looking for? If you decide to supply the materials yourself, you may be thinking you’ll be saving money in the long-run but what you’ll actually be doing is causing yourself potential time and hassle coordinating the efforts of shipping, delivery, on-site coordinating to have someone available to receive the shipment. Then, did you buy installation parts? For example, if you buy a sink and faucet… it doesn’t end there. You will also need a water supply line, a drain supply line, PVC pipes, shut-off valves, garbage disposal etc. Make sure your with your estimate that you ask about procuring and the cost of permits!
- Will you contractor be filing the permit directly?
- If so, will the estimate include the cost of permits or will you have to navigate that independently?
- What about debris/trash removal?
- Will the estimate include dumpsters, lawn maintenance over the time of the project? Will this estimate include appliances, delivery and install?
- How long is this estimate good for?
- Does the contractor know your target ARV (after repair value)?
- Have you discussed the level of finishes you’ll require to be installed i.e. handles, lights, appliances, backsplash, plumbing fixtures such as sinks or shower heads etc.?
Having an idea of what the price point should be at the end of the project will give your contractor information about what details should or shouldn’t be included in this type of rehab. Run ideas over with your contractor about some value-add points, i.e. button garbage disposal instead of a switch, backsplash types, tiled shower instead of surround… the list could go on. But if you’re working with an experienced REI contractor, these value-add conversations should be straight-forward.
- Level of detail
Now for the nitty-gritty, finances!
- Are you working with a lender that will require your estimate to be set-up in a specific way according to their systems?
- Is your contractor willing to work with a lender for inspections and draw payments?
- Will you be setting boundaries regarding spending, budgeting, and change orders for small material items?