Solution to Low Estimates
Being an investor, you must avoid underestimating of your job, starting to investigate the prices in the area – so, you must start the education of yourself. The investigation, that you can start doing all many questions, speaking with many local investors, contractors… Or, for a example, you can start walking through other several jobs that contractors (or investors) are estimating in terms of money. You also can investigate materials for a project in Home Depot. And finally, after all many conversations, questions and walks, you’ll start to understand that during this time of investigations you were hearing the same numbers or facts. And just when this moment arrives, you can start to build your own estimates. Asking to investor (or, maybe, contractor), if you’re unsure, double-check your data. And don’t start to worry about being or not being exact. Remember the “fudge factor” – that is about 10-20% of the total.
Finally, you don’t need to start the panic just because you don’t know how estimate – you’ll never know all! In this situation all that you have to do is just to find the person whose can help you.
As long as the process of estimating lasts, you need to remember that your principal objective now is to make an educated guess. The guess, that arrives at a number, as close as possible to the final number. And finally, is important to include a several number for unforeseen circumstances, or “fudge factor, because your educated guess can be less accurate – if there are some unknowns.
When you start estimating, just remember that in foremost place there are the big tickets items: heating systems, kitchen, roof, etc. The other things – little things – in the future you will need to renovate, so it’s better to estimate first the heating system, that spend your time thinking about new light fixtures or switch plates. This is logical.
Very Low Quotes by a Contractor
If the low quotes are so low, they can’t be good. Often a contractor wrongly evaluates a job: action, by which the rehabber asks contractor to do the work for lesser price. Occasionally, he pays it.
However, sometimes the possibility to maneuver can disappear, or simply it doesn’t exist from the beginning, especially if we talk about the cheap work. Since the contractor needs the work, he agree with the possibility to low they already lower quote and he starts all with the price that you offer to pay. So, here is when the problem appears. For the beginning, the contractor starts to understand that it’s difficult to make money on the job, because the quote, that they have realized, is too low. On this basis, they start to try the work into something beneficial, something moneymaking – they start to use cheap material, not keeping promises and leaving the job incomplete (particularly if the performed work already was paid).
Solution to Very Low Contractor Quotes
The best solution is the most easy: when we talk about this money problem, it’s important to use the good sense (and avoid the low quotes). If you’ve approximate several contractors which have the prices since $750 or $800 (with half upfront) to $1200-$1500, select one of the ten, paying to the cheapest a little more. You’ll be avoid a lot of time and save yourself. And, of course, you’ll be avoid to save money.
If You Compare The Incomparable Quotes.
Rehabbers frequently obtain a lot of quotes, and then they start negotiate with the quotes of one contractor with the other, much lower, quotes of the second contractor. This is a problem, because once rehabbers start to compare, they forget that it isn’t the same that comparing apples – for example, one quote to install a Ducane furnace is different than the other quote of Trane furnace. Methods and materials are so different and can vary greatly, so you need to be capable to convey what is that you want.
If You Compare The Incomparable Quotes: Solution.
One of the most important things, when you are seeking the quotes, is the necessity to ask the contractor about this theme. “Spec sheet”, defining the details of the work (workmanship and the quality of materials) to every contractor with whom you would like to work, or the provision a Scope of Work, are good way for achieve this. As well, in doing this, every received quote will be so comparable with every other quote.
Solution to Low Estimates
In order to avoid underestimating a job, you as an investor must educate yourself on the prices in your area. Speak with lots of local contractors and investors. Take a few to lunch. Walk through other jobs that investors or contractors are estimating. Spend an afternoon in Home Depot pricing out materials for a rehab. Ask lots of questions. A few lunches and a few walk-throughs and you’ll start to realize that you’re hearing the same repairs and numbers over and over again. Then you’re ready to construct your own estimates. If you’re still unsure, have a contractor or an investor double-check your numbers. And don’t worry about being exact. No one ever is. Include a “fudge factor” of about 10-20% of your total. And finally, realize that you will never know everything and that you will occasionally encounter a repair which you don’t know how to estimate. In those cases, just find someone who does.
Throughout the process of estimating, remember that your goal is to make an educated guess, arriving at a number that is as close as possible to the final number given the facts at hand. If there are a lot of unknowns, your educated guess will be less accurate. Therefore, you should include a higher number for contingency, or “fudge factor.”
Also remember when estimating that your primary concerns are the big ticket items? roofs, kitchens, heating systems, etc. Little things such as paint, carpet, new light fixtures, and new switch plates are always going to be renovated, so assume that you will always do these things and spend your time estimating the condition and cost of repairing the big ticket items.
Unrealistically Low Quotes by a Contractor
Low quotes can be good, but not if they’re too low. Often a contractor will price a job out. Then the rehabber will ask the contractor to do the work for less. Occasionally, the contractor pads the price. Often, however, there isn’t much room to maneuver, especially they have been asked to work cheaply. Even so, the contractor wants the work so they lower their already low quote and agree to do it for the price you’re willing to pay. Part of the way through the job, they realize their quote was too low for them to make any money on the job. So they attempt to turn the job into something profitable by beginning to cut corners. They use cheaper materials, don’t do everything as promised, or simply walk off the job, leaving it incomplete (especially if they’ve already been paid for the work that has been performed).
Solution to Unrealistically Low Contractor Quotes
The solution to this money problem is to beware of the lowball quotes and use common sense. If you’ve approached ten contractors who say it will cost $1200-$1500 and one who says $750 or $800 but they need half upfront, pay a little more and go with one of the ten. You’ll be saving yourself a lot of time, headache and, in the long run, money. Comparing
Rehabbers often obtain multiple quotes and then use a quote from one contractor to negotiate a lower quote with another contractor. The problem in many of these instances is that the rehabber is not comparing apples with apples. For example, a quote to install a Trane furnace is not the same as that for a Ducane furnace. Materials and methods can vary widely, and you need to be able to convey specifically what you want.
Solution to Comparing Incomparable Quotes
Most importantly, when seeking quotes, you need to ask each contractor for the same thing. Providing a Scope of Work or “spec sheet” outlining the details of the job in terms of quality of materials and workmanship to each contractor from whom you would like a bid is a great way to accomplish this. Also, in doing this, each quote that you receive will be very comparable to the others.