The best way to save on costs?
To paraphrase an old Clint Eastwood line, a property investor’s “got to know his limitations.” Ultimately, you’ll want to consider these points in making your decision….
The first set of concerns you’ll have to weigh between any do-it-yourself rehab project or hiring a contractor are the various types of cost savings issues.
On the one hand, you have the contractor’s price for your renovation. Subtract the cost of materials you’d have to pay for the job without any wholesale discount the contractor usually gets for materials. Now you’ll have your real “time cost” for performing the renovation.
The time factor
Also, consider that a licensed contractor can probably have the job finished in a fraction of the time it would take you to accomplish it. (Of course, if you’re on a tight budget, you may not necessarily have a choice).
In most cases, contractors have redone kitchens, baths, etc. on a regular basis. This might be your first time. And your lack of expertise will obviously increase the time spent on the project relative to a contractor’s time.
And you must also consider the lost opportunity costs of your time – what other investment property tasks you could have performed instead. (Of course, if doing renovation work is therapeutic for you, then the time factor is not so important here.)
Quality of materials
Also consider the quality of materials to be purchased. Do you have access to the same materials for the same price as a contractor does? Most contractors have a set “supplier list” that they purchase from over and over again for their many jobs. This affords them the best materials at the least cost.
Another key issue to take into account in your decision-making, is that do-it-yourself projects can sometimes be done incorrectly. These jobs can involve costly repairs when not done properly – and may ultimately require a contractor to come in to fix them. Ouch.
Another consideration for your bottom line, is that any amount spent on a contractor on an investment project will mean a reduction in the cost basis of the property when it comes time to sell the house. Thus, a lower tax bite. When you do-it-yourself, you cannot claim a deduction for your own time. (The investor’s time performing the job, while valuable, has no effect on the cost basis of the property.)
Finally, always weigh the cost factor of hiring a contractor with their ability to guarantee the workmanship and materials. A licensed contractor will service any items found defective during or after construction.
photos courtesy of alttext.com, gideonsword.net, sc6.blogspot.com