As a real estate investor, you may feel it more prudent to spread out costs when it comes to significant expenditures. Renovations are necessary in this business, but there’s no doubt about it – all that construction time, project management, and cost would give anyone a headache.
Why not take it all one step at a time?
Despite the potential benefits, getting as much done as possible in one fell swoop is worth it! Here’s why.
7 Reasons to Do All Necessary Renovations Sooner Rather Than Later
1. The Economies of Scale
You can often achieve economies of scale when you renovate multiple properties or projects simultaneously. This means buying materials, hiring contractors, and renting equipment in bulk can result in lower per-unit costs than doing them one by one. You might be able to negotiate better deals with suppliers and contractors when you offer them consistent work over multiple projects. In many cases, you can negotiate a discount when more work is included in the scope of your project.
As a side note, the cost of labor and materials is likely to inflate over time. The same project now could cost more later! Even if the upfront price is higher, you could wind up paying more if you spread things out.
2. Reduced Mobilization Costs
Contractors and subcontractors typically charge mobilization fees for setting up and dismantling their equipment and teams at a job site. When you have some properties to renovate in one market, these costs can be spread across multiple projects, reducing the per-project cost. This is also why taking care of several plans in one location with the same team may cost less than quoting the projects individually.
3. Efficient Project Management
Managing numerous renovations allows for better project management efficiency. Your team can coordinate tasks, schedules, and resources more effectively, which can result in shorter overall project timelines. This, in turn, reduces costs associated with extended construction periods, such as interest on loans, temporary accommodations for residents, or the need for additional project management personnel.
Plus, you only have to wiggle your way into a busy contractor’s schedule once!
4. Consistency in Design and Materials
Piecemeal renovations can result in a hodgepodge design. Standardizing design elements like flooring materials and colors, countertops, and backsplashes or tile is best. It creates aesthetic cohesion that attracts residents and uniform procedures for maintenance and cleaning. Plus, if you buy more of a particular material, you may be able to get a bulk discount!
5. Permitting and Inspections in One Fell Swoop
You don’t want to deal with permits and inspections more than you must. Start with a comprehensive plan for your property (or more than one) and finish these things pronto. If there’s a lot of time between renovations, you might stagger your costs, but you could also contend with changing safety standards and building codes.
6. Reduced Vacancy Costs
We all know that vacancies are costly for real estate investors. Because renovations displace your residents or prolong a vacancy, you want to get things done efficiently! Get all significant work done during the same timeframe. It will prevent you from going back and forth with extended vacancies and accommodation for residents!
7. Shared Resources and Costs
Some resources, such as equipment, tools, and skilled labor, can be shared more efficiently when renovating multiple properties concurrently. This reduces the need for duplicate resources on separate projects. It also standardizes the quality of work being done. Same tools, same people, same management. As an investor, the more you can standardize and centralize outsourced work, the more reliable and cost-effective that work will be.
Ultimately, investors should consider bundling necessary renovations. Get it out of the way. This prevents your property from being tied up in a constant cycle of renovations and replacements. It opens up opportunities for project discounts. It promotes consistency. It minimizes disruptions.
We suggest establishing a relationship with a contractor that can do it all – one that will work with you to ensure an efficient, quality job whether you have a single investment property or a dozen! If anything, they should have a catalog of trusted vendors for you to lean on.
Work with a team who has investment property renovation down to a fine art.
REI Nation makes investing in real estate stress-free!