You bought a fixer-upper project that has excellent possibilities aesthetically and financially if you can turn your dream into that eye-catching situation. Two critical factors to your success of flipping a distressed property into a gem are good contractors and time efficiency.
Good contractors have Craftsmanship and love what they do. Time loss in your project is costly. Many contractors may have good intentions but may fall short of their time obligation that could hurt your bottom line.
Time in real estate is money, and the clocks seem to run fast when you are the one holding the financial obligation.
Generally, a home improvement project should not take over 140 days. The risk you face is that when you go beyond a deadline, and you have a loan, and you get charged interest per diem or month. You may need to move from your current place by a specific date; then additional charges are applied. If you have to use rental equipment on a project and do not return it by a particular time; then it incurs extra cost, etc. The price of going beyond your time deadline will subtract from your equity. Thus, you must have a plan to control time before putting a project into effect.
You cannot rely on a contractor to manage time unless, in your contract, you have a “time of the essence clause” where you hold the contractor financially responsible for delays. Although that may seem the perfect thing to do, it can open too many disagreements. The best situation is to manage the project yourself or if you do not have time or knowledge, hire a project manager independent to the contractor. It is never a good idea to make a contractor manager themselves about your project.
Contractors usually take on many jobs at once because they do not want to be out of work. Often time a contractor gets partial payment upfront, and he or she does work for a few hours then run off to their next project and do the same thing to another client. The rotation of their obligations is not going to be in your self-interest. The only way to control the contractor is by having an independent project manager, or you take on the task of the project manager. A project manager should have a background in home improvement.
As a project manager, you would review contractor plans, schedule, and cost for moving your project forward. It is essential to write in your contract the various stages of project completion. For instance, demolition and removal to the dumpster is the completion of phase 1. Rough-in of electrical, plumbing and mechanical ductwork to include any structural changes are phase 2 completions. Drywall installation, priming, subfloors, and cabinets are phase 3 completion. Painting, tiling, and floors and punch out are phase 4 completion.
When you have defined the different phases of the jobs, you will have more control of time and cost. It is a safeguard for you by paying contractors in four draws for a home improvement project. These safeguards in place allow you to get another contractor to finish up your project if there is an issue with a current contractor without losing too much time and money.
You are in a better control position when you do not pay contractors to start a job. Most contractors like you to pay in advance of the various stages of the project. The justification is that they have to buy materials or order stuff. It is better if you or your project manager buys the materials and get them to your project site. With that said, you should be on time by ordering the needed materials and getting them to the project site on time.
Paying the contractors on time when they satisfactorily completed each phase of the project makes you an effective leader. You do not want to be the responsible party for holding up the job. When contractors spot that you are well-organized in handling your project, they will tend to emulate you; remember you are the leader.