By Ron Marszalek | Chief Operating Officer, Genstone Construction
It’s easy to think a successful renovation starts when the contractor arrives. In reality, some of the decisions with the greatest impact on a project should already have been made.
For investors, that process can start before the property is even acquired.
A purchase price may look attractive, but the investment can look very different once the work required to get the property ready for rent or resale is fully understood. Developing a realistic picture of renovation needs early can help investors evaluate the opportunity more completely and avoid surprises later.
Start With the Scope
A strong scope of work gives everyone involved a common understanding of what the project requires.
Is the work clearly defined? Are contractors bidding on the same expectations? Does the proposal identify what’s included – and what’s not? Are materials and finishes sufficiently detailed?
Even a seemingly small detail can matter. A scope that simply calls for “new kitchen countertops” could result in one contractor pricing Formica and another pricing granite. Both may technically satisfy the scope, but their bids aren’t based on the same materials.
The more ambiguity there is at the beginning, the greater the opportunity for inconsistent bids, change orders, and additional costs once construction is underway.
That doesn’t mean every condition can be identified in advance. Renovations frequently uncover issues that weren’t visible during the initial evaluation. The goal is to understand as much as reasonably possible before work begins and establish a process for handling the unexpected.
Look Beyond the Contractor’s Bottom Line
The lowest bid isn’t necessarily the best indicator of what a project will ultimately cost.
Investors should understand the assumptions behind a proposal. One contractor may include work another has excluded. Allowances may differ. Timelines, payment schedules, and responsibilities for permits or other requirements can also affect how a project progresses.
Comparing those details can provide a much clearer picture than comparing bottom-line numbers alone.
Do More Work Before the Work Begins
Renovation risk can never be eliminated, but proper planning and preparation can make it far easier to manage.
Before committing to an acquisition or beginning construction, investors should have as much clarity as possible around the property’s condition, anticipated scope, budget, and timeline.
The earlier those questions are asked, the more valuable the answers can be – not only for managing the renovation, but for determining whether the investment makes sense in the first place.