Another false impression that TV gives is how long renovations take...the timeline! First thing to note: not only can unexpected problems come up once renovations begin, they almost always do . And unfortunately for you, you probably don't have a MASSIVE CREW sitting around waiting to repair something that goes wrong so that the TV show goes good! You need to know that there are often issues that don’t show up even with the most diligent pre-purchase inspections. Why? Well, you can’t tell what’s hiding in the walls, or there could be a leak you won’t know about until it rains. There can also be problems with shoddy or unreliable subcontractors or annoyed neighbors who, at best, complain directly to you and, at worst, file complaints with the city. Aside from unexpected problems, you also must factor in permit approval, inspections, weather conditions, your contractor’s and laborer’s schedules, the time it takes to get customized features made and shipped, and more. You need to think about these "unexpected problems" and have not only a plan for how to handle them as they arise, but also have a realistic timeline and budget prepared BEFORE renovations start and really, BEFORE you even buy the potential property. Directly in relation to the length of time a renovation takes, is the amount of money it costs to hold the property. In other words, the longer the time you hold a property to complete renovations, the more money it costs. Every day costs you multiple dollars, and over the months, the money adds up! Your holding costs are going to include (but not limited to) interest on any loans, insurance, utilities, lawn care, pest control, property taxes, and, if you have the property for over a year, long-term capital gains taxes. The latter can be up to 20%, which would obviously eat a huge chunk of any potential profits (or might even mean you losing money).
40
Powered by FlippingBook