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10 Costly Mistakes to Avoid as a New Real Estate Investor After the up-front costs, additional monies should be tied to major milestones — for example, the end of excavation and foundation work, framing, plumbing, electricity, siding, roofing, and finish work. Similarly, a contractor who tries to tie money to dates rather than construction milestones is going to do you wrong. A low bid should also raise warning flags. Beware the common scam in which the contractor assures the homeowner that the home will be used as an example for advertising purposes and that’s why he’s able to bid so much lower than the competition. In fact, it’s almost never worth it to lowball a bid for the payoff of a portfolio piece. Instead, a low bid almost always equals poor work. Many new real estate investors rely on a dependable team of professionals to facilitate timely and profitable transactions. Each phase of a project will most likely call for someone that has been specifically trained in a respective field. Real Estate Brokers locate properties, investors secure deals and accountants manage funds. Everyone has his or her place amidst the frenzy of a rehab. More often than not, every position needs to be addressed prior to initiating a deal. However, some roles are more important than others. It goes without saying, but real estate investors are the catalyst and, therefore, the most important position in any rehab deal. Without an ambitious real estate investor, a deal may never even happen. Beyond investors, the importance of subsequent roles can be debated. However, one can argue that the contractor is the second most important person in any deal. Just like an investor, the profitability of any rehab is directly correlated to the contractor. Therefore, hiring a dependable contractor is not only critical, but also essential to the success of a rehab. 40 10 Costly Mistakes to Avoid as a New Real Estate Investor
10 Costly Mistakes to Avoid as a New Real Estate Investor Locating and hiring the right contractor for your rehab may be less daunting than originally anticipated. Accordingly, with the right system, hiring a good contractor is rather easy. The following will serve as a guide in your pursuit of the right contractor: Finding Contractors Rehabs consist of a variety of variables that can potentially make or break the entire deal. While it is almost impossible to account for each, there are certain constants that are all but inevitable. The success of a rehab is generally dependent upon two factors: having a proven system in place and finding a good contractor that is comfortable working within the confines of said system. For the sake of this article, we will assume you al<strong>read</strong>y have a system in place. Therefore, we will focus on finding contractors that compliment a good system. In order to hire the right contractor for your rehab, you need to do your due diligence. It is not something that happens overnight, or within the walls of your own home for that matter. You will need to enter their world and see them for what they really are, as this is the only way to perform a true evaluation of their skills. Consider the following locations when looking for the right contractor: Websites Local Building Department Job Sites Real Estate Investment Associations Contractor Referrals 41 10 Costly Mistakes to Avoid as a New Real Estate Investor
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