Save Money When Remodeling

by John Mulkey

While our economy struggles to find stability, there are many homeowners who realize that a slow housing market presents a great opportunity for those wishing to remodel or expand their homes.

Why would that be, you might ask?

It’s really quite simple and is based upon the law of supply and demand. When building activity is at its peak, both building materials and labor are at a premium; but when activity is low, contractors and suppliers cut prices in order to maintain the necessary volume to remain in business. We’re currently in one of those times.

While that doesn’t mean that every deal offered is a good one, homeowners who are willing to spend some time doing comparison shopping will find great deals and contractors eager to provide both great service and prices. Unfortunately though, there are always a few unscrupulous contractors, desperate for business who are willing to lie, cheat, or steal in order to fatten their wallets. We’ll give you a few tips to avoid the crooks.

Always ask for recent references (preferably a half-dozen or more) and then check them out—all of them. If you can view some of the most recent jobs, that’s even better. NEVER pay money up front before the job is started or material is delivered. Small contractors may tell you they have to have up-front money to begin the job, and if you agree, you risking losing all of it.

One way to get around this problem is to arrange to pay for the material yourself. In fact, you may be able to supply all of the material and have the contractor supply labor only. The negative side of this is large jobs where you may not have any idea of what the material will cost. (In the past I did a number of such jobs, including building entire houses, supplying labor only.

However, I always provided my customers with a written estimate of all material costs and updated it as the job progressed.) If you’re comfortable with such an arrangement, it can offer significant savings. Then, if you are buying from a local home center, you may be able to get a discount if you use their credit card, or you can charge the total to an awards card. Either way, you will have additional savings from the transaction.

Demand lien waivers (available at office supply stores or online) to protect you from subcontractors or suppliers who don’t get paid. Lien waivers should be requested each time a payment is made to the contractor.

Additional Savings Opportunities:

Shop for materials at local “salvage stores.” While you may assume that such stores carry only junk or damaged materials, that’s not the case. I’ve often saved hundreds on returned or slightly damaged doors and windows that were equal to or better than those for which I had originally budgeted. The key is to make certain the items fit your needs, both for energy efficiency and appearance.

Do some of the work yourself. Those who are handy, and some who are not so handy, will still find some tasks on their project where they may be able to save by providing some of the labor. Jobs as simple as site clean up, painting, screwing down a subfloor, or installing insulation can easily be done by anyone who has ever operated a hand drill or paint roller. Check with your contractor to see if providing labor on your job makes sense.

Check online for appliances, light fixtures, ceiling fans, special doors and windows, and finish materials. While you may not choose to order online, you can at least do some comparison shopping; and you may find local dealers of which you were unaware.

Investigate all your materials options. For instance, if you are painting the trim work, there are options that are much less expensive than wood, many of which will provide a better finish with less effort. There are molded trims that look great and, once painted, can’t be distinguished from real wood. Some of these materials, however, do not do well in high moisture areas and especially don’t like getting wet. In such cases you’re better off with wood.

Use your computer to check for substitute and less expensive options for all your material needs. There are some great sources of information where you can compare materials, costs, and ease of installation.

John Mulkey has forty years experience in building and marketing homes, has authored three books, and is the founder of TheHousingGuru.com, which provides the latest information for those interested in home repair, buying, selling, building, and remodeling homes. 

See our feature, Remodels Hold More Value Than Home Prices.

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

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1. Smart Remodel, Big Returns | AAOA - American Apartment Owners Association said at June 29th, 2009 at 8:45 am

   [...] Smart Remodel, Big Returns Upgrade tips for bed, bath and beyond   by Bernice Ross, Inman News   DEAR BERNICE: We’re planning on remodeling our two-bedroom, one-bath house and were wondering what upgrades will produce the best return on our investment. The house needs a new kitchen, and another bedroom and bath. We also thought of putting in a pool. Where should we begin? –Andy K.   DEAR ANDY: A common misconception about upgrades is that they always increase the value of the property. Upgrades normally make a house more saleable (i.e. easier to sell.) They don’t necessarily increase the property value. For example, assume that you upgrade your property with cherry cabinets and green granite countertops. You sell the home to someone who wants white European cabinets and black countertops. Your upgrades made your home more attractive to more buyers, but in this case, the upgrades are not worth much if the buyer intends to tear them out. When deciding what to upgrade, the smart decision is to upgrade your home for your own enjoyment.   You will obtain the biggest return from your investment if you add the extra bedroom and bath. Increasing bedroom and bath count is one of the smartest ways to increase property value. It also makes your property more appealing to a wider variety of buyers.   As a rule of thumb, increasing square footage increases value. There are some exceptions, however. For example, if most of the homes in your area are 2,000 to 3,000 square feet and you do an addition that makes your home 4,500 square feet, chances are you have over-improved the property. This means that your property is worth less than 4,500-square-foot houses that are surrounded by houses of similar size. The smaller homes in your immediate vicinity would drag your value down.   In terms of return on investment, pools are tricky. Do most of the homes in the area have pools? If so, adding a pool would make your property more comparable to the other homes in the area. On the other hand, many people don’t want the upkeep or risks associated with having a pool. Others may prefer to have a nice backyard where they can create the perfect garden.   Be sure to protect yourself by carefully investigating any contractors prior to hiring them. Does the contractor hold the appropriate licenses to do work in your city? Use Google to search the contractor’s name and company. Also search sites such as Yelp. Ask for references and contact them. If possible, go see the contractor’s work firsthand. Finally, it’s also smart to obtain at least three bids. If a bid is too good to be true, be wary.   If you’re feeling confused (which is what I felt when we were facing a major remodel on one of our houses), you may want to explore a company such as ServiceMagic.com. They screen contractors prior to adding them to their database. You can read reviews as well as obtain estimates. After reviewing bids from four ServiceMagic general contractors, we chose one who did an outstanding job on our remodel. Again, no matter whom you interview, carefully investigate their reputation and their work before giving them a deposit.   Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of “Real Estate Dough: Your Recipe for Real Estate Success” and other books. You can reach her at Bernice@RealEstateCoach.com. Copyright 2009 RealEstateCoach.com.    See our feature, Save Money on Remodeling.  [...]

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