9. Choosing the Right Contractor
How will you know you hired the right company? Chances are more likely that you will notice when you've hired the wrong one. I recently bought a house, and if I were going to build it, the cost would have easily quadrupled. That's because the cost of building correctly always exceeds the appraisal value of real estate at current market. Builders who build for $100 per square foot build garbage, and $200 per square foot doesn't guarantee better results.
Hire the contractor who isn’t afraid to say, “No. We won’t do that”. Trust me, you don't want a contractor who will blindly do anything you ask of him. I hear often from homeowners about how they don’t want the work to exceed the appraised market value of the surrounding neighborhood. Then, quite simply, don’t.
Don’t look at the house as a one sided input output machine, with a single return, the sale. Houses provide a diverse array of returns on investment as does the work done on them. Don’t think you’re going to get rich by owning a house. That isn’t a good reason to own a house. It is and will continue to be something you invest in. If you are more concerned about market ceiling than the quality of the changes you think you want, then please, do the rest of the world a favor and don’t try to be the innovator. Don't be the one who changes the market value of your entire neighborhood.
Or do. But, do it in the right neighborhood for the right reason. Do it based on sustainable values. Do it for your community, your future, your kids or grand-kids. I promise you that you will never lose money on quality work, unless you do it for the wrong reason.
Straight talk here: you will likely never see a cash Return On Investment on a quality renovation within the first market cycle, maybe not even within the tenth. What happens with quality work is that it starts paying you back when the work you paid "the other guy" to do starts falling apart. Work that lasts will survive several market cycles providing you with form and function while you own it and market readiness when you do cash in. Legitimate improvements(permitted and documented) can be deducted from capital gains during a sale.
This undertaking of investing in real estate is where networking with an intuitive and knowledgeable real estate agent, a competent builder, and an investment advisor would be ideal(make sure they aren't all the same person). Hire a contractor whom you trust to be flexible, and who has the management resources to acknowledge and execute the three stages of a project: pre-construction, construction, and post-construction. The job doesn’t begin with demo and end with paint. It really doesn’t.