21 Common Mistakes Renovators Make: Underestimating The Cost Of Renovation
Naomi Findlay, Australia’s Rapid Renovation Expert, shares the 21 common mistakes renovators make and her personal advice on how to avoid them.
This is one of the biggest mistakes I see novice and new renovators make. And you know what? Renovating for wealth is all about the numbers. If you have the wrong numbers, you’ll miss the mark. So what does it mean to underestimate the renovation cost of your project?
What it means is that you might run out of money and take an unfinished product to the market. You know what that means? To be honest, more than likely it means that you’re going to make a loss. That’s because rarely will someone pay top dollar for an unfinished renovation.
This usually occurs when people haven’t researched the cost of labor and trades in their local area. It also occurs when people don’t use a specific formula for costing up their renovations.
I remember two years ago, I was working with this client. Two gentlemen that have bought this project were actually in the industry. Both were referred by the real estate agent.
He must have a bit of a heads up early on that these guys. Even though they’re in the industry, they’ve never renovated for wealth before. I came into the project and bless their cotton socks. Even though they’re in the industry, they have very skewed and maybe a little old-fashioned ideas about the different costs of other trades and as well as products. For example, they’ve set a $10 per square meter as the budget for tiles.
I hate to break it to them that for a $900,000 property, we’re not going to make the mark. So that’s one of the reasons it’s essential to make sure you’ve set out a systematic budget in order to not underestimate your renovation cost.
Remember that renovation cost is one of the biggest commitments you’re going to make in any project. The greater the renovation cost, the less profit you’re going to make at the end if you’ve underestimated it.
It’s absolutely essential that first, you have a system to track your cost, and second, look at your actual cost versus your plan cost at the end of every project. Make sure that you make adjustments either by finding cheaper product, finding more efficient labour, or review your costing template to make sure that moving forward, you’ll never underestimate on your renovating cost.