Last week I purchased a pair of jeans for $100.00.
I’m not kidding.
Perhaps this is part of your daily shopping routine, but for a guy raised on Wal-mart and Goodwill, spending $100 for a single pair of jeans was disconcerting to say the least. I’ve been casually looking for a pair of jeans that would actually fit me for some time now (I wear a 36 length, which is nearly impossible to buy without special ordering) and finally stumbled upon the perfect size – for $100.00. After trying them on, I bought the jeans.
Did I mention I paid $100 for jeans? It still blows my mind.
However – it was the best shopping decision I’d ever made.
Who knew that jeans could fit so well and be so durable? I have spent years wearing jeans that didn’t fit right and wore out in months because I was too cheap to spend any money on quality jeans. I look back now and wonder, “how much money have I wasted from trying to save money?” My jeans may have cost $100, but for the first time in years,they actually fit my unnaturally long legs. Additionally, the material used just feels superior and I believe these jeans will last significantly longer than previous jeans I have paid for (if for no other reason than I will take better care of them due to the hefty price tag.)
Ironically, this week I learned a related lesson in real estate investing. Perhaps you have learned the same already.
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
Filling Holes by Cutting Corners
I am in-process of remodeling a home for re-sale and have several contractors working various different jobs. If you are familiar with the process of rehabbing a home, you know that legitimate contractors don’t come cheaply. In an effort to save some money (and help out the brother of a close friend) I hired a young high school kid to come fill nail holes – and there were a lot of nail holes.
To me, filling nail holes is a fairly simple procedure. I set up the kid with a bucket of spackling and with a little instruction, let him start working. The painter was hired to come in the next day and begin painting, so the high school kid worked all day filling hundreds of holes.
The next day the painter showed up to paint and, since I told him all I needed him to do was start shooting the paint, that’s exactly what he did. I stopped by at the end of the day to see the completed paint job – and was greeted by one of the worst looking paint jobs I had ever seen. The painter did an excellent job – but the walls that once had hundreds of nail holes now showed hundreds of smears of spackling that was never smoothed correctly.
Each and every spot.
Those spots not only stood out because of the difference in texture on the walls that were a nice orange-peel, but the paint looked different on those spots and created a completely different sheen. For those of you who have no idea what I’m talking about – just trust me, it looked terrible.
I realized my mistake immediately: don’t hire nonprofessionals to do professional work.
A Lesson Learned
I now had to hire my much more expensive contractor to go back and sand each of those spots, one by one, and re-texture those areas, followed by another coat of paint.
All in all, the mistake probably cost me several hundred dollars in wasted labor and pushed me back a full day – all because I wanted to save a few bucks on the prep work.
I tell this story to illustrate an important lesson when you rehab a home. Sometimes you feel that you are going to save money by cutting a few corners and hiring cheaper labor to do work. However, professionals do not charge high rates because they are greedy. They charge higher rates because they are generally worth it. Had I simply used the correct professional to do the work that they are experts at doing – I would have been much better off.
To sum up: Sometimes it’s cheaper to pay more money.
Obviously, I’m not suggesting to go out and hire the most expensive contractors you can find. I am, however, advising that you budget from the beginning the correct person to do each job and don’t get greedy.
Like spending $100 on a pair of jeans that actually fit right, paying the right amount of money for the right kind of contractor for a rehab job will save you time, money, and headache.
Have you come across this lesson yet? Do you have a story or a lesson you want to share? I’d love to hear it! Please leave a comment below and let’s talk about it!
Photo: Dov Harrington