Have you lost money in your property renovation projects? There isn’t a property investor who wouldn’t have lost money within his/her projects.
The result of such loss and specifically when a trusted team member runs away with the money, its hard to take.
If it resonates with you, then here is my piece of experience that pushed me into understanding how to find a builder that serves you.
Losing £7,000 overall with builders in different projects after becoming a trained property investor has prompted me to write this article.
This problem is no alien.
It is so intense and at times ruining lives that channel 5 has launched a program on Cowboy builders which probably most of you in the UK know and must have watched at some point.
Referrals Are Not Always Good
It’s a common practice that people suggest to go with referrals when you are trying to find a builder for your project.
If you miss the point of not doing due diligence, then you will be up for a shock very soon.
When I was trying to find a builder the one whom I used was referred by a known investor. In all honesty, I will also put my hand up and say, I became complacent that the investor who referred the builder would have done proper due diligence.
I WAS WRONG.
Just because a builder worked for someone else does not mean he will work for you. It is easier to blame someone else for your failures.
Generally, in my experience, investors are possessive of their builders if they are good.
But if they are referring them to others, exhibit caution:
If I have to think about scenarios why an investor would refer a builder when he/she is not happy with:
- New projects resulting from referrals could be a let off to complete his/her project quicker or to the plan. So literally referrer may be passing on their problem to you.
- Investors could be paid a referral fee for referring to the builder. They are referring even without using them.
- Investors can be referring just because the builder is their friend.
It only highlights that you should be strong enough in your due diligence of whoever you are adding to your team.
Online research is one of the top tips which most of us know, but we DON’T do it.
Google knows a lot about people. In the case of builders, it need not just be google there are quite a few other sites like mybuilder.com or ratedpeople.com which can give some information even before talking to the builder.
Here is a tip:
- If you see a builder opening and dissolving multiple companies, question the reasons and take an educated call on if it is done for the right reasons.
- If there is any information with criminal offences or any tax irregularities, walk away.
I’m sure there will be many other factors, but I would highly recommend doing your online research even before approaching the builder.
Multiple Enquiries To Find A Builder
If it is your first renovation project, I would always recommend talking to more than one builder and get quotes for the renovation project.
Push yourself a little more:
When you review multiple quotes, you will find why each builder has quoted different prices. In the past this helped me to understand what I need and what I don’t.
Helps me to keep my costs minimum identifying the minimum viable refurbishment I need and where I have to push the work to safeguard the house and the tenants.
Getting quotes could be done even before completion of the property.
Having multiple quotes from builders, you have a fallback option should your chosen one gets busy with other projects.
Catch The Conversation
If you are mindful, a chat with a builder can throw pointers if they are good to be part of your team.
In a conversation with one of the builders, I asked him why don’t you start purchasing properties yourself and build a portfolio for you.
His response was “my company is not mortgageable”.
This should have rung alarm bells in my ears.
I should have questioned myself, why banks would not lend him or consider him non-mortgageable?
If I understood the reasons behind it, I would have realised a different set of truths about the builder.
Being mindful of the conversations will lead to assess the background and personality of the builder and his company.
Due Diligence Process
Due diligence for a number of investors is going around and verify the projects the builder has done.
An assessment based on the quality of projects will forge an opinion if the build team is for you or not.
We have since extended this to assess further by understanding the builder’s schedule commitment accuracy, reference from the previous owners who used him/her for the projects shown and observing their values over sometime.
This allowed us to understand the personality compatibility between us to forge that ideal working relationship.
Personal Vs. Professional Relationship
Work is called work for a reason. If you are ignoring issues in work relation as you are trying to be nice or friendly, it will hurt the business.
If a builder is trying to be too friendly, raise your antenna to check if the renovation is going on schedule, to cost and quality agreed.
Always ask for a schedule of works. Ensure you are sticking to the systems and management processes when it comes to execution of the renovation project.
This mindset should not just be for build projects but any professional service.
When we become too friendly, boundaries will become unclear. Also when you start talking about your weaknesses, they may be exploited for their benefit.
“Being nice is ok but not at the expense of your business. Otherwise business will become a charity for wrong reasons.”
At the end of the day, if your project is messed up, you are responsible for it. If you get into blame game you will be the loser. Sooner you take responsibility; sooner you regain the power to fix it.
Once you have learnt how not to lose money, it is only crazy to lose money again or not learning lessons. You would save more money by using the tool OPM, other people’s mistakes.
“Insanity is doing the same thing, over and over again but expecting different results.” -Albert Einstein
Recouping The Loss
If blaming others is not an option then this leads to how quickly you can twist your mindset to accept the loss and allow yourself to move forward.
Exactly what I did. The only way to recoup the loss was to refurb the property to a quality that will out do our estimated valuation.
Thankfully, the property was values £5K higher than what we valued in our numbers recouping most of our loss.
Have that solution mindset and accept that shit happens. Acceptance is half the solution to move forward.