You’ve done your homework and uncovered a house just begging to be flipped. Congratulations!
Now what?
It’s time to consider just how much work will need to go into the house to make it sellable or rentable, depending upon your exit strategy. Not sure what exit strategy to choose? Check out our previous blog post for tips.
As any successful flipper will tell you, a good Scope of Work (SOW) estimate is critical to the success of any reno project. It establishes the parameters of the renovation from start to finish and, ideally, will provide a detailed timeline and budget.
But what makes a SOW effective?
It gives a bird’s eye view, to start.
Setting the stage, as it were, of the renovation to come is important. An overview of the project gives contractors a general idea of size and scope, and allows them to decide right upfront if they have the time and resources to tackle the job. It certainly doesn’t pay to waste anyone’s time!
Keep it organized.
It can be helpful to use a simple spreadsheet to manage the project. Think about creating specific sections for each room undergoing renovation as well as any exterior work that will need to be done. Columns should detail the square footage and materials to be sourced and list products by line item, allowing contractors to bid accurately. Providing the same spreadsheet to multiple contractors also will allow you to compare apples to apples as their estimates come rolling in. As a starting point in the process, we have created a sample SOW spreadsheet that is available for free. Download it right to your computer, and open it using Excel. Feel free to customize it, and make it your own.
Provide a timeline.
When do you expect to begin the renovation? A good contractor is often a busy contractor. They will need to know your expectations when it comes to scheduling. Let them know when you would like to see each major part of the project completed. And be realistic!
Specify a payment schedule.
As work is completed, consider how you will review and approve it. The SOW should include the sign off procedure so the contractor knows what he or she needs to accomplish in order to be paid. Have a discussion about who will be reviewing the work and their expectations. Lay out the process for paying your contractor right from the start to avoid miscommunication and headaches down the road.
Here at Navigator Private Capital, we have seen the good, the bad, and the ugly when it comes to SOWs. In our experience, the most successful projects start with thorough, detailed estimates of the work that needs to be done. Not sure where to start? Our licensed inspectors can point you in the right direction, providing expert advice and technical guidance throughout the life of your project.
Reach out to us to find out more.