Investment Property Material Costs: Who Should Pay?

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Investment property material costs Who should
pay?
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• As a real estate investor, landlord, or property
  manager, talking to a home renovation contractor
  about paying for materials on an investment
  property improvement project can feel unpleasant.
  As a property investor, you want to minimize your
  costs to keep your margins high. Additionally,
  you may have had materials missing or stolen in
  the past by bad home improvement contractors, so
  youve now taken the approach of asking home
  improvement contractors to cover the costs of
  materials.

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• This approach may not sit well with seasoned home
  improvement contractors, and you could be losing
  out on thousands of dollars.
• Heres an example of a real estate investor
  seeking home improvement contractor referrals on
  Facebook and requesting that the home improvement
  contractor cover the cost of materials

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• As you can see in the example above, the home
  improvement contractor communicates that he will
  have to charge a markup on materials if he must
  cover the costs.
• How much do home improvement contractors markup
  materials?
• First, lets start with why home improvement
  contractors charge upfront down payments and
  material markups.

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• Material markups vary from one project to the
  next, but its typically related to how much of
  the home improvement contractors own money they
  will have to put up if youre requesting them to
  cover the cost of materials. You will find that
  many home improvement contractors will be
  hesitant to cover the material cost because if
  the project doesnt work out, then theyre stuck
  with the materials and will be financially at a
  loss. Additionally, they would be at a loss
  without a markup due to time and gas money
  shopping for and hauling materials.
• Home improvement contractors markup materials as
  much as 35 so be sure to know what youre
  getting into when you request that they cover
  material costs.

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• Material costs have increased in 2022
• The cost of certain materials has gone up and the
  cost of lumber has been volatile. One reason
  materials have gotten more expensive in recent
  years is due to supply chains being disrupted by
  COVID. Contractors continue to experience the
  after-effects of the pandemic, including a
  shortage of construction materials and a sharp
  increase in construction costs that can lead to
  decreased profits.

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• The cost of home improvement materials normally
  increases annually due to inflation (an issue
  that contractors faced even prior to the
  pandemic). However, the inflation that
  accompanied the pandemic has been significantly
  different and has largely impacted material
  costs. The U.S. home improvement industry is
  heavily dependent on foreign construction
  materials. Because COVID-19 is a global pandemic,
  it caused closures and delays at international
  factories that produce these materials. As a
  result, the supply of home improvement materials
  dramatically decreased in the U.S, and what
  remained became much more expensive.

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• Ways to save money on materials
• While you cant control the supply chain issues,
  you can find ways to save on your material costs.

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• Use the FREE Renozee App and get competitive bids
  directly from immediately available home
  improvement contractors that compete to win your
  business. All bids submitted must show if
  material costs are included for full
  transparency. Thanks to the free Renozee App, it
  is easier than ever to find and hire home
  improvement contractors for completing any home
  and investment property renovation project.
  Simply post your project and receive unlimited
  live bids through the app directly from local
  home improvement contractors. Using the FREE
  Renozee App can save you time, money, and
  headaches when turning rentals between tenants or
  renovating properties for flips.

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