V2 Lessons Learned
Shoulda, Woulda, Coulda…
In great part, my efforts at anything I do apart from my job is to get a better understanding of life and to nurture my endless pursuit of knowledge, both daunting and joyful efforts.
Accounting – I knew accounting was important but there are characteristics of accounting which go unappreciated until you implement it in your project. I didn’t record much for this project but I have some numbers I can work with.
- Sum of Contractor expenses - $6,800
- Heating and Air - $5,100
- Fridge and Stove -$1,100
- Hardware store purchases -$5,000
- Miscellaneous -$2,000
Total Invested: $20,000
Without proper accounting:
- Understanding returns is difficult.
- Following a budget is difficult.
- Knowledge on allocation of expenses is lost.
- Incentives, such as a record of progress, are lost.
After paying for my mortgage, I’m left with $113. An annual return of 6.8%.
Monthly return * 12 months = ROI
Had I accounted for expenses, I probably would have opted for used appliances and a used heating and air unit. I could have performed more of the work myself, such as painting. Lastly, I could have learned how to use my accounting software prior to my next investment property.
Hardware Store Purchases - Depending on how involved you are during the remodeling process or to what extent you are remodeling, you will be in the hardware store… a lot. You will need a truck or someone who owns one. Contractors will charge you for the pick-up of materials.
Ask your contractor to make a list of materials for you or to text you every time he thinks of something needed no matter what time it is. Determine if you can pick everything up in the weekend or on a specific day of the week. There were weeks in which I was in the hardware store every single day after work. That gets old, real quick!
Line of Credit - A line of credit will go a long way. You have the ability to finance without interest on large purchases for periods of up to 12 months. This also frees up some cash in event that something else comes up.
Install a separate power meter - Currently, our power is hooked up to the main house. The power bill is split based on the square footage. My power bill is much less now, but I believe it would be even lower had I installed a separate meter.