This glossary covers renovation and construction terms relevant to real estate investment.
Planning
Scope of Work
Detailed description of all work to be performed in a project.
Specifications
Detailed requirements for materials, quality, and methods.
Budget
Estimated costs for completing the renovation project.
Contingency
Reserve funds for unexpected costs, typically 15-20% of budget.
Costs
Hard Costs
Direct construction expenses: materials, labor, equipment.
Soft Costs
Indirect expenses: design, permits, management, insurance.
Change Order
Formal modification to original scope, often affecting cost and timeline.
Cost Overrun
Actual costs exceeding budgeted amounts.
Construction Process
Demolition
Removal of existing structures or finishes.
Rough-In
Installation of mechanical, electrical, and plumbing before walls are closed.
Finish Work
Final installation of visible elements: flooring, paint, fixtures.
Punch List
List of items requiring completion or correction before final acceptance.
Quality & Completion
Inspection
Examination of work to verify compliance with standards.
Certificate of Completion
Document confirming project completion per approved plans.
Warranty
Guarantee covering defects in materials or workmanship.
Defect
Flaw in construction requiring correction.
Professionals
General Contractor
Primary contractor responsible for overall project execution.
Subcontractor
Specialist contractor for specific trades (electrical, plumbing, etc.).
Project Manager
Professional overseeing project execution, timeline, and budget.
Architect/Designer
Professional creating project plans and specifications.
Contracts
Fixed-Price Contract
Agreement with set price for defined scope.
Cost-Plus Contract
Agreement paying actual costs plus markup.
Lump Sum
Single total price for entire project.
Understanding renovation terminology helps investors manage projects effectively and communicate with contractors.
