Bringing a contractor on the very first visit

15 Replies

Hi, my wife and I have been looking at several properties in the Las Vegas Valley. We are constantly trying to find ways to streamline our process so we ca quickly decide if we are going to submit a bid or just move on to the next one. Do you think we should bring a contractor with us on our very first visit to the property or just go by ourselves and then decide if we even want to tackle the project. My hesitation to bringing a contractor on thhe first visit is because we don't want to waste his time by visiting all these properties and getting these quotes only to just turn the property down and move on. The pro I see is if we decide to bid on the house, we will already haven a someone there to give us a  good estimate so we know what we are about to get in to. I known this is an long winded but I appreciate the advice!

@Kevin Samuels   bringing a contractor with you to help estimate repairs is ideal, but you mentioned the difficulty of it already... it tends to be a poor use of their time, particularly with re investors who only purchase a very small percentage of properties they see. From my experience, any legitimate contractor I've come across would not want to spend their time looking at a potential house I'm interested in buying, since the probability I will actually hire them to do work on that particular home is very small. I always bring them in after I have the property under contract/before I have closed.

What may be a good approach is to talk with a contractor, explain your business plan/model, and that you are looking for someone you can trust to build a long term relationship with and give a lot of business to you in the future. Then suggest you guys walk through a couple of properties you are considering as a purchase. That way, you can get a sense of what his pricing is on various projects. After seeing a few houses with him, you may start to get a good sense of what it would cost for the rehab and you can then apply it to future houses you see without your contractor their. Just a suggestion to get started. If the contractor really believes you could be a potential repeat customer, then I'd assume he'd take a couple hours of time to help you out in this regard.

Hope this helps,

Kyle

As a contractor I will not visit a property until it is under contract.  I do tell my clients to send pics and I can give them a general idea of what the numbers are.

I would recommend having a better understanding of cost/ft on certain items i.e. paint, flooring, etc.  This will help you in preparing an offer.

Kevin,
If you can find wholesalers that have good reps for delivering profitable flips and accurate cost estimates, they will do the work for you. I bid my own because I used to be a GC. Not everyone knows how to do an accurate takeoff in short time. It is a skill that you don't find in 90% of tradesmen and many contractors. They higher PMs and Estimators because they are terrible at it.
If you find a successful, reputable wholesaler or three, you will set yourself up for success and never waste your GCs time. Win/Win for everyone! Good luck.

The replies above are pretty accurate to the challenges you would face attempting to bring a contractor in to every property you view.  At some point (probably very soon) they would quit replying to you at all and then you have lost a potential good contractor (which are hard enough to find in the first place)  Sending pictures and giving a basic scope of work with square footage on the house might get you close.  But you really are not going to get a good contractor to go take a look at multiple properties and spend the hours to get you bids unless you have the property under contract.  On average an accurate bid for a remodel project will take a contractor up to 8 hours or more of his time.  That is a lot of time per house to not get the work.

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@Kevin Samuels   It's certainly useful to have a professional opinion as to the feasibility of a certain project but it does have its limits. There are often things wrong that can only be discovered after getting into it.

It is therefore difficult to put together a comprehensive estimate after one site visit. A better approach might be to offer a contractor a 'consultation fee' to give a general examination of the house. 

Originally posted by @Laureen Youngblood :

The replies above are pretty accurate to the challenges you would face attempting to bring a contractor in to every property you view.  At some point (probably very soon) they would quit replying to you at all and then you have lost a potential good contractor (which are hard enough to find in the first place)  Sending pictures and giving a basic scope of work with square footage on the house might get you close.  But you really are not going to get a good contractor to go take a look at multiple properties and spend the hours to get you bids unless you have the property under contract.  On average an accurate bid for a remodel project will take a contractor up to 8 hours or more of his time.  That is a lot of time per house to not get the work.

Exactly. Good post. When I first started many years ago, several realtors and prospective buyers ran us around wasting our time. It didn't last long. Once that lesson was learned, all similar requests have always been politely declined.

Originally posted by @Account Closed :

@Kevin Samuels   It's certainly useful to have a professional opinion as to the feasibility of a certain project but it does have its limits. There are often things wrong that can only be discovered after getting into it.

It is therefore difficult to put together a comprehensive estimate after one site visit. A better approach might be to offer a contractor a 'consultation fee' to give a general examination of the house. 

As a general contractor for over 25 years, I think the consultation fee would be a good idea. It also depends on the relationship you have with the contractor. I have gone along with investor's only to give them the a budget and not get work. That being said, it left a bad taste in my mouth. It is best to take a lot of pictures, this way u can go over them at home or the office. Try to find a good contrator that will work with you and remember the cheapest is not always the best.

I was dealing with the same exact situation for my first property. I had a contractor come with me to as many showings as possible, thinking that he would be able to spot something I couldn't see and that he could get a jump start on getting his crew and subs ready. What actually happened was that he found stuff during the rehab that he couldn't see either during the walk-through's, his original estimate was within a few thousand of mine, once we closed on the property, the demo was delayed by more than a month because of other projects he had been working on. Overall I don't think it's hugely beneficial to bring a contractor to every showing, you just have to trust your instincts, and and the numbers. 

I have spent years estimating homes for Freddie Mac, Fannie Mae, Wells Fargo and many other banks and investors however, these customers are stable and consistent. This IS a skill perfected only through experience and repetition that unfortunately is not valued by the inexperienced investor. That usually is my red flag to politely decline the work. I have not had much luck working with independent investors largely because many are looking for a contractor that is willing to cut corners, work without permits and negotiate like we are selling them a used car. I have learned over the years that real money is made with quality materials, skilled labor and meeting deadlines. My advice to you would be to compensate before negotiate. Being a successful investor requires a competent general contractor to be part of the team or risk losing thousands due to a lack thereof. Watching a television show for a season hardly makes for a good reason to invest in real estate. Spend a lot of time on this site and attend conferences to educate yourself before making the leap. I still say the odds are better in Vegas without these skills.

I have occasionally brought along my carpenter, electrician and {once} my plumber to property walkthroughs before we have a contract or LoI in-place.

This usually occurs with vacant properties (REOs, estates, etc) which are going to need a lot of work.   Together, we can cover the property quickly and determine if we can rehab the property in a cost-effective manner and roughly what that cost will be.  With that info I can determine what our offer would look like and decide whether we proceed or not.

Now, when I do bring a trade along for a reconnaissance, they get paid for their time.

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Hello @Kevin Samuels  ,

Reliably estimating rehab costs is very important. I am a Realtor in Las Vegas and about all we do is investment properties for remote investors so my ability to estimate rehab costs is very important. Because I do this all the time I have developed a process for estimating rehab costs that has proven to be very effective, which I describe below.

You might think each property will be totally different and there is no way to quickly estimate rehab costs. It is actually fairly easy if you view the property as a number of separate standard components. Once you do this, you can develop standardized costs for the most frequent rehab items. Below is a small sample of the standardized costs I use.

  • Window treatments: $60/window. If I have a large window then I count it as 2 windows.
  • Bathroom sink and faucet: $150.
  • Carpet: $1.80/SqFt.
  • Replace a broken window: $150/pane.
  • Remove an oil stain from a concrete surface: $75/stain.
  • Repaint interior of property: $1/SqFt of living space (assuming the walls are not a dark color which might require two coats of paint).

How did I obtain these costs? Initially I got these from property managers, contractors, flooring sales people, etc. Over time I revised the unit costs based on my own experience. And, when I come across a rehab item I do not know, I take a video of the problem and sent it to the appropriate contractor. Below are the most frequent rehab items for which I have standardized costs:

Notice that I have no costs for roofing, siding and landscaping. That’s because most of the properties in Las Vegas have tile roofs and rarely need work. There is no siding, only stucco. There is also little or no “landscaping” in the traditional sense because most yards are desert landscaped (rock).

Also, I include all associated costs for each rehab item. For example, the $1.80/SqFt for carpet includes removing the existing carpet, minor repair work on the sub-floor and a new pad and carpet installed. For appliances, I include the cost of disposing of the old ones.

How accurate is this approach? It has proven to be sufficiently accurate for determining whether to eliminate a property. The “real” estimate of the total rehab cost occurs during the due-diligence period.

Another important rehab consideration is risk. Items like paint, carpets, tile, appliances are low risk. I don’t mind having a fairly high rehab cost if there are no high risk items. What do I consider as high risk items? Mold, Chinese dry wall, structural damage, foundation issues, non-permitted additions, flood issues, etc.

I hope this helps.

Originally posted by @Kevin Samuels :

Hi, my wife and I have been looking at several properties in the Las Vegas Valley. We are constantly trying to find ways to streamline our process so we ca quickly decide if we are going to submit a bid or just move on to the next one. Do you think we should bring a contractor with us on our very first visit to the property or just go by ourselves and then decide if we even want to tackle the project. My hesitation to bringing a contractor on thhe first visit is because we don't want to waste his time by visiting all these properties and getting these quotes only to just turn the property down and move on. The pro I see is if we decide to bid on the house, we will already haven a someone there to give us a  good estimate so we know what we are about to get in to. I known this is an long winded but I appreciate the advice!

Best way is, hire an estimator, take pictures while you walk them. After the estimates are done, shop for contractors and see if they could work on those prices. Remember that estimators aren't that accurate and they have a specialty, so make sure to get someone who has been working with houses, and knows materials which are cheaper but not cheapest. The streamline you are describing will not work in most cases. Being a contractor, we have certain budgets for opportunity costs, so if somebody chooses to engage with our services, we could spend around $xxx worth of time and expenses, that usually translates to 4 4-hour blocks. Rough estimate, 5 properties, regular estimate, 1 property. What we also need to take into consideration is, what keeps you from getting another contractor prices and give the job to them?

Do the hard work and learn what contracting work will cost and then you no longer have this problem.

Thanks so much for the info and advice! And Seth, I will definitely push to do the hard work. Appreciate the motivation!

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