Hi BP, I'd like your input on something. I'm finding it very difficult to schedule a viewing for my contractor to walk through the property before I make my offers. Does anyone have a good idea about how to show the property to your contractor without them being there. I've thought of things like recording or photographing the entire walk through, or even a live skype session or something. I know this may sound stupid, but here's the reason why.
In the last week and a half I've lost out on two potential flips. I had to cancel my purchase contract on Property 1, and Property 2 was snapped up in literally 2 days, just before my contractor could see it.
I visited property 1 with my partner, we made a list of renovations and things we found "wrong", put an offer in, it got accepted, but upon inspection there were many more things revealed; enough to double the rehab cost as a matter of fact, we ended up cancelling the deal. I feel that if my contractor was able to be there or see the property beforehand we would not have made an offer on the property in the first place.
Property 2 had great flip potential. It had a huge profit margin and mostly cosmetic work, priced very low even for an REO. I saw it on Tuesday. I wanted to put an offer in the next day (wed.), but decided to wait until my contractor could see it the following day(thurs.)
Sure enough, the property went under contract on Thursday morning.
Do you think I'm going about this incorrectly, or do I need to do a better job getting my contractor to see the property in one way or another, again with video, pictures, whatever.
All suggestions are welcome, especially if they work well for you.
@Roman Pak, I have to be honest with you. I don't know any contractor that would be willing to tag along with me when I look at properties to help evaluate repairs. For the most part, these guys are very busy and know it is not in their best interest to look at every property you see. Odds are you will look at many many homes before finding one that works for you, so it just isn't a very good use of time for them. Really what you have to do is get an idea of what repairs costs and how to identify them. Cosmetics are easy but structural items such as plumbing and electric can be more difficult. What I do is budget something for both of those categories, assuming some repairs will need to be made. I've seen enough houses where I can be fairly confident if I see major plumbing, electrical, foundation, HVAC issues. However, I always include an inspection period in my offer. Once I have the property under contract, then I bring in the contractors to give me a more thorough evaluation. That doesn't really solve your problem of under estimating the repairs and then having to back out once you discover more issues, but at least in my area, a legitimate contractor is going to be too busy to look at every house I see unless I was bringing him major business (which isn't the case for me). Maybe others have better advice for you, but essentially it comes down to being able to recognize issues yourself and being liberal in repair estimates. I think there is a tendency to minimize repair costs in or to justify an offer price, but that is a good way to bring down profit margins.
Are you paying them for a pre-purchase rehab estimate?
I'd get the contract locked up first and then bring them through during the inspection period for a quote.
What I try and do, is partner with the investor. That way I have a vested interest in the project, and costs reflect that.
This of course comes along with creating a relationship with whomever you're working with, previous to the purchase.
Depending on how many times you back out of a deal. You can always just treat your contractor as your inspector. If it fails inspection you walk. Just be very careful you don't build a reputation or destroy your relationship with your contractor by wasting his time.
I previously had a very similar questions.
If you don't see any major damage upfront and as@Scot Howat said get the property under contract. I would bring in the contractor day after my inspections are done. Like @Kyle B. said scheduling contractor to get there when you want, can be difficult. Good luck!
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