Why would a contractor partner with a newbie investor?

Question

I’m a newbie investor with a full time job but have money for a down payment and very good credit. Why would a contractor partner with me on a flip or brrr investment? What do I have to bring to the table?

JD Martin · Answer

That's an excellent question, and one more new investors should ask themselves before going off the deep end when they find it difficult to find partners.

What DO you bring to the table?

Are you willing to go find deals? Do you have people looking to invest money in a project? Do you have your own money? Are you a marketing expert? Are you a broker and can save on fees? ETC.

Identify what makes your particular situation appealing to someone else and emphasize that in your efforts to find a partner.

Kim Martin · Answer

Sumana - you mentioned a few very important attributes. Cash in the bank and good credit are extremely valuable. I would also guess you have a willingness to learn. You bring a lot to the table that someone else might not have. Best of luck to you and feel free to reach out if you have any questions.

Sumana Potluru · Answer

Thank you!!

Lynnette E. · Answer

Look for a contractor that is building new homes in the area.  They often will do things like the roofing and kitchen for you for a lot less that a general contractor doing renovations.  They often, after doing a few major things for you, will recommend subs to do the minor things as well, or oversee it for a cost plus a percent.

Sumana Potluru · Answer

@Matt Hershberger I couldn’t find a decent contractor who is honest with the numbers. Everyone I’ve worked with have always charged me a lot more than it would actually cost for our home additions/Reno. I didn’t know better then. But, now, that I’m reading all these books I see that they were charging me 100% markup on the materials and labor. It’s so sad.

Sumana Potluru · Answer

I’m so new that I’m looking to some blogs and real estate YouTube shows to tell me real estimates to fixing some big problems like 1) uneven floors due to sagging caused by foundation problems in 600sqft of the house I.e., 2 bedrooms and a bathroom floor around 1 inch; may need 3-4 more footings and floor joists (max $3000) ....2)roof shingles replacement (~$7000).... 3) kitchen complete Reno, countertops, cabinets, appliances, flooring (~$30,000 )..... 4) on 2nd floor, add master suite by converting one existing bedroom and common area ($40,000).... 5)galvanized plumbing ($5000)..... 6) old electrical ($5000).......7) restore a garage that was converted to closet+laundry room around 50yrs ago (~$3000 max)...... 8) remove radiators and the heating unit.....(Max $15,000 to include heat with existing hvac)..... 9) refinish existing hardwoods that are in good shape in around 2000sqft (max $5000) . Contingency of $35000 for other issues like demo, landscaping, unexpected issues. I really can’t believe that these issues will cost me $200k and 6months to 1year (as per the very expensive contractor I asked to evaluate it. He actually suggested I demolish it and start fresh for $350k new building.... lol. Just to workout the numbers on this property, here is the background..... it’s on the water, comps are in $800k range, this property is 1950 built 3000 sqft single family home in a good rental area. I still think it can be done in $150k. We are in Hampton roads area (southeast Virginia). Can someone help me get a rough idea as to why I could be so off with my estimates? I’m confused. I’m missing a lot that he didn’t mention or he factored in more than $70k of profit.

Matt Hershberger · Answer

Hey @Sumana Potluru a piece of advice that I have learned is when you find a contractor that you really enjoy working with and does great work for you, try not to refer them out to many other people. You do not want to split the time they spend on your house with other projects to a point where your house is not a priority. Every contractor is different though with the work load they can handle.

Jason Zimmer · Answer

If there's money to make and the contractor believes in your plan, there isn't any reason they wouldn't want to work with you.

Why would a contractor partner with a newbie investor?

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