How to get "investor" pricing from contractors?

Question

I'm new and learning about flipping, hoping to acquire my first house to flip, and I'm wondering how you get investor pricing versus retail from a contractor.  I have a good feel for what rehabs cost at a retail price and that is dramatically different from what I see quoted on this site for what flippers pay.  So what is the magic way to get such a discount?

Brian Mathews · Answer

You probably won't get very good deals to start.  After you prove yourself that you aren't doing this as a hobby and will do 1 deal and give up.  Which happens a lot.  You might be able to start negotiating some sort of lower rate.  The first thing you need to do is be very organized and don't waste people's time constantly changing your mind about the scope of work and if you do change your mind, be ready to pay more.  The next thing is that when a bill is due to a contractor, pay it very promptly.  I'll be honest with you, I'm an hvac contractor and if you came to me, letting you know that you are just starting out, I would give you a bid, but most likely not take you very seriously.  No offense to you personally, but there are so many people out there trying to do this that fail or never get off the toilet, its not even funny.  I might try to shadow with somebody or partner with somebody who brings some legitimacy to the process, that might be a good start to meet people and get the ball rolling.

Karen Margrave · Answer

Account Closed Welcome to BP! The only way you can get a less than retail price is to provide some value to the contractor. On fix/flips it may be the potential to do several deals and provide steady work.

On new construction, you may be able to get a better deal by entering into a contract to buy upfront with a solid contract and deposit (will help contractor get better financing), or participating as a joint venture partner where you put up the money and the contractor does everything else etc., then split the profits on sale, or use your portion as down payment to purchase completed property.

David Niles · Answer

Best way is just working with them and creating a trusting relationship. As the relationship grows your pricing should get much better.

You have to understand contractors get offered the "carrot" all the time with the promise of "just give me your rock bottom price and I have tons more work for you" most of which never pans.

Finding a reliable reasonable contractor is the cornerstone of your business so dont expect to do it over night and maybe not even on your first job or two.

As Karen suggested maybe giving the contractor a stake in the deal can be a great motivator.

Do not take all the pricing you see here as going rate either, each part of the country can and will vary, plus some of the rates I have read, not sure how those contractors could stay in business for very long.

How to get "investor" pricing from contractors?

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