GC bid attached. What can I learn from this? San Antonio, TX

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GC bid attached. What can I learn from this? San Antonio, TX

Corbett Brasington
Rental Property Investor · San Antonio, TX · Member since 2021 · 67 posts · 28 votes

So this is my first property to have a GC I am building a relationship with give me a full cost breakdown structure (which I paid him $250 for, as I wanted it to be worth his time as I might need a ton of these before he gets work).  

House went under contract today so I don't know how long this link will work but https://www.zillow.com/homedet... is the link to the property.

As a new investor my goal for the next 12 months is learning.  Total immersion by taking action.   I do not want to be in the business of being a GC.  

That said....what can I learn from this?

  • - Are the prices too high or low?
  • - The format of this does not include materials....should I have a consistent format that the GCs need to comply with?
  • - There is no concept of lead time on items.  Do I need this to help reduce my risk on supply chain things? Do I just trust the GC to source the vendors to get it on time?

What I have learned.

1. Nothing beats going on site. The pictures did not represent the amount of work this home needed.

2. Seeing how the GC approached looking at the property did give me confidence. He was very thourough.

3. Trying to take picture with my phone, and talk, and write things down while at the property was....really cumbersome. I need a tool kit or something.

4. I started outside but I think next time I rather would start going inside....rough sketching the floorplan and then using that like a punch list markup to capture all the things.

5.  I really feel like I need some onboarding checklist or something for GCs.

Any feedback about the bid would be helpful. I have the BRRRR analysis of the property I can share but don't want to overwhelm the post.

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Mark Buskuhl
Investor · Plano, TX · Member since 2016 · 61 posts · 48 votes
4y

You may not want to hear this but you need to run from this deal.

1. It's in a flood zone.

2. It's WAY to much work for a new investor. Take on something with less rehab.

3. That GC bid is horrific. Way over charging and not even detailed. Where is plumbing? Electrical? Insulation? Trim? Doors? 

4. Don't buy off MLS. If you don't want to do the work to buy direct from seller at least get hooked up with some decent wholesalers.

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  • Brendon Pishny
    Investor · Olathe, KS · Member since 2017 · 123 posts · 99 votes
    4y

    @Corbett Brasington

    I feel like this is a ton of work to go through just to make offers. I think it’s good you went once with a contractor. Now you have a good idea what it will take to rehab a property. You should be able to make offers. Then take your contractor to the site after you’re under contract. He may be willing to keep going with you if you’re paying him but do you want to spend that much money and not get any deals. Most contractors will get tired of doing that much effort if they’re never going to get any work out of it. As you get better you should be able to walk a property for 30 minutes and have a ballpark rehab number so you can make an offer.

    In my opinion I would want materials included. This something you would definitely want to clarify with him. Also, it’s hard for me to say if the numbers are too high or not. It depends on what market you’re in. In my area this seems a bit high.

    Hope some of that helps.

    2Reply
  • Aaron Bihl
    Investor · San Antonio, TX · Member since 2017 · 344 posts · 268 votes
    4y

    It looks pretty high to me.  I have one I'm doing now that same size and similar scope of work and I'll be all in around 50k.  I'm not replacing window but did repair the foundation.  

    The roof for 15,500 would be enough for me to be like no thanks.  

    3Reply
  • Corbett Brasington
    OP
    Rental Property Investor · San Antonio, TX · Member since 2021 · 67 posts · 28 votes
    4y

    @Brendon Pishny are you suggesting that I make contingent offers based on some base assumptions landing...make sure that contingent offer is accepted...then go on site, do the due diligence and renegotiation as appropriate at that point?

    1Reply
  • Corbett Brasington
    OP
    Rental Property Investor · San Antonio, TX · Member since 2021 · 67 posts · 28 votes
    4y

    @Aaron Bihl ty!  This GC is the first one I have connected with and I have not vetted him in any real way.  That said I need to figure out a way to do that.

    0Reply
  • Brendon Pishny
    Investor · Olathe, KS · Member since 2017 · 123 posts · 99 votes
    4y

    Yes you should be able to make offers based on assumptions of what the costs will be. Always have an inspection period in the contract. Then if you find something that significantly changes those rehab costs you can renegotiate. In this market taking a contractor and getting a formal bid to make offers is not feasible. 

    2Reply
  • Richard A Young
    Investor · San Antonio, TX · Member since 2019 · 112 posts · 47 votes
    4y

    @Corbett Brasington, are you aware that this property is in a flood zone? https://www.sariverauthority.o...

    1Reply
  • Brian Phillips
    Member since 2021 · 25 posts · 19 votes
    4y
    Prices are different in each market, but I agree that the roof price seems high. I did a roof 18 months ago in Houston, about 1100 sf and the tear off and replacement cost $7250. When I first started investing, I paid close attention to the cost my GC was charging per unit. $X for each door, $X for a sf of flooring, $X for a new HVAC system. After a couple of properties, I was able to have a pretty accurate idea of what a rehab would cost. And I always allow at least 10% for contingencies.
    0Reply
  • Corbett Brasington
    OP
    Rental Property Investor · San Antonio, TX · Member since 2021 · 67 posts · 28 votes
    4y

    @Richard A Young I was not.  I think that means that flood insurance is required by law or something yes?

    0Reply
  • Richard A Young
    Investor · San Antonio, TX · Member since 2019 · 112 posts · 47 votes
    4y

    Yes, @Corbett Brasington. Of course, there is a chance of flood as well. I recommend taking a look at the map link I sent.

    0Reply
  • Paramvir Singh
    Investor · New York, NY · Member since 2020 · 13 posts · 16 votes
    4y

    In terms of whether the prices are too high or too low, the only way anyone can answer that question is comparing these prices to one or two other bids from other GCs. With that said, there’s definitely a couple of items that stand out as being a little high

    0Reply
  • Mark Buskuhl
    Investor · Plano, TX · Member since 2016 · 61 posts · 48 votes
    4y

    You may not want to hear this but you need to run from this deal.

    1. It's in a flood zone.

    2. It's WAY to much work for a new investor. Take on something with less rehab.

    3. That GC bid is horrific. Way over charging and not even detailed. Where is plumbing? Electrical? Insulation? Trim? Doors? 

    4. Don't buy off MLS. If you don't want to do the work to buy direct from seller at least get hooked up with some decent wholesalers.

    7Reply
  • Allen L.
    Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
    4y

    Ok, your bids are outrageous. Just outrageous. I'd want to get my $250 back if I paid him for a quote. Including the siding this is no more than a 30K job. He's charging you 15K just for the roof. The heritage shingles installation on a 1200 sqft home with the plywood replaced is no more than 5K.

    3Reply
  • Aaron Bihl
    Investor · San Antonio, TX · Member since 2017 · 344 posts · 268 votes
    4y

    pretty much everything @Mark Buskuhl said.

    A flood zone wouldn't scare me if the deal was good enough, but if it's something that you are flipping you always have to think of it with the end retail buyer in mind.  And a number of them will be scared by a floodzone even if its a calculated cost and makes sense.  There are certain things that make retail buyers scared.

    0Reply
  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2018 · 141 posts · 103 votes
    4y

    @Corbett Brasington $20,000 for drywall!! Run, we just did a full gut, 100% replacement of all drywall with tape/float and texture for $7,700 with material included on a 3 bedroom two bath 1,400 square foot house just a few miles away in Seguin. The most reasonable thing I see is $485 labor for 11 windows but I would be worried about the quality for that price. The roof price is outrageous as well. DM me and I'll send you a list of good HONEST subs that can help cut your prices.

    3Reply
  • Corbett Brasington
    OP
    Rental Property Investor · San Antonio, TX · Member since 2021 · 67 posts · 28 votes
    4y

    @Mark Buskuhl I did, but as a newbie I am still looking to learn as much as I go.   I have a good sense for how to analyze a deal (minus the rehab part...which...that is a big part), how to find them off market, but I have not yet build the GC relationships I need yet.

    0Reply
  • William Walker
    Investor · Wilmington, NC · Member since 2016 · 211 posts · 262 votes
    4y

    I’ll fly to your 1 story 1,200 sq ft house and rip the siding off with a hammer and pry bar myself for 10k - save you a grand right there. 

    5Reply
  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    4y

    Its great that you are online learning, but nothing beats learning in person. Get with some local investors and see projects that they have going on. Go to Home Depot to see what siding costs. See what insulation costs. See what shingles, underlayment and nails cost. A quick estimating tool is: 1/3 for material, 1/3 for labor and 1/3 for profit. ROUGH estimate.

    You can come out to my projects anytime. Just give me a call to set it up.

    2Reply
  • Steve Milford
    Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes
    4y

    @Corbett Brasington My recommendations:

    * Take the same scope of work that was provided without pricing and get 2 more bids. Paying a GC to come and bid on a job is a service. Appreciating the deal you received and helping each other is a relationship. I.e. The roofer I use, answers my texts fast, he squeezes me in between jobs, he doesn't charge me for bids, AND he is inexpensive. And he can do it quicker than I can.

    * See more houses in person, a LOT more. The more you see the better you will get at estimating.

    * Create a spreadsheet that is regularly updated with Home Depot Pricing, then when you look at the house, you can plug in quantity of things you need, to estimate repair costs. When I walk a house, I don't fall in love with it, I go to evaluate and work my spreadsheet from my phone.

    3) Trust your gut. If you don't feel comfortable with it, get more education until you do.

    What I saw as needing further eval: aluminum windows, roof, siding, brush/trees touching house (these help pests travel), cadet heater in kitchen, floors, pipes look galvanized (but closer inspection needed), cabs are old but not necessarily worthless.

    Key is to not improve property more than neighborhood. Making money in BRRR, is about getting most rent for money spent, so look at how much rents are in area as well. That is your litmus test.

    0Reply
  • Jackie P.
    Investor · Golden CO · Member since 2010 · 77 posts · 12 votes
    4y

    I used to live in Austin.  GC prices too high, flood zone issue, lots of work.  But, maybe you can use the GC list to negotiate price reduction with seller.  Good luck!

    0Reply
  • Harrison Sharp
    Real Estate Broker · DFW · Member since 2015 · 350 posts · 270 votes
    4y
    Originally posted by @Corbett Brasington:

    @Brendon Pishny are you suggesting that I make contingent offers based on some base assumptions landing...make sure that contingent offer is accepted...then go on site, do the due diligence and renegotiation as appropriate at that point?

    Yes. You are in Texas so you can put an option period where you get an inspection/due diligence period in your contract. Its a waste of time and money to get a quote like this and pay for it when you don't even have a house. Get it done during the option period and if it's too high for what you want back out. But you should have a pretty good gauge on what needs to be done when walking a property. 

    Roof - 6-8k  (paying 15k for a new roof is way too high) 

    HVAC - 5-8k 

    Water Heater - 1.5k 

    Cleanouts - 5k 

    2Reply
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