New to flipping: Tring to find a lender and a contractor
Member since 2022 · 1 post · 0 votes
Been making calls this week trying to get some contractors to view and provide bids on a property I'm interested in flipping. If I get calls back, it seems everyone is a week or two out. Most of the contractors I called I got off BBB site or knew the name and reputation by word of mouth. Would love any advise.
Also trying to find Hard and Private money lenders, if anyone has any one they would refer for Az would greatly appreciate! Also, one property I was interested in wanted proof of funds for an offer, but the lenders I have spoken to want me to have a property under contact...is one way or another more typical?
Many thanks!
Most contractors do not know the flipping business, I would not recommend calling off a BBB list. Get referrals for contractors who have experience working with investors by attending local REI meetings or calling Realtors who do a lot of flip transactions in your area.
This is a great point, and I really want to emphasize this as well.
As far as hard money goes, my meetup is how I met my mentor and my HML, who is now my PML. With lenders, shop around. I am loyal to my one, so I do not have too much knowledge on nationwide-based HML, but if I were starting out new and had to earn trust, I would actually use a credit union and see what products they have for distressed properties.
Now let's talk about contractors.
Hiring contractors requires a sword and shield...metaphorically. or hell, literally if you feel cool enough lol.
Investor meetings help with finding out who shows up to work, sure. But more importantly, those meetings will reveal who you should stay away from. And honestly, that is a key factor that is not talked about enough. There are contractors who do crappy jobs, we get it. But there are also GC's/handymen out there who deliberately cut corners, hire the wrong people, or worse, will steal from you. And believe me, those people can hide behind all the LLC's they want, but they cannot hide their name and face from the people that worked with them in the past and got burned.
This defense is your shield
That being said, great contractors to investors are like rare pokemon cards you don't want to share or let go of. So don't expect anything too soon until you gain trust and can offer value. You can find great contractors in two ways that I use to this day
1.
◉ Go on Zillow/realtor/redfin etc
◉ go to filters
◉ type in remodel on the keyword
◉ look through the listings of renovations that matches your pursuits
◉ call the listing agent and ask for information on the remodeler, and offer the agent a listing if you can use that person and make a killer flip
◉ call the remodeler and establish a good relationship
◉ learn your numbers
This is how I found the GC I have now. I love his work, he's honest, he's fair and the timeline is always in point.
2.
◉ Hang out at Lowes and Home Depot at 6-7am and find out who's showing up for work. This is how I met my specialists, like my plumber
◉ Ask the pro desks who they prefer, go to another Lowes or Home Depot, and listen for repeating names.
This offense of your sword
Get with a realtor out there, they hold the keys to everything
Most contractors do not know the flipping business, I would not recommend calling off a BBB list. Get referrals for contractors who have experience working with investors by attending local REI meetings or calling Realtors who do a lot of flip transactions in your area.
Been making calls this week trying to get some contractors to view and provide bids on a property I'm interested in flipping. If I get calls back, it seems everyone is a week or two out. Most of the contractors I called I got off BBB site or knew the name and reputation by word of mouth. Would love any advise.
Also trying to find Hard and Private money lenders, if anyone has any one they would refer for Az would greatly appreciate! Also, one property I was interested in wanted proof of funds for an offer, but the lenders I have spoken to want me to have a property under contact...is one way or another more typical?
Many thanks!
Well it seems you are brand new. nobody is going to lend you money, OR if they do they will want at least 50% down. I suggest you connect with someone doing deals, find them deals, earn fees , save learn and apply what you learn. . Nobody is going to even show you a property, you do not have any money nor experience. Do you know how much rehab will cost ? How do you know if you are even getting a good deal ? DO NOT try and go it alone on your 1st deal, it will be very costly. 10 years or so ago, I knew nothing. I started exactly how I am stating, and flipped a contract for 20k in 3 weeks, that got my juices going. Well 500 deals later I have done it and seen it all,
Good Luck
Get with a realtor out there, they hold the keys to everything
realtors really ?? That is not the answer and they certainly do not " hold the keys to everything " . I have done more the 35 mill in deals (*About 500 ) and never once used a realtor , they do not have the deals . But they ALL have the same line " multiple offers highest and best " Same line for 10 years .
@Parrish J Anderson I was in a similar position when I went to do my first flip. I had only bought a handful of properties prior that were completely turn-key, therefore I had little knowledge/experience in the contracting world. My suggestion based on my personal experience would be to find a fellow investor who is more well-versed and experienced with construction. They will have a list of contractors that they have worked with in the past and will be able to know which ones to work with and which ones to avoid.
My partner had a remodeling background, but had never done a flip. For him, the renovation aspect was a piece of cake and he could do it in his sleep. For me, the lending/financing side of things was a piece of cake (I was a mortgage loan officer at the time) and was more daunting for him. So each of us had a piece of the puzzle that the other was missing. We ended up teaming up, did that deal, it went great (even with a bunch of rookie mistakes we made) and fast forward 3 years and we've done a bunch of additional flips together and now do this full time.
Hope this helps! The tl;dr is to find a partner that understands the aspect of the business that you are struggling with and team up.
Get with a realtor out there, they hold the keys to everything
realtors really ?? That is not the answer and they certainly do not " hold the keys to everything " . I have done more the 35 mill in deals (*About 500 ) and never once used a realtor , they do not have the deals . But they ALL have the same line " multiple offers highest and best " Same line for 10 years .
Pretty objective statement to make. I'm a realtor and if an investor were to approach me for deals i'd have 10 off market properties THAT I have personally tried to buy that I can point them to. Maybe you're not connecting with the right people
Get with a realtor out there, they hold the keys to everything
realtors really ?? That is not the answer and they certainly do not " hold the keys to everything " . I have done more the 35 mill in deals (*About 500 ) and never once used a realtor , they do not have the deals . But they ALL have the same line " multiple offers highest and best " Same line for 10 years .
Pretty objective statement to make. I'm a realtor and if an investor were to approach me for deals i'd have 10 off market properties THAT I have personally tried to buy that I can point them to. Maybe you're not connecting with the right people
Maybe but in all my years and again doing 500 deals in the Cleveland markets, I found that realtors provided no value to me. Maybe others have had great experiences but not me. Even the home I am living in now, ( moved in may 15th ) we found not the realtor. When we called for a showing the realtor new nothing about the house. It was asking 625k, I offered 475k, realtor said we are way way to low. Well we got it for 512k. Just finished the reno this week, , we can now sell for 850k, again realtor did nothing . I locked up 8 props over the last 3 weeks , no realtor involved . I will flip them again not using a realtor.
All the best
Been making calls this week trying to get some contractors to view and provide bids on a property I'm interested in flipping. If I get calls back, it seems everyone is a week or two out. Most of the contractors I called I got off BBB site or knew the name and reputation by word of mouth. Would love any advise.
Also trying to find Hard and Private money lenders, if anyone has any one they would refer for Az would greatly appreciate! Also, one property I was interested in wanted proof of funds for an offer, but the lenders I have spoken to want me to have a property under contact...is one way or another more typical?
Many thanks!
Hi Parrish, let me help you with these connections you need. Let's connect on a DM
Most contractors do not know the flipping business, I would not recommend calling off a BBB list. Get referrals for contractors who have experience working with investors by attending local REI meetings or calling Realtors who do a lot of flip transactions in your area.
This is a great point, and I really want to emphasize this as well.
As far as hard money goes, my meetup is how I met my mentor and my HML, who is now my PML. With lenders, shop around. I am loyal to my one, so I do not have too much knowledge on nationwide-based HML, but if I were starting out new and had to earn trust, I would actually use a credit union and see what products they have for distressed properties.
Now let's talk about contractors.
Hiring contractors requires a sword and shield...metaphorically. or hell, literally if you feel cool enough lol.
Investor meetings help with finding out who shows up to work, sure. But more importantly, those meetings will reveal who you should stay away from. And honestly, that is a key factor that is not talked about enough. There are contractors who do crappy jobs, we get it. But there are also GC's/handymen out there who deliberately cut corners, hire the wrong people, or worse, will steal from you. And believe me, those people can hide behind all the LLC's they want, but they cannot hide their name and face from the people that worked with them in the past and got burned.
This defense is your shield
That being said, great contractors to investors are like rare pokemon cards you don't want to share or let go of. So don't expect anything too soon until you gain trust and can offer value. You can find great contractors in two ways that I use to this day
1.
◉ Go on Zillow/realtor/redfin etc
◉ go to filters
◉ type in remodel on the keyword
◉ look through the listings of renovations that matches your pursuits
◉ call the listing agent and ask for information on the remodeler, and offer the agent a listing if you can use that person and make a killer flip
◉ call the remodeler and establish a good relationship
◉ learn your numbers
This is how I found the GC I have now. I love his work, he's honest, he's fair and the timeline is always in point.
2.
◉ Hang out at Lowes and Home Depot at 6-7am and find out who's showing up for work. This is how I met my specialists, like my plumber
◉ Ask the pro desks who they prefer, go to another Lowes or Home Depot, and listen for repeating names.
This offense of your sword
Been making calls this week trying to get some contractors to view and provide bids on a property I'm interested in flipping. If I get calls back, it seems everyone is a week or two out. Most of the contractors I called I got off BBB site or knew the name and reputation by word of mouth. Would love any advise.
Also trying to find Hard and Private money lenders, if anyone has any one they would refer for Az would greatly appreciate! Also, one property I was interested in wanted proof of funds for an offer, but the lenders I have spoken to want me to have a property under contact...is one way or another more typical?
Many thanks!
You're running into issues getting these people to spend time on you because you're way too much of a long shot to get a deal passed the finish line. I wrote the following articles you see below, I think you should read them both as they both apply to your current situation in the industry.
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HELP! I can't Find a Reputable Contractor to Rehab my House!
How many times have we seen a post on Bigger Pockets with a new investor complaining that they can't find any reputable general contractors to rehab their houses? Often times, these investors are looking for general contractors to give them bids on properties they are thinking about investing in and they can't seem to figure out why nobody is calling them back. From there we get a countless swarm of people who chime in with the same story and everyone talks about how busy contractors are.
Folks, I am here to dispel that myth. Yes contractors are busy just as any business owner is but they aren't so busy that they aren't taking on new clients. No, they are not interested in taking on YOU as a new client.
The reality is that if you want a general contractor to go out for free and bid a house renovation for you so that you can put your numbers together and make an offer YOU are not a lead they want to work. If they spent time working with you they would not make money. This is very different from being too busy to make money. They are not too busy to make money. It's just working with you that's the problem.
Now, now before you all get in your feels here, don't think I'm dropping these truth bombs on all of you with facts and data to back it up. That's not my style.
Recently I wrote an article and started a thread called THIS is why your Realtor is Ignoring you-DATA says they Should! If you have not yet read it I highly recommend you do because the same people who can't get a general contract to work with them are the same people who can't get a real estate agent to work with them.
In that thread I broke down data from approximately 1,100 potential investment property deals I worked both as a Real Estate Broker and general contractor. From this data I determined that the average investment property deal close rate is about 2.9%.
From there we need to take it one step further. I know you all are reading your "how to's" on hiring general contractors so you all try to go out there and get your 3 quotes. This means that a general contractor has a 0.9% chance of landing a renovation job out of the work they quote for you.
Let me repeat that. A general contractor has a 0.9% chance of landing a renovation job out of the work they quote for you. So for all of you folks out there that are running into a brick wall trying to hire an "investor friendly contractor" this is the reality of the situation you are in. You represent a payday of less than 1% to these people. These people aren't too busy to make money. No, these people are intelligent enough to know that you can't run a profitable business spending time with clients whom have a 0.9% chance of paying you for your time.
This is why you can't find a reputable contractor to rehab your house.
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THIS is why your Realtor is Ignoring you-DATA says they Should!
If you spend any measurable amount of time browsing the BP forums you have probably come across a thread or two that was started by a new investor who's having a heck of a time getting a Realtor to work with them in an out of state market. As you can see by my post count under my dashingly handsome headshot, I've been on BP for quite some time, and I can tell you that I have personally read 100's of these types of threads.
So the question is, why is this? Why is it so hard for an out of state investor to create a mutually beneficial relationship with a Realtor in an out of state market? Is it because Realtors are bad at their jobs? Or is it because out of state investors are bad clients?
The simple answer is YES to both questions.
Yes it's hard for out of state investors to work with Realtors because Realtors suck at their jobs.
AND
Yes it's hard for out of state investors to work with Realtors because out of state investors are horrible clients.
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Now before all you out of state investors and Realtors start jumping down my throat, let me explain. Ya see this is not simply an opinion piece, I've got the data to back it up.
As for the Agents in the equation. Industry wide close to 9 out of 10 agents will leave the industry every single year. That's a nationwide statistic and it's been like that for decades. So if you are thinking it's the Agent's fault as to why investors and agents can't create a mutually beneficial relationship you'd be right about 90% of the time.
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Why do so many agents leave the business?
The 1st thing we need to look at is money. Most out of state investors are looking at properties in the "turnkey" space and the price points are sub $100k. Often times way less than that when investors want to do BRRRR deals and things of that nature. So if you're an investor and you are looking at doing these deals and are trying to connect with a Realtor to do them you've got to understand that the Realtor is looking at a commission that's going to fall anywhere in the $500 to $2,500 range. Myself I've sold over $200 Million worth of this type of property to investors and I can say the commission of an investor focused Realtor is roughly $1,250 when you average it all together. Having done 1,000's of sales I've got a good amount of data to say that's a very fair estimate.
Now as an investor you may be thinking that's a good chunk of money because you are going to buy several properties from this agent. You are probably thinking you are a heck of catch because of all that residual income they will be getting because you are a big bad investor. Surely if an agent meets you they will be the 1 out of 10 who are making good money and staying in the business. Right?
No. Not at all. In fact, you're probably the type of client who's going to earn them an hourly rage far below minimum wage. Burger flippers are actually going to pull down a much higher dollar per hour than agents working with out of state investors.
Many of you know that I run a show called The MLS Search & Analysis Show. What this is, is how I work with investor buyers to help them buy rentals from the MLS. This is a paid show. You must pay me up front to work with me. I will not work with you as an agent unless you pay up front. The reason behind this is simply math. I would not make enough money working with you if I didn't. This is why the agents working with investors often fall into the 90% that quit the industry.
Prior to this show I was selling investment properties but knew that the pay rate was not sustainable without an up front fee. With the show being a numbered episodic show it's become very easy for me to track the data and really hammer down exactly how little money these agents are making when they work with you guys.
Here is what the data says.
Over the last 10 months or so I have been hired by investors to analyze properties for them and submit an offer on said property if they were interested in buying it after my analysis answered all of the questions investors ask on everyone of these properties. Basic stuff but basic stuff that takes up an agents time to get to you such as current rent, market rent, mechanical ages and things like that.
Over the last 10 months gone over about 1,100 properties for investors. In going over 1,100 properties for these investors it's resulted in roughly 95 sales. With an average commission of $1,250 we are looking at $118,750 in gross commission or an average commission per property looked at of $107.96.
Now how long does it take to look at / go over a property with an investor? An hour? Two hours? Three? Are you an investor who wants to fly into town and drive around all day? If yes, let's call it 4 hours between
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Effective Dollar Per Hour $26.99.
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Of course agents have to advertise to bring in clients. If nobody knows who you are how can they work with you after all? They can't. Lead generation is the most important part to an agent's success. So let's reinvest 20% of that revenue into lead generation.
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New Effective Dollar Per Hour $21.60.
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But wait, we aren't done yet. No, ya see most Agents working with low commission properties like this haven't sold $200 Million in real estate. Most agents working these super low commission deals are new agents who have yet to move onto the high cost suburbs with owner occupants. Most agents don't have a sophisticated TV show with 10 Million+ views. Most agents aren't working with buyer's who are so committed to buying that they have paid money up front, many of their hours are spent combing through all of the tire kicker's endless questions so most agents working with investors aren't closing sales at the rate I am. They are probably at best able to close their deals at a about a third of the rate I am.
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New Effective Dollar Per Hour $7.20
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But wait, there is more. These agents are not business owners, no they are working for a Broker so guess what, they've got to pay a commission split. Let's call that 20%
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Final Effective Dollar Per Hour of an Investor Focused Agent is $5.76
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So there you have it folks. If you are wondering why you are having such a tough time getting an agent to be excited about working with an investor no you know why. You represent a pay rate of $5.76 an hour to these people. With an effective dollar per hour pay rate of $5.76 is it a surprise that 90% of the agents talking to investors are terrible at their jobs? What quality human being is going to work for $5.76 an hour? Working with you as an investor isn't this magical carrot that all of these agents are chasing. Nope, not even close.
Get with a realtor out there, they hold the keys to everything
realtors really ?? That is not the answer and they certainly do not " hold the keys to everything " . I have done more the 35 mill in deals (*About 500 ) and never once used a realtor , they do not have the deals . But they ALL have the same line " multiple offers highest and best " Same line for 10 years .
Pretty objective statement to make. I'm a realtor and if an investor were to approach me for deals i'd have 10 off market properties THAT I have personally tried to buy that I can point them to. Maybe you're not connecting with the right people
Maybe but in all my years and again doing 500 deals in the Cleveland markets, I found that realtors provided no value to me. Maybe others have had great experiences but not me. Even the home I am living in now, ( moved in may 15th ) we found not the realtor. When we called for a showing the realtor new nothing about the house. It was asking 625k, I offered 475k, realtor said we are way way to low. Well we got it for 512k. Just finished the reno this week, , we can now sell for 850k, again realtor did nothing . I locked up 8 props over the last 3 weeks , no realtor involved . I will flip them again not using a realtor.
All the best
There are more bad realtors than good. We need em all