How to stay clear of "retail" contractor prices?

13 Replies

Ended up purchasing a foreclosure a few weeks ago outside of Chicago and will be using it as a primary residence. I want to remodel the kitchen but do not want to pay full retail prices that GCs will quote me if they think it will be my primary residence. How do I go about letting contractors know this is a rehab/flip?

I have a few duplexes under my belt but never had to rehab/flip. Any thoughts on how to approach this would be appreciated. 

I'm also interested in tips on this.

I'm completely opposite I feel like they're going to see $$$$ when you're telling them you're flipping. Get multiple estimates and go with the one you're most comfortable with. 

Why would you get a better deal from telling them its a flip.  That makes no sense at all.  Get 2-5 quotes and go with it

Originally posted by @Scott K.:

Why would you get a better deal from telling them its a flip.  That makes no sense at all.  Get 2-5 quotes and go with it

 For the same reason Jiffy Lube brings up transmission flushes to women more than to men.  People will take advantage of you if they think they can. 

Originally posted by @Brock Y.:

 How do I go about letting contractors know this is a rehab/flip?

You don't. Because it isn't. Just start going to your local REIA groups where you can meet contractors or get GC contacts from other investors. This would be a good opportunity to build a relationship with a GC whom you may wind up using in the future. 

I have been having work done on my primary residence and have found that multiple offers will give you a wide spectrum of prices. One discovery from Biggerpockets that has helped me is the two books by J scott, sold here on Biggerpockets. The first one is "The Book on Flipping Houses." It will aide in determining a strategy and set up a system you understand. The second book, "The Book on Estimating Rehab Costs" is the one you need now - It expands on the first book but it breaks down the specific jobs and gives you a breakdown of individual components.

I was able to get a better quote on repiping the supply lines to my house because of what I learned from this book - particularly the understanding of what the contractor, or in this case plummer, uses to write a quote - In my case I used what I learned about cost estimates by knowing the number of fixtures and I was able to get a quote from a local plummer about 2.5K$ lower than the highest quote. It helped to talk to the estimator about my expectations and listen to their spiel and ask questions specific to what your stated expectations are. So far, the quote is in and holds for 30 days and work will be scheduled when I have my master bed remodel started in mid August.

You can find these books in the Resourses section or, what I did, was purchase from Amazon.com.

Originally posted by @David L.:

I was able to get a better quote on repiping the supply lines to my house because of what I learned from this book - particularly the understanding of what the contractor, or in this case plummer, uses to write a quote - In my case I used what I learned about cost estimates by knowing the number of fixtures and I was able to get a quote from a local plummer about 2.5K$ lower than the highest quote.

 Thanks for the kind words, David...

And you're exactly right -- being able to speak the language that contractors speak and understanding how they view the job is critical to getting good prices.  If they believe you know what it takes to get a job done and what it typically should cost, they won't waste their time trying to take advantage of you.  

One of the strategies I'll use when I don't know what I'm talking about (still happens now and then :-) is that I'll bring in one contractor who I don't believe I'll use (perhaps a high-end guy out of the yellow pages), and I'll ask him LOTS of questions so that I fully understand how he views the job and how he is basing his prices.  Then I'll use that information to get bids from the contractors I would seriously consider using.

Be careful of telling a contractor its just a flip as opposed to a primary residence.  You may get a better price (but how will you really know?) and you might also get an out of level backsplash!  I wouldn't tell them more than they need to know.  

Sometimes building the relationship with contractor is helpful. Because if he does not rip you off on the first deal you have, you would continue working with him in the future. Sharing the bigger picture with people may help

I'm was a builder so a bit of insider knowledge here but if margins are really slim on a project I have used guys employed by subcontractors (electricians/plumbers/etc.) to do sidework for me at an hourly rate. Say the sub may charge $65/hr and employee earns $20/hr I pay $30/hr. The drawback is it takes more time to complete, but it also stretches your budget. Ask for recommendations from people you know and you may find the right person. Also, don't go around the contractors back on this. Most of the guys I use don't care much if an employee makes a bit of extra money on the weekends. If it is going to be an issue, stay away.

Just tell the GC what you want done and let him give you a price, and you like the price draw up the contract.


Joe Gore

I believe the very best way to make sure, is to get 3 ITEMIZED estimates from 3 Licensed Contractors.

The Estimates should include cost of material, cost of labor; Per trade (i.e. electrician, plumber), cost of permits and dumpsters (for bigger flips).

I believe by making sure everything is itemized, it does 2 things. 

1. You make sure that your comparing apples to apples in materials. Such as cabinets size and quality, Granite selection, etc. 

2. Your also see the margin or profit in deal for the contractor. Commonly know as GC Profit and Overhead. (This is were you would normally be taken advantage of).

SInce you should be receiving estimates based on the same types of materials and labor and they will be priced per line. You can then compare the cost installation.

In my opinion as a contractor the best thing to do is be upfront. 

Medium walton logo epsTony Reyes, WALTON Contractors LLC | [email protected] | 7083038055 | http://walton-contractors.com

Whether it is a flip, rental or primary residence would not change how my guys would quote it.

How badly the contractor wanted the job would determine the price he'd be willing to do it for.

Ask for a price from a few guys and try to haggle a little. Go with the one your most comfortable with that also has a fair price.

Medium holton wise property group logo jpegJames Wise, The Holton Wise Property Group | [email protected] | 216‑661‑6633 | http://www.HoltonWisePropertyGroup.com | Podcast Guest on Show #127