Real Estate Broker · Albuquerque, NM · Member since 2017 · 30 posts · 4 votes
Hello-- I am a NM Realtor that has purchase 100% a great property- I have the subs & am looking to turn the property in 3-4 weeks- I have been approached by a local plumbing contractor, that has all of the contacts I would need, to flip the next home,....and the next, etc-
I currently have about 85-90% of the contractors I would need to keep this going- I can stay slower and steady or possibly bring in this contractor, that has his access to everyone ( granted, I will not be paying consumer pricing on repairs). I am not sure where to value him and his crew. I certainly do not want to under value & at the same time, not leave $$$ on the table-
Does anyone in this forum have different step up plans that they put in place? Or, do you think I just need to get my additional 15% help to make myself whole? The homes I am looking to turn, are and would be in a 1st time home buyer New Mexico range, or step up ...Say $150- $200k- Thanks in advance- JF
Jan Fensterer - I'd be hesitant to trust someone new to me with my whole project.
Create a written scope of work and walk through the site with 2-3 GCs who can bid the whole project piece by piece with a timeline. Or if you want to GC, then get this person to bid for the plumbing and get their buddies to bid on the other stuff (their suggested painter) vs your existing contractors (your painter(s)).
Never pay deposits upfront for materials and non-completed work. Home Depot offers 30+ day credit lines. Too many stories about people getting burned by trusting someone unknown with a deposit.
Jan Fensterer Two great pieces of advice for budgeting projects that I learned at an SJREIA meeting from a guest speaker.
1) Set up your payment schedule in small increments. The smaller, the better, test the waters at 10%, try to settle around 15%-20%, no more than 25% though. This allows for you to easily replace a contractor with minimal loss, should any unresolvable issues arise.
2) Write a 48 hour fix and repair clause into your contract. If any issues arise during your project, 48 hours is more than enough time to have the contractor, regardless of trade, address an issue.
These terms should help you along your journey, as a licensed electrical contractor in NJ, I find them more than reasonable.
Thanks so very much for all of your input- I have worked directly with many subs over the years- A few hiccups over the years, I usually deal with each trade directly- It gives me some good control and one on one trust has been built. I was recently approached by a contractor that is mainly plumbing & heating. He told me he has additional access to subs to do an entire flip-
I am currently flipping a home, should not take ore than 30 days, to get back on the market- I have my Brokers license, as well as the cash to purchase an additional home, and take care of all of the "hold" costs- Again, I would like a 30-45 day turn around. This contractor is reputable- I make commission on the purchase and the sale of the property. If I can find an additional house & give him a chance at scoping out the work, doing the rehab- Do you think this would be a 50/50 split on the profit after repairs and closing costs are done?
Since I would be acting as the bank, I would approach him with the cost of materials and labor to not be marked up whatsoever. Again, with taking the advice that is listed above,. about incremental draws.
I am new on the forum, so I appreciate your help- I do have a lot of experience with contractors and did do flips years ago, before the crash- Many Thanks
@Jan Fensterer, if you're finding the house, then paying for EVERYTHING (by definition - labor IS marked up), why would you then pay your Contractor ANY split on the profit (leave alone 50/50)?
I sense that you might be wanting your Contractor to be vested in your enterprise, and you seem to be trying to "hedge your bets" a bit, but, will your Contractor agree to 50/50 in any LOSS too?