Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
Originally posted by Sam Ferris:
Get the same people all the time; let them sleep in the rehab; make them employess and pay the taxes.
Was that a joke?
If not, are you suggesting that you'll buy them their tools, pay for their workmans comp insurance, pay for their liability insurance, deal with the details of hiring and firing, etc...
Sounds like much more overhead than what you'll gain...
Real Estate Investor · Dearborn, MI · Member since 2009 · 55 posts · 7 votes
15y
Originally posted by J Scott:
Go to Home Depot or Lowes at 7am on a typical weekend and start collecting cards. Any contractors at HD or Lowes at that time are both diligent (they don't sleep in) and have work (they are in demand).
You'll still want to do your due diligence, obviously, but it's a good start.
Then, once you find one or two great contractors, ask them who they recommend for other jobs. Good rule of thumb is that good contractors will only recommend other good contractors -- otherwise they risk their reputation, which good contractors won't do.
This is a great post! We have had the unfortunate experience of contractors who show up at noon and later - they do decent work but it gets old not knowing when they'll show up!! Love the idea of going to home depot at 7AM on a saturday to find the contractors who have a sense of urgency. Very clever.
Residential Real Estate Agent · San Diego, CA · Member since 2011 · 29 posts · 2 votes
15y
Hello,
I specialize in single family investments in San Diego. My boss is a GC and he rolls his fees into the rehab project as part of the partnership profit in the deal. The best deals will always use this method unless the rehabber does most of the work himself. By having a GC involved in partnership profits, the investor takes home the majority of the profits, while the GC/partner is happy, and the rest of the team is happy (agents, brokers etc) because we limit the amount of junk fees going out the door to other non-involved parties. Hope this helps!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
Originally posted by Raymond Pistilli:
The best deals will always use this method unless the rehabber does most of the work himself.
I'm going to disagree with this statement...
While a GC would certainly want you to believe that having him as a partner is the best situation, in reality this is just the best situation for the GC, not the investor.
Put yourself in the shoes of the investor -- if you had a choice between bidding the job out to a GC for a fixed price or partnering with a GC for a percentage of the profits, why would you ever go the partner route? The only reason I can think of is because you don't have the money to fund the rehab yourself, so in essence, you're partnering out of desperation, not good business sense.
But, there are a couple of downsides to partnering with a GC. First and foremost, you're going to be giving away more money than you need to give away. Second, you're going to have less control over your rehab, as the GC will likely try to make decisions that the experienced investor should be making. And third, if any of your contractors are not performing to satisfaction, it can be very difficult to get rid of them (especially if it's the GC who is not performing).
Giving a GC a percentage of the profits makes no more sense to me than giving your real estate agent, your mortgage broker, your inspector or your appraiser a percentage of the profits -- if you can't afford their services without giving away a percentage, then you may do it out of desperation, but that doesn't make it an ideal business decision.