Wholesaler · Washington, D.C · Member since 2011 · 449 posts · 94 votes
Over the past couple of months my partner and I have came very close to actually going through with a rehab. Well last night my realtor told me about a property that his family member was selling and was willing to entertain investors. So, today I went to take a look at the property and it looks like it may be a good deal but I'm unable to figure out how much the rehab will cost.
So, this is where I need you guys help. How do I find a general contractor that will complete this job? I want to get several bids on the property before I get it under contract so that I know what I'm getting myself into.
Post some local ads via craigslist,newspaper,etc. Interview those contractors. Ask questions such as how long have they been in the trade?, Do you have any current jobs going on right now?, If so where? Then go look at their jobsite get to see how the workers are and the quality of their work. Next ask for recent job references. Contact them and ask if they were happy with the work performed and if you could stop by and see the work. There's a lot more to it but I hope this helps some
Uryss - is it necessary to get a mentor? I tried getting someone to work with that has had experience but it seems like I'm a burden to them. She showed me how to look for properties but then when I sent her a list to review she then claimed she was to busy to take a look.
Also, when working with a general contractor do you have to know the scope of work that you want done? Or, can I simply tell them I want this property ready to sell retail but I want it done as cost efficient as possible?
You need to tell them what you want done and seta budget or they will take control of you job and eat up all your profits.
My suggestion, act ad you own GC. You collect the bids from the subs. Have all painters show up at the same time, tell them to bring their lic, ins and references. If they show up with out these ask them to leave. Collect bids and talk to them and get a feel for them. Then call every ref they give you.
Do this for all trades.
Once you make a decision on which guy to use. Call him, tell him you liked him but always ask him to sharpen his pencil on the numbers and he will get the job.
Never pay any of them up front. When you do pay them get a lien waiver signed
Mike I would go ahead and tie the property up contingent on a inspection. It seems difficult now but, you will soon become a expert at estimating rehab cost. Look in your yellow pages or sit in home depot lot in the morning. You will find several contractors willing to help you estimate your job. If this is a cosmetic rehab go to your lowes or home depot and see what materials cost and what they charge to due the work. You can look around and see that you need paint, counter tops, flooring, drywall, etc... This will give you a starting point on cost. For the things you dont know, you can get a home inspection to find what may be hidden to your naked eye. This is not the cheapest way but the fastest way for you now to estimate cost.
I had a contractor come take a look at the property today. After taking a look around her said "if I was you, I'd stay away from this as a flip". Should I take this with a grain of salt?
It is very hard to get a GC to give you a quote on a property in under a week, let alone on a property you do not own. You will need to establish some rules of thumb for the condition of the property, and the get formal bids during your inspection period.
A big rehab will run your $35-40/sq.ft. Cosmetic rehabs run about $10/sq.ft (for a 250-300K ARV). So you will need to adjust it accordingly for your market. These are for flip properties as well, not rental property which have much cheaper rehabs.
Now I'm assuming there's a difference between a quote and an estimate, correct? I'm thinking that an estimate is just a rough figure on how much a project will cost. Now a quote will be more in depth.
qoute, estimate, proposal, contract.... depending upon the scope of work? all can be used in order for a contractor to start. Prefer a contract, myself... FYI: no deposits, u can cover your materials, it can save you money.
Sorry Richard but the verbage is a very big deal in construction contracts, kind of like the difference the word "not" ads when used in front of "guilty".
Listen Mike, your not ready to do a flip, sorry but that is the advice that will save your butt. You have to know what you are doing before you do it, or else your just a passenger along for the ride.
A construction "estimate" is covered under each states law, and get to know it, because it states the contractor can, with or without consent, make a final billing for XYZ beyond the quoted, estimated amount. Some states it is as high as 35% additional, and it is 100% legal. That means they could have you sign an estimate contract for 10K, and give you a final billing for 13,500 and under law you gotta pay or else they place a lein on that property.
The terminology is an exactimate, and have it expounded in detail in the contract, that the amount is an exact amount, not an estimate, and any increases or additional charges of any kind, or additional work, is to be first approved thru a signed change order.
Any good flipper never signs contractor contracts, we provide them with our own.
I am both a 15+yr contractor, and a flipper, so don't blow this detail off, I have seen people loose 6figures over neglecting this. Lots and lots of problems can arise from flipping wrong, and with the wrong contracts, well thats the ball game, pack it in.
But seriously, your not ready to flip, try to wholesale it to a flipper, then learn all you can from them. Ask them to apprentice you.
I had a contractor come take a look at the property today. After taking a look around her said "if I was you, I'd stay away from this as a flip". Should I take this with a grain of salt?
Did he give you a reason why you should stay away from that property. If his numbers match your budget and resale, thats a good property to flip. Do you know if he is an investor/contractor. Get the answers you need to make a educated decision on this property. Find more contractors to come and give you an estimate, but act as if it is your property and you are ready to move forward to rehab.
James - yes he was into house flipping in 2008, he no longer flips. The reason he said he would stay away from it was because it needed a lot of work done. The floor was sagging in multiple places and there were six led paint pillars out front that would all have to be stripped.
Be sure and come to an understanding of time frame before you sign the contract. Make him stick to your initial agreement by adding $100 per diem for overages on the contract.
Check references, and get many bids. Let the contractors know up front you are getting several bids. If they ask you what you think your number is for cost, or what another contractor bid on the job, don't answer.
I have a good contractor. I usually make a list of what needs to done and what I need timewise. I have a copy for both of us when we walk the property. I get a professional proposal and compare it to my list to make sure everything is included.
I have also stopped and talked to contactors rehabbing nearby. At the minumum I can see their work and get a bid to keep my guy honest. Just a few days ago an alert came up showing a property a few doors down from my next project. It looked great and went UC very fast. So, I called the listing agent for the name of the contractor and how much it cost. I plan to call the contractor and say "I want the exact same things done" and get a bid (knowing what the last job cost).
This is the toughest part of the investing biz! You will get bids all over the board, but I gotta tell you if you want it to work well, you gotta be your own GC. Break it down into small bites. Hvac, Electrical, Plumbing,
Drywall, Trim, Paint, etc...
If you give it to one guy, he will get overwhelmed and the deal will go south quickly! If you have someone that is good enough to see it through, you will not be able to afford them.
I wrote a book, Vacant house to beautiful home. It is in editing right now. I will see if it is cleaned up enough to send you a digital copy. I would be happy to put a link on here to give it out to everyone if it is not considered self promotion.
It is a great outline on how to evaluate a beat up home. :mrgreen:
May I ask what city and state you live in? That is mostly for curiousity purposes. Everyone gave you good advice which can sometimes be overwhelming since some of it is contridictory advice. I do whole heartedly agree though that you need to oversee your project for several reasons. It will cost you less, it gets you more familiar with all phases of contractors in your area and you are not relying on someone else to be your eyes and ears. The only way you can be sure they are working like they should and the hours they should is by actively participating in your rehab. Eventually down the line, from what I understand, is you will eventually build a trust worthy team that you know you can rely on. You cannot do that on your first few houses. I have only done one rehab, but I was there every day. It gave me invaluable knowledge as to costs, problems that you could run in to etc. It also gave me a good idea of who did quality work and who I would not deal with again. I had a great carpenter that taught me mountains along the way just by building a repore with him. I got multiple estimates myself for each phase of the work. I did not always go with the cheapest, I went with who felt the most reliable. That project was a total gut rehab and I was quite fortunate to only get one bad contractor, my roofer, but because I was onsite I was able to see he was not performing as well as he should and was able to stop him in his tracks and replace him. Had I not been there he would have completed the work, I would have been out 10k and had to hire someone to fix his work. It saved me 7500 of his bill and I used that to have it finished by someone competent.
I do not pretend to know more then any of these folks. You and I were both fortunate enough to find this wonderful site that offers a wealth of knowledge. I am to the point that I don't want to say BOO without asking them how loud I should say it lol... I am sure that will change once I have more experience but for now.... I LOVE THESE GUYS!
Ok I used to live in Richmond. Is this property in City proper, carytown, churchill, county? You have your plumber, electrician, roofer, carpenter, sheetrock (can often be done by carpenters crew), landscaping, foundation (if needed), siding, windows, HVAC, (the latter 2 are mostly salesman lol...cabinets and countertops etc. The plumber can do the install on the bathroom fixtures, hot water heater etc. I have contacts if the house needs siding in Richmond. Let me know if you will require that. I used about 10 total on my project. I did the demolition and the painting myself. I also did all the design work myself. Because I added a 2nd floor to the project I hired an architect to make sure I did it right and got my own permits from the city. I did not have to do that, but chose to so I could build a repore with the city licensing and inspectors staff. Building relationships will be very important, especially if you are keeping your work mainly in that area. I used to have my siding business in Richmond. I went quite well but I made sure that I was friends with anyone that could affect my project.
Sherry - the property is located in the North side of Richmond, I'm not from Richmond so I think that's what its called. Sounds like a lot of people to having working for you, how do you schedule everything with all of them to make things work.
Once you find out all of what you have to have done, you need to schedule it as if you were building a house. You don't want to put floors in before they do plumbing, you don't want to rewire the electric afterwards if you have to do new sheetrock... you need to make a plan/schedule of all the repairs that need to be done and take them in logical order. There are some items you can have multiple contractors doing their thing at the same time. i.e. the roofer can be working while demo is going on inside... the bathroom tile work can be done at the same time your kitchen cabinets are being installed etc. Just always make sure (esp. if hardwood work is done) that you do that last before any staging. You don't want contractors walking on your floors before they have properly dried or mucking them up after they are done.
As for the area, you have a mixed area there if it hasn't changed much. Mostly blue collar some white collar workers and families. But there are patches of lower income housing too so watch your neighborhood. A good way to tell is go by the property at night and on weekend nights. Also look at cars in the neighborhood... does somebody have a benz sitting in the driveway of a mediocre house?? If so you might have drug problems in the area.. Are there alot of people hanging out in the neighborhood at night etc. just things to look for when you are blessed enough to be buying in your own backyard. Also neighbors, do they take care of their houses? Are the lawns kept up etc. These are all good indicators of what you might be buying into. Never hurts to talk to the neighbors too and ask about the neighborhood or talk to a local real estate agent and find out about the neighborhood. As Greg mentioned too, check into the local real estate investor groups in your area. I know they have them up there and that should give you good local contacts. Hope this helps