Before I really dive into the waters I really feel as if I need to have a firm grasp on the construction aspect of this business. Unfortunately I have little to no experience in this field and I would really like to become a little more knowledgeable and gain some experience before I start a rehab project.
From all the stories I've heard of contractors overcharging for exorbitant amounts of money/stalling projects and draining money I feel as if the one thing I'm really lacking is knowledge in construction. Knowing how much to pay, what needs to be done in a rehab, how long each thing should take, etc. (Btw, I don't mean this post to sound as if all contractors are thieves, I know there are reputable and honest ones as well)
I was wondering how you all got started and if you could offer any advice! Thanks!
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
15y
I was actually a General Contractor before I was anything else, so it was a little easier for me, I guess. Having said that, almost every single trade can be broken down cost wise on a per sq ft basis. This can be done with drywall, paint, flooring, tile, stone, roofing, cabinets, etc. Plumbing is done on a per fixture basis, and electrical is done on a switch, outlet, circuit count.
You can contact both subcontractors and general contractors to get an idea of what they charge for these. A GC is going to put a premium on everything so expect to pay more for work they are involved in. Subs will usually be cheaper but then your time will come into play since you would be managing the project. If you are inexperienced, you may want to go with a GC at first.
You can either look around online or go to Home Depot/Lowe's to get an idea of what materials will cost you. Spend the time it takes to learn everything, and there is A LOT to learn. But don't let it discourage you.
For your first couple of projects a little common sense will go a long way. Look for projects that require minor, cosmetic details to get them back ready to sell. If you are walking around inside and the floors are bouncing, you probably want to stay away. Look for cracks (larger than hairline) in the foundation to see if there are issues there as well. Also get a home inspection before buying to make sure there isn't anything major you might be missing.
Property Management · Memphis, TN · Member since 2009 · 668 posts · 362 votes
15y
There was not a book for me when I started. I asked a ton of questions that only confused me more. When I bought my first property, it was experience that began my training in real estate.
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
15y
I was actually a General Contractor before I was anything else, so it was a little easier for me, I guess. Having said that, almost every single trade can be broken down cost wise on a per sq ft basis. This can be done with drywall, paint, flooring, tile, stone, roofing, cabinets, etc. Plumbing is done on a per fixture basis, and electrical is done on a switch, outlet, circuit count.
You can contact both subcontractors and general contractors to get an idea of what they charge for these. A GC is going to put a premium on everything so expect to pay more for work they are involved in. Subs will usually be cheaper but then your time will come into play since you would be managing the project. If you are inexperienced, you may want to go with a GC at first.
You can either look around online or go to Home Depot/Lowe's to get an idea of what materials will cost you. Spend the time it takes to learn everything, and there is A LOT to learn. But don't let it discourage you.
For your first couple of projects a little common sense will go a long way. Look for projects that require minor, cosmetic details to get them back ready to sell. If you are walking around inside and the floors are bouncing, you probably want to stay away. Look for cracks (larger than hairline) in the foundation to see if there are issues there as well. Also get a home inspection before buying to make sure there isn't anything major you might be missing.
Real Estate Consultant · Lansing, MI · Member since 2011 · 356 posts · 306 votes
15y
Your best bet is to talk to family/friends/co-workers and ask them who they have use in the past. Don't be afraid of this side of the business, as you just need a little experience. While most contractors are good people, you may not even need one. If you know that your house needs some plumbing work, call a few local plumbers to come out and give you a bid. Another good way would be to call a few local property managers. They should have a list of good people who do solid work at fair prices.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
15y
Agree with Brian. Many places are just trashed and can be cleaned up with lots of elbow grease and paint. Linolium and carpet works wonders as does landscaping. If you can jump in and do as much as you can yourself at first you will get a hands on feel for things. A good carpenter can be invaluable for the future
Don't know about your market but if need be try to be able to be in a position to rent if a sale isn't forthcoming.
Real Estate Investor · West Des Moines, IA · Member since 2009 · 55 posts · 21 votes
15y
Before I bought my first house (primary residence), I knew next to nothing about renovations and improvements. After several projects on my own house, I had a feel for the material costs of most things. Knowing how much materials cost will at least give you a base of knowledge.
I've always been told to double the material costs (for labor) and that's a ROUGH idea of what you'll pay a contractor. Obviously that's very approximate but it helped me while rehabbing my first property. After you get a couple under your belt, you'll have a much better idea of what things cost.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
15y
With no experience you should definitely get a home inspection by a LICENSED contractor. For your first deals, go with a cosmetic fixer needing cleaning, paint, new lighting fixtures, faucets, and appliances would probably be the extent of what you should try, (have flooring measured and installed by sub, and any gas appliances!) but... as with everything, you need to know what you know, and hire what you don't. Most important, don't invest more than what you can afford to lose! CHECK REFERENCES.
Best way to gain quick experience is to go on a construction site and offer to work for free or low wage. Let the contractor know you will soon be buying properties and you need to be familiar with constructions terms as you look at properties. Spending some weekends on a busy site would teach you a lot.
It might be better to breakdown what you want to learn into sections. For major renovations your have electrical, plumbing, insulation, roofing and foundation structure.
It might be wise to start with plumbing and electrical. You have different electrical phases based on your state code. pay attention to outlets locations and what kind of power output in each and why.
Plumbing is even more crucial as most of the bad job would be covered up. Look at the plumbing layout and ask why. Take a closer look at the inches of the pipes and ask why. Familiarize yourself with plumbing materials quality ratings and cost.Their are many ways to join a pipe, learn to notice the most professional look.
Look more closely at insulation materials and see the different quality standards. Next, you have bathroom and kitchen fixtures and that requires some basic knowledge about how long you want stuff to last.
Personally, i dislike major rehab because you're constantly dealing with unanticipated contingencies that would eat up your funds very quickly.
The above was what i learned managing the renovation of a 16 unit with partners. After that deal i learned how to pick contractors and what you need to include in any agreement, to ensure compliance. If you're financially liable for any delays, make the contractor responsible for past deadlines regardless of all factors.
Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
15y
I am still learning. I am fortunate that my son is a carpenter with sheetrock and flooring experience. We hope to build a business that will support us soon. I have dabbled with subs with no luck finding one that I want to keep. I have learned that I do not place enough value to work/jobs I sub out and calculate too low for what I can get it done for. It has cost me some time to DYI. But, I am gaining the experience that I want so to be able to at least talk about "how to" and maybe negotiate future projects.
I am sure I would have gone about it differently with out my son's experience.
Don