When contractors won’t come out

Real Estate Investor · Des Moines, IA · Member since 2016 · 922 posts · 533 votes

6y

This may not be what you want to hear, but if you feel dependent on a contractor to effectively cost out a fixer upper, you may be dependent on them in a way that you don't want throughout the project. I'd suggest figuring out how to get into some work yourself, even if it means taking on something less appealing initially as a project.

For that contractor (that's any good) they don't want the risk that they're wasting their time going out to walk a site that may or may not close, or that you may or may not actually use them on...

Most that are any good aren't contractors anymore, by the way. The one's that are good figure out they can do much better as an owner, and have the integrity to build credit and not be creepy.

2 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@Jim Goebel thank you. There is plenty of other work on the interior for us to do ourselves, and we have some help with grading. I’m definitely open to the idea of smaller projects to begin with. You’re spot on with why contractors won’t want to come out, I’ve been told directly that they don’t like doing bids for investors because they rarely get the work.

1 Reply

Ahmed Porter

Contractor · washington, Washington D.C. · Member since 2011 · 204 posts · 64 votes

6y

this time of season we are busy offer to pay them for the estimate they will be out like 125 to 150 for the estimate.Also, try to create a relationship with a few send them a job from time to time and when its time to for your job you will get more prefrontal treatment than someone that just calling

6 Reply

Tim Johnson

Lender · Grand Rapids, MI · Member since 2018 · 703 posts · 446 votes

6y

Find an investor friendly contractor and pay him $500 to come over and look at the job. Build a partnership with him and ask if you can see how to estimate from him so you can gain the knowledge. Tell him you plan to do lots of jobs so you want to learn how to do estimates. You will gain the knowledge so on future projects you don't have to have a contractor hold your hand.

Build your team

2 Reply

Danielle Wolter

Rental Property Investor · San Diego, CA · Member since 2019 · 290 posts · 253 votes

6y

@Maxine Kunimura Like a few others have said, offer to pay them for a quote. If it was me, I wouldn't want to go out and give someone a quote when #1 I don't NEED the work and #2 I'm not even sure I would get the job. I will always be willing to pay a contractor a couple hundred to come give me a quote, especially on a large project where I'm not confident ballparking it myself.

3 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

Thanks everyone. It had crossed my mind to offer to pay for a detailed quote, I will definitely pursue that route now.

4 Reply

Charlie John

Investor · Twin Cities, MN · Member since 2015 · 130 posts · 111 votes

6y

If contractors have work for months out, many of them don’t even pick up or call back and it can be very frustrating if you want to get stuff done. It sucks actually so I hear your frustration!

Another issue is that you don’t own the house yet. I would only go to look at a houses someone didn’t own yet if it was a close friend or family member. I like the idea of offering a contractor a few hundred dollars just to come meet you on site and give you an honest assessment. That may help you get someone out there.

A 210 offer on a 365 retail listed house?? Good luck. And the sellers know without out a doubt how much work it probably needs, but they are going to stay patient with the realtor shooting for 350-365.

2 Reply

Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

6y

Hi @Maxine Kunimura

Good luck on your project.

I will agree that paying a contractor will resolve your current problem. However I also feel that you are paying money on something that will never work.

Think if I was the listing agent, we agreed on listing at $365,000. an offer came in at $210,000. If my client even hinted at entertaining it, I would say "Whoa, wait up, at least give me a price drop to $325 or $299 before even considering taking that". I of course work for them and I want them to get as much as they can and a $145,000 just take it wouldn't be my first choice. If it's only worth 210 then throw the offer, but I wouldn't spend a whole lot of time trying to get quotes and sending people out. If I felt it was worth somewhere close to asking or at least in the same neighborhood I might pay for some estimates but 2 weeks and a 30% drop is hard for me to spend money on.

3 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@Mike Cumbie @Charlie John

Thank you for the insight.

I was running into a lot of that - many contractors aren’t even answering. Which I understand, getting the ball rolling is always the hardest.

I don’t necessarily expect them to accept the offer, especially without negotiating first. I figure I should just get on with making offers in general. I’ve always heard on BP that investors typically only get a small percentage of their offers accepted.

I was also motivated from one of the latest podcasts where an investor offered $1M on a $2M deal and it was accepted right away. Definitely not the norm, I know.

The home is in extremely rough shape. Mildew and urine smells throughout, water damage throughout, list goes on. It will be a lengthy rehab if it happens, but we’ll see!

0 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

I should also say, it’s not an actual mansion. That’s what my oldest called it when we looked at the house, hence the nickname :)

0 Reply

Shawn Coverdell

Investor · Clatskanie, OR · Member since 2014 · 212 posts · 233 votes

6y

I don't want to sound mean but this is your money you are investing and this needs to be said. If you are dependent on contractors to make this deal work, I would pass on it. You need to lean to do repairs yourself at least for the first few or you may very well get crushed. I'm sorry, but TV has really mislead a lot of people into flipping. they try one and never do it again. YouTube can be a treat source for many repairs. Get a contractor license and hire people. Learn the secret to Fire, fire, fire, fire, Keep and I will see you in Mexico.

Shawn Coverdell

Homes in the Hood

1 Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

6y

Originally posted by @Maxine Kunimura:

@Mike Cumbie @Charlie John

Thank you for the insight.

I was running into a lot of that - many contractors aren’t even answering. Which I understand, getting the ball rolling is always the hardest.

I don’t necessarily expect them to accept the offer, especially without negotiating first. I figure I should just get on with making offers in general. I’ve always heard on BP that investors typically only get a small percentage of their offers accepted.

I was also motivated from one of the latest podcasts where an investor offered $1M on a $2M deal and it was accepted right away. Definitely not the norm, I know.

The home is in extremely rough shape. Mildew and urine smells throughout, water damage throughout, list goes on. It will be a lengthy rehab if it happens, but we’ll see!

You're kind of mixing and matching strategies here.

Strategy 1) Writing a zillion super lowball offers and hoping some spaghetti sticks to the wall can work. You just need to find some noob Realtor who thinks that writing offers that will not get accepted is the highest and best use of their time - they exist!

Strategy 2) Paying GCs to come out and bid it, to convince the seller to take your super low offer based on that, can also work. You just need to find some noob GC that thinks $500 to bid a job is the highest and best use of their time - they exist!

Trying to mix those two, all you're doing is wasting your time and paying GCs for no reason.

#1 is for MLS properties.

#2 is for off-market properties where your marketing/sales budget/efforts is what put you in conversation with the owner, who is ONLY talking to you, and it NOT on the MLS. 19 times in 20, when this crosses my desk, the investor has a decade or more of professional full time marketing/sales experience under their belts.

Trying to bring the #2 drama to a #1 property is just going to get your correspondence thrown in the trash.

3 Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

6y

#2 above, here in the East Bay (Oakland, etc), is STRONGLY also correlated with investors who are professional general contractors, salespersons, or, real estate agents, with a decade or more under their belt. Correlation isn't causation, bla bla bla, but correlation is certainly correlation.

1 Reply

Account Closed

Rental Property Investor · North Conway, NH · Member since 2016 · 69 posts · 16 votes

6y

You're most likely going to need to pay for quotes. Investors have a notorious reputation amount contractors because they often have unrealistic expectations. What are the chances that your deal is going to go through and their bid is going to be accepted?

1 Reply

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

6y

Originally posted by @Maxine Kunimura:

Advice needed on my ‘Smelly Mansion’ please!

I’m having a hard time finding contractors willing to come out and give quotes this late in the season. I’m a new investor and I’m just beginning to work on building these relationships. I’m currently looking at a house as a live-in flip while renting the lower level (with my back up plan being a regular flip or multi rental).

It's listed for $365k but my offer will be closer to $210k due to the extensive repairs. I wanted to include add'l documents/quotes with my offer, that illustrate the cost of these major repairs. ARV would be $490k (conservative estimate, may be closer to $540k). Sellers have already moved, lots of ‘junk' still in home, and it hasn't been taken care of at all. On the MLS for 2 weeks before they dropped $15k from listing price.

What are some alternatives I can use to illustrate to the sellers the extent of the repair cost? Specifically, roofing, siding, gutters, and grading. Grading may be more complicated because we’re unsure if the foundation has the water proofing on it.

I don’t have the experience (yet) to estimate these in my head. I was thinking of writing a letter that details all the major concerns and then moving on and not letting this become a time suck before even having it under contract.

Any and all advice appreciated. Thank you!

You need to pay the contractors to come out. Contractors aren't going to burn hours of their time for free for you to see if you want to buy the house or not. Any contractor worth his salt has a pipeline of paying jobs and knows that the odds of you getting the offer accepted and then hiring said contractor are very low. It'd be like a car salesman spending time trying to sell cars to a bunch of 4th graders because eventually they will all turn 16.

2 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@Chris Mason

Outlining the 2 strategies has cleared this up a lot - thank you! I’ll readjust my strategy.

This is my first intentional REI ‘deal' and it's definitely a bit of work to sort out all the info I've absorbed and put it into play correctly.

1 Reply

Mark S.

Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes

6y

@Maxine Kunimura message me. I may be able to make a few suggestions that will help.

1 Reply

Jeshua Patrick

Rental Property Investor · Charlotte, NC · Member since 2017 · 298 posts · 232 votes

6y

@Maxine Kunimura I learned the lesson you are learning earlier this year. I found a 2-story house with a partially finished basement apartment that had a significant amount of deferred maintenance. ARV was around $350k. They were asking $185k but the property needed about $150k to get back up to code. I had pre-approval for $250k with rehab and probably could have gotten up to $300k. I was required by the bank to have a GC quote repairs and was only able to get 2 to even come out and one of those was my agent because I didn't own the property. I now know why "cash" (hard or private money) is required to do rehabs. GC's worth their salt won't waste their time quoting jobs you can just walk away from if the numbers don't make sense.

1 Reply

BOB CRANEY

HIGHLAND, MD · Member since 2011 · 160 posts · 141 votes

6y

If you have no rehabbing experience then a big rehab job may not be the best starting point for you, to many variables that you dont understand yet. If you want a chance at success, then think of this business as crawl, walk, run progression. Start with a paint and carpet rehab that is an easy base hit. Next do a light rehab job that may include a new kitchen or bathroom. Next step up to a rehab that has some more complicated heavy work that will scare away most retail type buyers.You will find that there are a lot of properties out there that will not qualitfy for conventional or FHA type financing and can only be sold to investors. These are the properties that will be the ones you are looking for because the pool of potential buyers will be much smaller and only investors. One of the best places to find contractors is at material supplies houses where contractors buy their materials. Go there and as for referrals for a decent company that buys there often and has a decent reputation. You are a newbie and you will not get the best pricing on things because you will need your hand held more than an investor who has done several rehabs and is easier to deal with in the eyes of a contractor. Educate yourself on the contracting side of rehabbing so you can talk the talk and not sound like such a newbie.

3 Reply

Dustin P.

Realtor · Tempe, AZ · Member since 2017 · 541 posts · 442 votes

6y

@Maxine Kunimura Send the offer first and see if they would even entertain it before wasting the time getting bids. Maybe they'll meet in the middle somewhere.

Also, how did you come up with the $210k offer price if you don't even know how much work it needs? What's the ARV on the house? Did you just throw a number out there?

1 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@BOB CRANEY

I’ve done work on my current home, but really like that method of slowly stepping it up.

0 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@Dustin P.

I know most of the work it will need, but not the exact prices. I had a family friend (contractor of a few decades) walk through it with me. He had estimates in his head as far as rehab, but some areas were outside his specialty. I also got to that number based on the holding costs and length of time the house would be under construction.

0 Reply

Dustin P.

Realtor · Tempe, AZ · Member since 2017 · 541 posts · 442 votes

6y

@Maxine Kunimura

Gotcha. I'll echo what others have said in that I would not waste the time/money trying to get a contractor out there for an offer that likely will not be entertained.

Put yourself a rehab sheet together and work on estimating rehab items yourself. You can always call individual sub-contractors (Roofers, electricians, tile workers, cabinet guys, countertop guys, painters, landscapers, HVAC techs, etc) and just ask over the phone for at least a ball park estimate of what the costs are. A lot of contractors are hesitant to give numbers that they will be held to but ranges they can usually cover. For example, a tile worker may lay tile for $2.00 to $3.00 per square foot for floor tile, maybe $15.00 to $20.00 per square foot for shower tile. You can estimate the cost to tile a shower by just doing the math and then adding in material cost. Then if you plan on paying a GC just add his markup (May be 15% to 30% depending on your market and the GC and how busy they are).

This isn't a knock on you but I think in general a low of newer investors expect everything to be laid out in front of them and with a lot of the markets being red hot right now that's just not how it works. You'll be trying to run your numbers when a red hot deal hits the MLS while a more experienced investor will be at the house already, estimating rehab costs and filling out his offer. The more prepared you are the better you'll be able to jump on good deals!

2 Reply

Maxine Kunimura

OP

Eagan, MN · Member since 2018 · 32 posts · 17 votes

6y

@Dustin P.

That’s great advice on the rehab sheet! And I think you’re spot on, the best deals will be gone if I can’t move quickly. Ballpark estimates will be really helpful.

0 Reply

Lynnette E.

Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes

6y

hmmm, you need the contractors to do the work, but you can not even get one to give a bid. Should you actually buy the house, how will you get one to DO the work for you? It would seem to me that your area has a shortage of contractors/too much work right now and it will be difficult to hire a decent contractor to work on a schedule.

So it may be better to look at houses where there is not a shortage of workers to fix the things that need fixin' or that you can do the fixin' yourself.

Other thing, most sellers will not believe and care about a list of 'I want to improve' the house and you the seller should accommodate my upgrades by lowering your price. They may consider things that an inspector identifies, maybe, if they are not obvious, in changing their price. And many inspectors can give price estimates for repairs that are needed.

I think that next, with your strategy, you will find that there is a shortage of realtors who will write out offers that are ridiculously low. BTW,
I have sold 6 houses in the past 3 years. I would not even respond to an offer more than ten percent below listing price on MLS listed properties. If you are wanting to negotiate the price, you may not want to start with insulting the seller with a lowball price and a list of improvements you want to do.

1 Reply

When contractors won’t come out - need quotes

When contractors won’t come out - need quotes

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