BRRR Suggestions & Questions

6 Replies

Good morning all, 

How is everyone approaching the rehabbing of a property? How are you getting your contractors to price with accuracy? Are you hiring an architect? How much is that usually? 

Additionally, are there any GC suggestions in the Philadelphia area? 

I would love to pre-qualify some general contractors and architects? 

I would appreciate the input.

@Luis Marcelino I manage multimillion dollar capital construction projects, so using an architect, engineer and professional construction cost estimator is standard. For my own reno projects, it took years to learn accurate construction costs and assemble a scope of work. I use a database now and can routinely get to within 5% of actual costs on about any reno project...but again, it takes time.

One thought is to interview multiple contractors and get bids. 3-5 bids should show you an appropriate range for the work. I would not automatically select the lowest, but seek value and craftsmanship. I would also be sure to ask for proof of insurance or a bond...referrals, images of past projects, etc. Remember, you are the boss and this is your project and your money. A good contractor will understand this and have everything you need to make a decision to proceed. 

One last thought would be to use a virtual assistant to call and vet contractors...I use UpWork, but there are sever VA firms that could do it...pay $50 and come home to a nice tidy spreadsheet with contractors information awaiting your approval.

Originally posted by @Brandon Sturgill :

@Luis Marcelino I manage multimillion dollar capital construction projects, so using an architect, engineer and professional construction cost estimator is standard. For my own reno projects, it took years to learn accurate construction costs and assemble a scope of work. I use a database now and can routinely get to within 5% of actual costs on about any reno project...but again, it takes time.

One thought is to interview multiple contractors and get bids. 3-5 bids should show you an appropriate range for the work. I would not automatically select the lowest, but seek value and craftsmanship. I would also be sure to ask for proof of insurance or a bond...referrals, images of past projects, etc. Remember, you are the boss and this is your project and your money. A good contractor will understand this and have everything you need to make a decision to proceed. 

One last thought would be to use a virtual assistant to call and vet contractors...I use UpWork, but there are sever VA firms that could do it...pay $50 and come home to a nice tidy spreadsheet with contractors information awaiting your approval.

@Brandon Sturgill, Thank you for the quick advise. I am an architect by background so I understand the importance of it, But from a 2-4 unit rehab, I can't really speak. I am not sure if it is something that contractors can estimate based on scope, material selection and others. 

Do they really need a fully integrated set of drawings for a 1200 SF rehab? Bearing walls and other systems to remain?

Hi @Luis Marcelino

Welcome to BP!

The main item is sure up your refinance monies with a bank based on loan amounts, your qualifications & etc.

Depending on the amount of rehab depends on your power team above.

Everyone gets checked out.

Would suggest attending some reliable investment groups with good educational subjects not ones selling there packages.

Diversified Investors Group and HAPCO are the most reliable in Philadelphia to attend.

Let me know if you have any questions.

Regards

Joe

@Luis Marcelino :

Basically what @Brandon Sturgill  said. 

As you probably know, there is a difference between a contractor who is a good tradesman versus a contractor who is a good project manager/estimator. Both types of contractors have their uses/merits. 

For residential rehabs, you probably don't need to hire an architect to run a successful job (unless there is a good reason to). In our case, we provide most of the materials, give some lose drawings/specifications, and let the contractors do what they need to do. Granted, I think one reason we can do this is that our investment group has an extensive construction background --- both as contractors and material supplier. And since we refer a lot of the work to these smaller contractors, we can figure out a solution for any issues or additional scope of work that pop up.

I would try to find a good GC that already worked on several projects with a fellow investor that you trust. In my experience, most small GCs and contractors are bad at estimating. So you may have to guide them through that process. If you don't know how, might make sense to partner up with another investor that has experience doing it. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Luis Marcelino Since you are an architect, it may be difficult to "dumb down" to a general residential renovation project, but you have an inherently strong skill set for this type of work. For example, I'm working with a design firm and the designer is busting a contractors balls on submittal after submittal and memo after memo....citing details from a 300 pg. spec book, and requesting timely submissions of the smallest details, paint draw downs, casework, laminate finishes, flooring...you name it. And I'm loving it. The project will be perfect or the designers head will explode...and I'm paying the contractor with her running point on construction admin, so he'll suffer until it's perfect.

The point is, if you can apply your complex skillset to a parallel universe, you'll do well. 

And yes, a decent contractor can give you an accurate estimate with a single walk-thru...they don't need drawings and all the formality...though some degree of accountability is needed. A good GC will do all this and more:

@Brandon Sturgill,

Thank you so much for your detailed and valuable input. I appreciate the information and the illustration.

I’m trying to do things the right way. I have read too many posts, articles, etc about things going South for no reason. I’m very thankful for your input.

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