Finding a contractor and construction management for a first BRRRR?

Question

I already own a couple of rental properties, and I'd like my next purchase to be a BRRRR. The problem is that I'm a little intimidated by the renovation side of the process.

I don't have a contractor yet, and I'm not even sure what the normal process is. If I find one, is it common to pay them to walk a property with me before I buy it? Are good contractors generally willing to do that?

I'm also probably more paranoid than the average investor. I've heard plenty of stories about contractors taking much longer than expected or putting your project on the back burner in favor of bigger jobs if you don't already have a relationship with them. I guess what I'm really looking for is a practical, beginner-friendly guide to managing your first renovation. How do you find/vet a contractor and what does construction management actually look like for someone doing their first BRRRR?

I think I have a decent understanding of the difference between renovations that increase rent and renovations that increase appraisal value, but I'd also love to hear what you all look for when evaluating a BRRRR. What types of projects have the highest ROI? What upgrades have consistently worked well for you? And are there upgrades that you absolutely avoid because the ROI is bad?

For my first BRRRR, I'm leaning toward mostly cosmetic renovations to keep things simple, but I'm open to taking on bigger projects if the opportunity makes sense.

Andrew Postell · Answer

@Christopher Plummer great name.  Finding a contractor is a super important question and it doesn't just apply to contractors.  How do you know that a lender is any good?  An electrician?  A title company?  Anything?  Even if they do have 20 years experience...how do you know really?  And while nothing is foolproof the most consistent method of finding good vendors is relying on OTHER real estate investors that have worked with those vendors.  This is why we network with other real estate investors - kind of like what you are doing here!

So, let's try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. The priority is consistent recommendations from active investors.  Oh, eventbrite too. But post locally for this. That’s the best bet.

Also, no rehab items have a good "ROI".  I think the one with the most return is a garage door.  But it doesn't mean that we can just skip them.  If there are repairs that need to be done and we don't get any return on them (which many of them have $0 return) that means that we need to lower our offer.  Our offer must contain room enough to fit in the rehab items AND still include the amount of equity we need.

Hope all of that makes sense.

Eduardo Cavasotti · Answer

I would pay a contractor to walk it before close, but only after you have a written scope and photos. Your first BRRRR should have 2 numbers before the offer: rent ready budget and refinance ready budget, because they are not the same job. Avoid anything where the budget depends on the contractor finding the problem after you own it. Cosmetic is fine for deal one if the spread still clears your $150 per month cashflow floor after real reserves.

Eduardo Cavasotti · Answer

Anytime. On deal one, keep the rehab boring and make the offer carry every ugly line item before you own it.

Christopher Plummer · Answer

Hey Andrew, thanks so much for the answer! I honestly feel kind of dumb for not thinking to ask other local investors sooner haha. I will definitely check out some meetups, I appreciate the thoughtful response

Christopher Plummer · Answer

Thank you Eduardo for the insight!

Finding a contractor and construction management for a first BRRRR?

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