Order of Operations

[Jewel B.]

One thing I'm currently struggling with is the order of operations.

• 1. Browse the market (MLS, Craigslist, Facebook marketplace) for potential properties, keep an eye and ear out for off-market (network)
• 2. Pull aside any properties that seem to have potential / fit buy box (2-4 unit for FHA househack and motivated sellers/distressed properties to HML BRRRR)
• 3. Evaluate the comps for ARV and potential rents
• 4. Schedule showings with realtor
• 5. Have contractors walk the property and bid / estimate rehab costs / quote
• 6. Submit an offer based on the ARV*70%-rehab costs rule of thumb (which accounts for the equity that will be left in the property after refi)
• 7. Speak with HML and see what they need from me
• 8. Offer rejected, accepted, negotiated, or ignored
• 8a. If rejected or ignored with no other buyer, follow up every week / regularly
• 8b. If another offer is accepted, monitor listing until sold to see if it goes back on market
• 8c. If accepted or successfully negotiated, due diligence (with possible negotiations), then close (or back out based on contingencies / unwillingness to negotiate)

Rehab/Contractors: Bid first then offer or offer first (based on some metric, such as % ARV) w/ contingency (such as inspection or approval of business partner) then bid and negotiate?

HML: Should I speaking to the HML at a different point in the process? Before and after offering?

I would love to hear your thoughts!

Thanks

[Jewel B.]

Quote from @Austen Mueller:

Only thing I would say is Speak with a hard money lender first so you have an idea of what you can afford/ what they will loan on. You will also need a pre-approval for your offer. Its your first deal so the terms wont be as good. You may want to shop around. There are many lenders out there, I suggest speaking with a few of them. Your agent should be able to get you in touch with a decent lender.  Also you should have a contractor lined up or at least a couple your deciding between before you go out on showings. Make sure you have seen they're work and have good reviews. Speaking with past clients is best. 

Have the contractor meet you during the first showing so you dont need to schedule two. You wont be able to make an educated offer without their quote. Your realtor should be able to provide you with ARV and rental comps so you can run your numbers and work with your contractor to figure out where your offer needs to come in at.

 Thank you for the feedback, Austen. Yes, it did occur to me after posting that I would need to speak to lenders beforehand, in order to obtain pre-approval and letter to present to sellers. Great point. It also occurred to me to speak with refi lenders in advance as well. I have several recommended and seemingly professional and reputable HMLs (and refi options) in mind. I understand that my terms the first go around especially, as well as the first few in general, will not be the best. I definitely intend to shop around, as I want to get fair rates, fees, and terms, but I do accept that the first is the worst, as the saying goes. Getting the experience and the momentum is key for me regardless. I have a contractor lined up I know personally and have seen his work, as well as a few others on my list. My intention is to have 3 of everyone on my list. GCs and subs.