Analyzing a deal****

[Jaleen Anderson]

What is the best way to analyze repairs on a property, if you don't work with a contractor?

[Michael Hayworth]

Originally posted by @David Veikune:

BP member J Scott has a book called the book on flipping houses and you get his other book for free called the book on estimating rehab costs which sounds like the one you would want. Both combined cost $29. Might be better to find a good contractor in your area that can do quick estimates. 

 In an active market where Jaleel is, most good contractors are booked out several weeks. (I'm currently booking for January.) It's hard to work up enthusiasm for going and doing an estimate -which takes a good while to do properly - for an investor with an unknown track record. And because there are approximately 10 million newbie real estate investors out there (my estimate, others vary), contractors get calls several times a week from investors we have no knowledge of. They tend to fall into three categories:

1. Went to a guru seminar, got told how easy this is, ran out and overpaid for a house because they overestimated its ARV and underestimated reno costs. Have a construction budget that's not realistic. Somehow it's going to be the contractor's fault that $50K of reno won't fit in a $30K budget.

2. "Thinking" about buying a house. Want contractor to walk through it with them, create a reno budget (which, again, takes 3-5 hours to do properly  - even a "ballpark" takes a couple hours out of a day to drive out there, go through the house with you, and do a quick & dirty ballpark.). May or may not buy house. If they do buy house, may use your reno budget as a starting point to get some guy off Craigslist to do it cheaper.

3. Have no money, want to be a wholesaler, need someone to teach them how to do reno estimates. They'll pass your name on to the buyer (who probably already has his own contractor).

If a contractor will agree to run out and spend a few hours on a make-ready estimate for a new investor he's never met, that's actually a red flag about the contractor.

Start with the books. That's very good background. Find an investor group in your area where you can network with others. There'll probably be some contractors there. The OP is in an area with an active BiggerPockets group.

It's difficult, because we all had to start somewhere. But if you want a good contractor to invest any time in you, you have to prove yourself credible.