General Contractor Recommendations

[Renee Stark]

Hello! My husband and I are newbie real estate investors and looking to buy and hold in the Augusta area (although we live in Las Vegas). We are planning to use a little cash savings as well as our 90k HELOC to BRRR a property. In fact, we have one in particular in mind that our realtor gave us a tour of last weekend (flew out there for a quick trip). We have met with one contractor already, but are looking for referrals for any other reliable general contractors in the area. We want to get a few bids on the property if we can. Having to manage this renovation from afar, we clearly need somebody reliable, efficient and honest (although we are looking into hiring a third-party project manager who is local and can serve as our representative). Any recommendations are greatly appreciated!

[Jim K.]

@Renee Stark

Your first investment is going to be a BRRRR property about eight states away from you. As far as a reliable team in place goes, you have a realtor, you're working on a contractor (but you plan on getting several bids), and you suspect you want to hire a property manager in Georgia. I can immediately think of four problems with the plan.

1. You mention nothing about your personal understanding of the renovation process.
2. You offer no details of the property itself.
3. Your renovation budget is maybe around $90K of your your retirement savings. What you're basing this figure on is unclear.
4. You make no mention of perhaps the most important problem with your plan from a contracting standpoint...today is August 7.

I'm sorry, Renee, it really looks like you're about to get screwed. If you don't, it will be close to a miracle, and then you'll just take the wrong things you will have mislearned from an abnormal result to your next project and get screwed there.

Long-distance renovation-for-profit is very hard. Doing it hands-off and entrusting the management to a general contractor with additional oversight by a property manager is even more difficult, especially when you don't have a long-term relationship with any of the people doing the work, with years of built-up trust and respect between you. A lot of that trust and respect comes from whether or not you actually know something about these people and what they do. I have to say that given what you've written, it really seems likely that you don't, especially given the very big detail that you're overlooking in this whole discussion.

It's August 7th, and the property is in Georgia. The best people for this work have been booked solid since the middle of March. Any local GC who has time to spare to pick up a major project like this right now will be at best highly questionable. Any subs the GC finds with enough free time to handle the work will be even more questionable. Could it go right? Oh, sure. But that's a low-low-probability outcome.

Yes, I understand that you have to learn somewhere. And you will probably lose money going through the learning curve (as an investor, I was no exception whatsoever to this). But starting out as investors in residential renovation this way, with the stakes this high and so many chances for things to go wrong, it just can't be your best option. I think there are better ways.

Whatever you choose to do, good luck to you.