What to have, Walk-through with contractors

Question

I'm about to start calling contractors to see if I can get them to do a walk through of a potential deal I'm looking at doing.

is there anything I should have for the contract? Do I need to provide them with a scope of work or will they look through and give me a general cost for different aspects of the house?

Shawn Parsh · Answer

John,

You have got some good advice so far, but I thought I would add my input. First as a general rule try not to pay skilled labor prices for unskilled work. For example, my electrician, plumber, HVAC guys, well guys, and so on will not be doing task that my handymen can do. It may be easier to hire a general contractor to handle everything, but you will be paying them to call others to do the work. I call the professionals I need directly and skip the middle man. I will agree that this works for me because I have extensive experience rehabbing houses and feel comfortable overseeing the projects. If you have little or no experience than a General contractor may be a good choice.

A key to your future success will be your ability to build a reliable team. I have never paid a contractor to look at a planned project and give me an estimate. I routinely have my team members assess new projects before I close on the deal. For example, my electrician walked through a house I'm closing on today a few days ago to see what was needed to get the electric up to code. I do this for a few reasons. For example, I want to make sure I have a good idea of the costs and the time involved to address issues, and I want to give my contractor advance notice of the project and what will be needed.

Many investors buy a property and then start having people come to give estimates on what needs to be done. I generally have all my estimates done before I close on the property and then when I sign the closing documents my team starts the rehab that day. By doing so I get the jobs done faster.

The people I use are more than willing to look at potential investment properties for me (at no costs) because they know I am worth a lot of future money to them. For example, my mason showed up to look at a foreclosure property with foundation issues within two hours of my call. He knew that others were making offers on the same property and I had to act quick. I had to know what it would cost to fix the problem so I could make a good offer. I used the foundation issue to get a lower price, purchased the home and had the mason fix the foundation. In the end we both made money.

David Avery · Answer

Must have a specific scope of work.

That way you have a bid " Apples for Apples "

I  would have only labor bid.

You control products.

Don't fall for contractor that forces you to sing the contract.

If contractor pulls up in $60,000 truck and GQ clothes. His bid will be triple most.

Peter Mckernan · Answer

Yes, know what you want to do and do your research on if the contractors that you will be calling know how to do what you want to do. Some contractors can remodel a kitchen and put in flooring/paint, and some can build ground up. Know what you want the end result to be and then get 2-3 that have those skills to quote you on your job.

Jacob Sherman · Answer

Hey John ! Really depends on what type of project you're working on whether its a full gut or value add where you'll pick and choose what you're looking to upgrade or not . Generally you'll go through the project with the contractor

Michael Dumler · Answer

@John Currey, leaving it up to the contractor to tell you what needs to be done is a great way to get burned and lose money. Avoid this at all costs.

Others may disagree, but in my opinion, you need to have some level of rehab knowledge and understanding of costs before having a contractor walk a property. Moreover, maybe your market is different, but from my experience, most contractors won't walk a property until it's under contract or you're providing a flat fee for their time. "The Book on Estimating Rehab Costs" by J Scott is an insightful resource to help get started.

As noted above by Liam, you must provide the scope of work to the contractor. If this is your first deal, I'd recommend working with a licensed GC. Once you start to develop a system and have a general understanding of associated rehab items, you can then hire individual subcontractors to save on costs.

Angela Martinez · Answer

It's crucial to have a well-drafted contract that clearly outlines the scope of work, timelines, payment terms, and any other pertinent details. Provide a detailed scope of work to potential contractors, specifying the renovations and improvements you want for the house. This will help them give you a more accurate and tailored cost estimate for different aspects of the project. Having a comprehensive contract and clear communication upfront will contribute to a smoother and more successful fix and flip venture.

Liam Naughton · Answer

Hey John,

You'll want a rough scope of work in mind before you give them a call so you can let them know in advance what they'll be looking at. You may get some people off the bat who won't want to take on the project.

I'd also recommend having a timeline in mind for how quickly you want to get the project done and asking each contractor if they have other trades they have experience working with and like working with. If one contractor can lead you to another and they do good work together the overall outcome of your project is going to be smoother and higher quality. That being said, it might cost you a little more than subbing each trade out but you're likely to make up for that cost on the sale and the time you save by working within established relationships.

If there are any major issues with the project you're looking to take on you'll want to take pictures if you can so you can send them in advance so any contractors can bring the necessary tools to assess the scope of work.

Take a quick look at the materials you're going to need for the site either on Home Depot or Lowes or something similar so that you know roughly what the cost of materials is going to be. That way you can be sure that they're not overcharging you. On that note, get multiple bids and don't go with anyone trying to force a quick decision.

Good luck, hope it works out for ya!

What to have, Walk-through with contractors

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