Investor · Rocklin, CA · Member since 2016 · 83 posts · 77 votes
Curious how you guys go about finding a contractor that will walk through a property with you and give an estimate on repairs ? It appears to be a deal if the rehab isn't too crazy, but want to be sure before buying. Ive reached out to some local Sacramento home inspectors and they want nothing to do with that, so how do I find a contractor that will do this ? Craigslist ?
Contractor · Sacramento, CA · Member since 2015 · 131 posts · 55 votes
10y
@Abdul Azeez the two situations are a bit different. A real estate agent has a contract with a seller to get paid for their services, they perform little to no work dedicated to one specific property prior to signing of the contract. In a real estate transaction there is a uniform profit/commission for a real estate agent across the board that is recognized by the industry as a whole, this doesn't exist for contractors. Therefore as a smart owner/investor it wouldn't be smart to select a contractor without receiving multiple bids (because pricing can vary widely). Although many times contractors with advertise "free estimates" as a marketing tactic that doesn't mean every contractor should be expected to provide bids for free. Like @Matthew Paul said an accurate/thorough estimate takes several hours to put together, and many times these bids do not result in getting the job. Even when contractors do advertise free estimates you can be assured these hours will be included in the bid, but if they don't get the job they get nothing for their efforts. Just to add to this, the most accurate bids will come from the best contractors, these contractors most likely have a full plate of work currently and into the future. If you expect to pull them away from a project they are actually getting paid to work on it's probably going to cost you.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
10y
Don't assume a contractor is going to come out and bid a project for free especially if this home isn't yet yours. Their time is valuable and for them to drive, meet you, discuss your options for repairs, and drive back to their next job can take 1-2 hours in some cases. Make friends with a buddy who does repair work and is interested in flipping and bring that buddy along to give an idea of repairs needed and such.
@ Matthew paul - how detailed are we talking about? I am just trying to ballpark an estimate so I can factor into my offer price.
It should be very detailed , if not , the estimate will be like this ................. Fix house somewhere between $ 500 and $ 50, 000. Ballpark estimates .....if I shoot low the customer gets pissed because they need to spend more , all they are is a guess
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
10y
It needs to be pretty detailed to be accurate. What happens if the house is at $100,000. You bring in the contractor, he says, "your looking at $100,000 in rehab". The ARV is $225,000. Now you have to make a lower offer. If you lose the house and find out someone got the work done for $60,000, would you be unhappy that there was a $40,000 discrepancy between the off the cuff budget you got and the actual costs? For the contractor to give you a fairly accurate estimate/budget, he will need to crunch some numbers. Being a GC he might even have to reach out to a few subs to get ideas of cost on individual scopes. This will all take him time and effort, prior to you even owning the house. He is not bidding to work for you (you haven't gotten there yet) he is bidding for you to maybe get a place, that he then had to come out and bid for you, against other contractors, in an effort to work for you.
In a perfect investor world, contractors would do this, but in the real world, most GCs see this as a long shot to get the work, and will either expect compensation or will not even want to be involved.
Investor · Auburn, CA · Member since 2016 · 57 posts · 18 votes
10y
In the Tools tab, click on FilePlace. Under Templates there are some good worksheets. Check out the Sample Detailed Estimate Report. It details a home in Kansas so you would have to adjust for costs where you are, but it lays out everything in detail.
Investor · Plano, TX · Member since 2014 · 145 posts · 102 votes
10y
This is a great thread.
You should have your team in place before you go searching for properties. If you don't know the numbers then you need someone you can trust to give you accurate numbers. You also need them to be available to do the work.
Getting a price from some random contractor doesn't matter. If he can't do the work, the price is meaningless because virtually no other contractor can offer the exact same price.
So, find a great contractor and offer to pay for his time. At least 90% of the houses you look at won't be good deals. Are you going to drag this guy around to 10 houses before you finally close on one? At least pay for his time.
Investor · Las Vegas. Jacksonville, Bay Area Ca, Nv, Ca, Fl · Member since 2015 · 511 posts · 220 votes
10y
I see a lot of post in this thread from the receivers of the contractors service but very few from a Lic G.C in the N. California market. I have been contracting and in the building /remodel business in N. Ca for the last 30yrs. When I first started out I did free estimates for buyers based on the promise of work after they close. Although some of the work did materialized, most of the estimates were used to negotiate the price down or asking for a credit from the seller. I thought this was a good business practice to do free estimate and hope a one would turn into a work contract. But after years of this practice and countless hours of free work, I came to the conclusion that if someone is profiting off of my time it takes to put together a complete and itemized estimate then I should be compensated also. Most investors will not pay for this service and expect a free estimate which is fair because they may have multiple properties they are weeding out for a purchase. I have also see numerous times that a buyer uses my estimate for negotiating and then give the work to a handyman or take a cheaper route. Now one of my first questions when I answer a call from a buyer is " are you in escrow or shopping around ". To be honest I still do free estimates for a known R.E Agent's because of the different avenues of work request they bring. Just a little insight from a G.C. Oh by the way, you are much better off finding a contractor working at a site close by the subject property or go to your nearest Home Improvement Store between 6-8am and start up a conversation with a contractor loading his "marked" truck with materials. This way you've established a connection and the contractor will be more agreeing to stop by and give you a free estimate or at lease you will have a few business cards.