Buying sight unseen

[Andres Cardenas]

Hello everyone, I have a two part question.

1. If you buy a house sight unseen from a wholesaler are you then getting a full inspection or do you just go in and start fixing what you or your contractor think it needs?

2. When you’re about to start a rehab generally speaking what’s the first thing you usually do? Is it best to take care of big ticket items first for example a roof or does it even matter where you start?

I know both question depend on a lot of different factors, so thank you in advance for taking the time to help out !

[Jason Richards]

Andres,

You nailed it.  Both questions are pretty open ended.  The best I can do for you is to offer up what hopefully amounts to a useful nugget or two of information to build upon in your business.  

First off, (and I hope it goes without saying) purchasing a property site unseen is risky.  Books could be written - probably are written about the myriad of things that could go wrong with that.  We've seen it done.  It can work, but I think it should be avoided if at all possible.  If not possible, make sure someone you trust in the deal is giving you a reasonable idea of what the condition and scope of repairs are.  I'll leave it at that.  

That aside, I think the real question is "do I need an inspection"?  The answer depends on a few variables.  Are we talking about an experienced investor and experienced contractor that have done a decent volume of remodels in the past?  If so, the real benefit of an inspection would be to document the scope of work and perhaps use it as a tool to renegotiate the price with the seller.  When working with a wholesaler, a formal inspection probably won't carry much more weight than your or your contractor's own opinion on the current condition and required work.  

Order of work for a rehab can vary from project to project.  For items that require permitting, such as new roof, new plumbing, new electrical panel, etc., line up your trades to get you bids and start the permitting process as early on as possible to ensure you don't have any unnecessary delays.  Big ticket' or small items should be prioritized in a manner that works with contractor/trade availability and the natural progression of the project. There are, of course, some sequential components to every project. For example, framing new rooms is always done before plumbing, mechanical and electrical work if and when each applies to the room(s) you are creating. Drywall work generally follows that, then texture, then paint, and so on.  In general though, you do what you can as soon as you can.  Time is of the essence - especially if your project is financed. The interest and carrying costs can really eat into your profits if you're not effectively planning out your project and managing the workflow efficiently.