When during a BRRRR should a contractor give me an estimate?

Question

Good morning guys! I am from Long Island, NY, and I am looking into getting my first real estate property out of state, with a potential BRRRR. My question is if I find a property that seems enticing via pictures, agent opinion, etc for a BRRRR, when should I have a contractor see it to give their opinion on the condition and estimate?

From what I have seen so far, properties fly off the market in a few days and I feel I would be missing out on a deal to send a contractor over to only then put an offer in?

Should I put an offer in, and once it's approved, send a contractor out to see if the numbers make sense?

Thanks!

Brandon Baker · Answer

@Michael Mackney, I do exactly what @Michael Dumler mentioned. I have my real estate agent do videos, and verbally point out everything she she's wrong with the property. If you are good at estimating costs,  you'll get close to the rehab budget. With that being said, people miss stuff all the time. I had to replace a drive way, AC units, rebuild exterior walls, all because the video's just don't show everything and real estate agents aren't contractors and won't see everything. It's a learning experience for sure. So, here's my suggestion, get your agent to do videos as quickly as possible, estimate your rehab, add 10% contingency, and if you get under contract get an inspection asap.

Michael Dumler · Answer

@Michael Mackney you're correct, anything remotely close to an on-market deal will be under contract within 3-4 days, hence, time is of the essence, especially given the fact that you're out of state. I would advise having your real estate agent scope the property and provide photos and videos for you to assess. As someone has mentioned, the concept of trying to get your GC out to the property before submitting an offer, in theory, sounds great but realistically given the current market conditions it is highly unlikely. While the practice is difficult out of state, I would recommend that you exercise running your numbers as accurately as possible before submitting an offer. If you go under contract, then have your GC or several for that matter view the property during due diligence, and have them provide you with quotes shortly thereafter. I would not opt out of having an inspection done on the property. The inspection report will be used as a means of leverage when negotiating with the seller. Hope this all makes sense and helps!

Chance Willden · Answer

@Michael Mackney

Get it under contract with a 3 day due diligence and have your GC walk the property during that time frame. I would start familiarizing yourself with certain scopes of work for your area so you can do a high level estimate for simple things like case, base, paint , flooring, cabinets, countertops, etc.

David Avery · Answer

Its a great concept if a contractor has the 1-3 hours to stop his work, drive over to your property . inspect it and then give you the numbers.  I would have a contractor all ready lined up and face time him and he can give you rough estimates.  If he is smart in RE he may give you suggestions like added square footage, putting in a closet to make a bedroom, and some great thoughts on showers, vanities, and kitchens which make the property Pop!

On a BRRRR it is about flow and appeal.  Colors and staging.

Now a days contractors are out about 3-12 weeks and it is great if you have one lined up that can face time you.  An inspector would charge you $400-$700 for half of this information. So you want to treat him right.  If he doesn't get the job  give him a $100. gift certificate to his best place to eat.

Best of luck, and yes a contractor should give you an estimate.  But treat him for it.

Trent B Paul · Answer

@Michael Mackney

Great question Michael!You should bring your GC (General Contractor) with you to the showing and have them look through and give you estimates for any disclosed or patent defects.

You can also ask the seller if they will allow an inspection prior to any offer, most will deny, especially if they’re working with a listing agent. However, if they’re off market or other wise allow it, have your GC attend as well.

The earlier the inspection, the sooner you can get GC and any necessary subcontractors in during due diligence period to give you more precise quotes.

If the scope of work for the project is too expensive you can always back out within due diligence period.

However, I would not recommend putting in any offer not in good faith if you do not fully intend to take the project on. That is highly unethical and will give you a bad reputation in the community.

-Happy investing!

Mike Davis · Answer

@Michael Mackney also,  there are a lot of great resources online that give you suggestions on estimating basic repairs to a property. Remember to estimate on the higher end, because the cost of building materials are much higher right now. If this is your first deal, I would however get a GC and walk through with him/her and have them explain what they look for. For turning the GC into a "teacher" maybe a nice gift card like @David Avery suggested. After a few of these you will be able to do it mostly yourself.

When during a BRRRR should a contractor give me an estimate?

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