When to get GC bids?

Question

Curious what the best practice is here.Simple question - when should I be getting GC bids; while in contract or after closing?If during contract, then we'll have to build that timeframe into our offer. Thanks!

Andrew Postell · Answer

@John Bernardo ok, so I do agree with the above post...if you are purchasing a property "off market". And that's usually how the BRRRR method works. I mean, the market is changing so maybe it's possible to work with it with properties listed on the MLS? But we haven't done it that way in over a decade at this point (there's always exceptions to everything...but 99% of the time the BRRRR method is with off market properties). Now you will need SEVERAL skills to work the BRRRR method successfully. None of these did I know when I did my first...and I worked out ok...but now that I know what I do now, I would HIGHLY suggested learning at least some of these things before purchasing a property. A lot of the knowledge that I have now came from networking with other real estate investors in my area. It certainly is a HUGE help to know others. However, the other piece of this - you will never be ready. Ever. So don't base action on being ready. If we didn't get married until we were "ready" nobody would be getting married until they were in there 70's. But I do want you to make the best decision you can. My first property I purchased for $7,000 - seriously. I targeted a lower value home because I thought that if I made a mistake at least it would be a small mistake. And I made every mistake you could make....well, maybe I got the home insurance right...but outside of that - everything was wrong. And today I am a millionaire. So should I have NOT done that first property? I most certainly should have! But it would have been good if I had more information as well. So try to get both...as best as you can. And keep working at it and working at it. This is very hard to do no matter what anybody says. Here's the skills I would say would be helpful to know about doing a BRRRR property: BRRRR SKILLS NEEDED Generally speaking you will need several things to successfully complete a BRRRR: ARV - being able to calculate the Value on your own (meaning, without the wholesaler telling you the value) is really important. Repairs - You will likely need to know how to budget the repairs as well. Getting a contractor can be extremely frustrating especially if you need to make an offer without even looking at the property. How do you calculate repairs without a contractor? You may need to lean on other local real estate investors in the beginning. Or maybe even just focus on properties with a very light rehab? Lenders - You will need a lender on your BUY step and on your REFINANCE step. And I would HIGHLY recommend to read this article I wrote for Bigger Pockets on how to find good lenders that you can find HERE. If they are good, they should be absolutely definitive on rate, terms, costs, etc. Trust me, many lenders will tell you they can do this...but it's very rare to find. When I first started BRRRR'ing my properties lenders would tell me "That's illegal"....it's not, they just didn't know anything about it. Finding Properties - and this is the absolute hardest step of anything right now. So network like crazy and find some good resources. It's going to be hard...but if it were easy then anyone could do it. Hope all of that makes sense. Thanks!

John Bernardo · Answer

Thanks both. Really useful advice @Andrew Postell. @Bob Stevens to clarify, I'm not looking to get into contract without knowing things such as ARV and estimated repair costs. The formula I'm using is ARV * 0.7 - repairs for target acquisition price. Reason I ask about doing a contingent offer and walking with a GC after in contract is because often, time is everything, and it seems like we won't always have that luxury before entering contract. So I would enter contract contingent on a full inspection, including GC walk, after which we would have more than just a ballpark estimate on repairs.

Bob Stevens · Answer

PLEASE connect with someone doing deals in your area, you are not anywhere near ready, Response, neither one is correct. You need to know the repair amount BEFORE you even go to contract so you know what to pay Good luck

Eliott Elias · Answer

During option, you're going to want to get as many opinions as possible if you're new and don't have someone you trust. Use option period to get inspector in there as well to negotiate any repairs.

Bob Stevens · Answer

All my deals are never more then 60% all in of the ARV . Just picked up a 3/2 all in 60k, value about 125k rent 1400 :) 10 unit all in 350k, value about 480k. There are good deals everywhere if you have an experienced network All the best

Bob Stevens · Answer

Whomever you are listening to stop, they are clueless. You do not negotiate a PP and go to contract without knowing all your numbers. PLEASE connect with someone doing deals, learn then apply what you learn Good luck

Jaron Walling · Answer

@John Bernardo There is some good advice already given here. Notice nobody mentioned using "rules" so I'd throw the 70% rule out the window. It's very difficult to find distressed deals that hit that mark. Less rules, more $$$.

Chris Seveney · Answer

@Bob StevensAgree 100%.