Getting Bids From Contractors

[Griffin Malcolm]

How do you guys actually go about getting bids from contractors for rehabs? Is it before you buy or after? Seems risky waiting until after the purchase when holding costs will start to pile up, but it also seems silly for the contractor to walk the property with you, write up a detailed scope of work and risk the buyer not actually completing the purchase. Do you pay a contractor money each time they walk a property before hand?

I'm comfortable analyzing a deal, I understand I'll need to get an LLC in order to get a short-term loan, and I know I'll need to find a lender for the refinance, but sourcing bids is what is currently hanging me up. Any feedback would be appreciated. Trying to get all my ducks in a row so I can actually look at some properties with intention.

[Kevin Sobilo]

@Griffin Malcolm, Before or after purchase, that is the question??? My answer would be NEITHER!!! lol. How about DURING the purchase!

I do my own estimating. I create a scope of work and then for each line item I make my own estimate. THEN I assign a confidence level for each line that I used to create a low estimate and high estimate. The more certain I am of my original estimate the tighter the range, the less confident I am the wider the range.

When I'm done, and I add everything up, I have 3 estimates. An original estimate, low and high estimates. The original estimate is my target and should look like a very good deal. The high estimate should never happen because everything would have to go wrong and I would have to manage the project poorly but if it still makes money or breaks even or close I feel secure. The low estimate will never happen.

Using good project management, you can manage the cost of the project as you go by adjusting the scope of work, negotiating better deals, or extending the time frame.

So, pre-purchase I use this estimate and then once I have the deal under contract I can use the time between then and closing to firm my plans up. To refine my scope of work and to begin getting estimates and lining up contractors.