Maybe A Dumb Question About When To Get Contractor Bids

[Robert Arzola]

Hey everyone. I plan on starting my journey into BRRRR investing in Georgia - specifically in Macon and the surrounding areas and was wondering one thing about contractor bids. When is the right time to have them walk through the property? I want to get a number of contractors via referrals from agents, property managers, and so on, and would want to have 4 or 5 bids as David Greene suggests in his book on BRRRR. However, if doing a hard money lending purchase of the home, would it be best to do 1 itemized bid in the initial walkthrough of the property and then - if I decide to pursue the deal and get it under contract - do the other bids in a due diligence period? I do plan on paying the contractors for their time to do the bid as well. I know it could be costly at first, but it would mean having a good amount info to compare and hopefully make the best choice.

[John O'Leary]

Every situation, and the timing is different. Before finalizing your terms with a hard money lender, it's crucial to nail down a reliable budget. Changes in your budget can impact the original terms offered by your lender. It's helpful to know your lender's limits on loan-to-cost (LTC) and loan-to-value (LTV) to gauge the flexibility you have with your numbers. What you want to avoid is basing your loan on estimates and discovering, after closing, that your actual costs are significantly higher, which could leave you in a tight spot. Once you've closed, your lender won't be able to modify terms or increase the budget, and more often than not, actual costs are likely to surpass your initial estimates.