How I tell contractor i'm a wholesaler?

Question

Hello Guys!

how do i tell the contractor i'm an wholesaler and not going to rehab the house, just want his bid?

What does he get out of this?

And how exactly to tell it to him? (Than it's worth it to work with me as an wholesaler)

Thank you!!!

Matthew Paul · Answer

He gives you a bill for his time and you pay him .  Dont play games with him . For a breakdown of costs , he will have a couple hours in preparing it . Look to spend $300 to $400 .

Don Konipol · Answer

@Maayan Elkabetz

Being new in real estate business, as being new in any business, has numerous challenges.  Two of these are creditability and knowledge.  Somewhat, this can be purchased until such time as you’ve developed sufficient knowledge, experience and track record.  As mentioned, you can “purchase” an inspector’s or contractor’s knowledge and expertise until you have sufficient experience and know.edge to substitute your own.  Creditability, by way of a verifiable track record, is much more difficult.  For instance, how do you get a seller or broker to take you seriously, especially in todays market where property is receiving multiple full price offers with 24 hours of listing?  How do you obtain a proof of funds or financing approval letter?  There are multiple moving pieces that become much more difficult it place when there are three buyers for every for sale property.

Many wholesaling intermediaries concentrate on property that for one reason or another is not likely to receive much interest from the “usual” buying public.  This usually means houses in low income areas ( hopefully with the area “gentrifying”, houses in very poor condition (think roof, foundation, etc.), houses where a permanent “negative” exists (airplane noise, freeway exit, unstable soil content), etc.  However, the two most successful investors I’ve met in the SFR discount purchasing arena concentrated on properties with title issues ( multiple heirs, missing spouses, unrecorded deed transfers, etc.).  Whatever you choose, there will be a large learning curve.  Few actually stick with it.  Maybe you’ll be one of the few that do.

Will Barnard · Answer

You tell the contractor by simply saying this: I am a wholesaler and will be selling this contract to my buyer, however, your bid will be given to the buyer.

But as Jonathan stated above, using a contractor and paying him to do the bid is NOt the most efficient or cost effective means for this task. You as the wholesaler need to learn how to estimate rehab costs and there are tons of threads on this site describing how to do it, I have personally provided precise instructions in many threads on how to learn and eventually do it in your head after walking the home.

Jonathan Styer · Answer

You're going to need to pay him for his time. No one wants to work for free, so just be upfront and say, I'm a wholesaler, I want an estimate of rehab costs for this home. What will you charge to come up with this estimate?

To be honest, this is not the smartest way of going about finding out rehab costs, I believe most wholesalers figure it out themselves by going through the home and determining what needs done then adding up those costs. Once you've been doing it for a while this becomes second nature.

Good luck!

Will Barnard · Answer

Never say never but Dustin makes some very valuable comments here. Particularly with getting precise labor bids from individual tradesmen which you could then plug into your itemized spreadsheet and calculate rehab numbers from there (once you have both labor and material pricing for all items).

Dustin P. · Answer

I would look up individual trades and ask their pricing on specific items. How much per square foot to install vinyl plank flooring or laminate, how much for tile, how much per square foot to cut and install granite/quartz countertops, how much per box to install cabinets, how much per square foot for interior/exterior paint, drywall, appliance install, install vanities, how much per square foot for shower tile, how much for a 30  year dimensional shingle roof on a 1500 square foot house with standard size 2 car garage, etc.

Getting a contractor bid will include their markup on everything (In this market, anywhere from 20-40%) and you'll never get a house under contract using those numbers

Bruce Woodruff · Answer

Except that just going on strict SF numbers will leave lot of $$ TBD (to be discovered). A good GC will be able to get that number a lot closer to reality than just doing a SF bid. And you can ask him to back  his overhead and profit out of the bid....

Gabriel Starms · Answer

As someone who's worked with many contractors, this is a for sure way of making enemies with contractors as opposed to them becoming your allies/friends

Contractors will despise going out there on site knowing that you aren't the decision maker and have no plans of actually conducting the work he's giving you the bid for. (Keep in mind they get paid to do the work, not to give out bids)

I'd recommend to jot down some common repairs you'll come across. [Bathroom remodel, drywall, flooring, etc] Ask them to give you a ball park over the phone price per sq ft for each of these projects and that you wont hold him to that number just wanted a general idea. For transparency, let him know you and your partners will be coming across 10+ properties a month that you'll be running rehab numbers for and will be using them for future projects but want to have a ball park number as opposed to them having to have an on site bid each time.

^ This strategy would be well suited for small GC's as they would be more willing to give out numbers over the phone or can go to each individual trade specialist if you have the extra time.

Dustin P. · Answer

That is true I should never say never. But moreso you are unlikely to create a sustainable business of 10+ deals a month if you run your rehab numbers with a GC markup included in this market.

How I tell contractor i'm a wholesaler?

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