All Forum Posts by: Hunter Harms

@Shawn Ward Thanks for the response!

So use the price per square foot method for a solid rehab estimate to base my offer off of? 

And then during my due diligence period get the exact numbers and make sure the deal still works? 

Then finally close on the deal after negotiating the price down based on the exact numbers?

Still looking for some more clarification on this topic :)

Quick question BP!

Assume I'm looking at REOs

When I'm looking at a property my agent sent me online and I want to determine whether or not the property is worthy of visiting, how do I do a quick estimate of rehab costs to plug into the flipping calculator? For examples sake, lets say I like the area and have found my comps, but now I need to decide what my bottom line is for offering and whether or not the deal's numbers make sense! What are some strategies for doing this?

Another question I have is, would having an inspector and a few different contractors visit a property before offering make sense? I know deals go quite fast, but since I am a newbie I really do not know what I'm looking for when it comes to rehabs and it would heavily benefit me to get a rough SOW from an inspector and then bids from different contractors based off that inspector's SOW as well as their own findings. As David Greene said on BP Podcast 257, "Do I really know what I'm looking for when I look under the hood of my car? I'd rather just ask an expert." I'd clearly pay everyone for their troubles, but having a legitimate list of what needs to be done, along with an actual price for the rehab would clear any doubts I have on my first deal and ensure my offer is adequate.

I know the standard procedure is to get your offer accepted and then go about your due diligence, but even after calling around and finding labor/material costs I'm not confident my numbers would be accurate. So I really wouldn't know what I needed to offer to even get it accepted to then go about my due diligence.

I am a newbie, but I'm extremely committed to real estate because I see the freedom it can offer. I have invested my money wisely elsewhere and will have the funds necessary to start looking for my first deal later this year. I'm just looking to get my understanding of the entire process down so once I am able to start my first deal, I can.

Thanks!

@Account Closed This was the exact response I needed to read! Thank you! I fully intend to hire a GC and let him do his job, but after reading what you have laid out for me, I will just give a vague "look book" and let the contractor to as he pleases with that. I guess being a newbie has my guard up when it comes to contractors, but after reading all of these great responses there really is no reason to be so guarded. The licenses and regulations they have to abide by is enough for me to realize that they too are in deep when it comes to projects. Fantastic reply, thanks much again. 

Quick question BP! 

Assume I'm looking at REOs 

When I'm looking at a property my agent sent me online and I want to determine whether or not the property is worthy of visiting, how do I do a quick estimate of rehab costs to plug into the flipping calculator? For examples sake, lets say I like the area and have found my comps, but now I need to decide what my bottom line is for offering and whether or not the deal's numbers make sense! What are some strategies for doing this? 

Another question I have is, would having an inspector and a few different contractors visit a property before offering make sense? I know deals go quite fast, but since I am a newbie I really do not know what I'm looking for when it comes to rehabs and it would heavily benefit me to get a rough SOW from an inspector and then bids from different contractors based off that inspector's SOW as well as their own findings. As David Greene said on BP Podcast 257, "Do I really know what I'm looking for when I look under the hood of my car? I'd rather just ask an expert." I'd clearly pay everyone for their troubles, but having a legitimate list of what needs to be done, along with an actual price for the rehab would clear any doubts I have on my first deal and ensure my offer is adequate.  

I know the standard procedure is to get your offer accepted and then go about your due diligence, but even after calling around and finding labor/material costs I'm not confident my numbers would be accurate. So I really wouldn't know what I needed to offer to even get it accepted to then go about my due diligence. 

I am a newbie, but I'm extremely committed to real estate because I see the freedom it can offer. I have invested my money wisely elsewhere and will have the funds necessary to start looking for my first deal later this year. I'm just looking to get my understanding of the entire process down so once I am able to start my first deal, I can. 

Thanks!

@Christopher B. Thanks for the response man! So what I'm getting from you is that my finish materials I want to use such as paint, appliances, countertops, fixtures, etc are where I should be specific and maybe use a design guide. I intend to pay for these things myself to ensure I am not getting ripped off and to also get all of my credit rewards (I like to travel). 

When working with my contractor would I just be able to discuss and show him these finish materials I am wanting to use and he would specify how much to buy? Also, would I be able to just have him pick up the adhesive, nails, etc? 

If my understanding is correct, I would be able to make a complete list of finish materials with him and the amounts to purchase, then I could shop around to find the best deals for these items and have them shipped to the job site? 

BP! Here is the situation:

I am a first time investor and and am looking to purchase a foreclosure to rehab and resell. I have been really working on creating my systems to ease the process of a flip, as well as set up my business in a way that it can scale. I have decided for my first flip I will be using a GC because I feel I would be overwhelmed when estimating rehab costs for subcontractors. To ensure I do not go underwater on my first deal I have decided to just eat the extra cost of a GC, but make sure I get my money's worth by learning from him and his guys as they work. I fully intend to have myself and my eventual team manage rehabs completely, but for now I will be mitigating risk and maximizing my learning. 

For my rehabs I am thinking of making a laminated packet that consists of a very in depth breakdown of how I want the rehab to look. I want it to include which materials to use, their product numbers, what each room needs to have in it, etc, all with pictures and descriptions making it basically fool proof. In BP Podcast 232, Nathan Brooks mentions that he does something similar and by constantly pounding how he wants his properties to look in his contractor's heads, the process becomes easier, quicker, and done better. I would have the GC and his guys pick up the materials on their own, but it would be the items I specify in my design packet. My hope is to have all my houses in a certain area be pretty much identical so the rehab process works like a machine once we've done a few flips with the same exact design scheme. The vision I have with this is me, my partners, agents, lenders, and contractors all know what our houses require material and labor wise every time (because they're all based off of the same design sheet) so everything is done fast and of great quality. 

Is this system of doing things effective? Is this something that other investors are doing? I would love some insight on this and also on processes you have automated into your own business! 

Thanks!

Michael Noto @Ola Dantis Thanks for the response that cleared quite a bit up! I have read both The Book on Flipping Houses as well as the The Book on Estimating Rehab Costs, and am just starting Brandon's book on rental properties. I'm making sure I am very well versed in every aspect of real estate so when it's time for my first deal I come out profitable!

@Chris Seveney Do you have a link where I could find GTD and Evernote?

@Jim Goebel I run an ecommerce clothing store and manage a portfolio of tech investments haha, but I fully intend to make real estate my main business. Its not that I can't work out the order of operations, I just feel I have a way larger risk/reward gap if I were to manage the subs myself now early on with no experience compared to just hiring a GC and taking the hit to my profits, but ensuring the job is done right.