Here is what has worked for me when I am doing a rehab in an area where I have never used local contractors. If needing a specialist, like a good interior painter, I visit the local paint supply stores (like Sherwin Williams). Some times they have a posting board in the store where painters post their business cards…and i take a couple. If no posting board exists, I ask the counter people for a few good local choices of painters that buy from them a couple times a month, or specialize in working with real estate investors. They know which clients service retail homeowners vs investors, and I typically can’t afford the painters that service the homeowners.
If needing more generic contractors, I visit the nearest Home Depot or Lowes to my project and park at the Contractor’s Entrance at 7AM. I watch the contractors come and go and approach those that seem to match what I am seeking as contractor type. I ask if they service investors, and get their business cards to follow up. Hope these ideas help.
@REI GUY Great advice. Going to hardware stores to recuit contactors is the exact process that we’ve recommended our construction crew to implement. Our project manager also created a google form for our team to pass on to contractors we meet. The contractors fill it out, listing their contact info and areas of specialty for our project manager to follow up on.
I’ve had great success with dropping in on properties that are being rehabbed. We typically use the same guys over and over and there is a price difference when you use guys that work with known investors. We don’t pay retail price for rehab work.
If the contractors know they will get repeat business you can get great prices.
BRRR is a great strategy. You want to find out what contractors other investors in your market are using. Attending local REIA’s and networking events is a great way to do this. People don’t always want to share them so keep your eye out for crews working on flips in your area and don’t be shy.
Go to networking events. Talk to other flippers there and ask them for references. Once you have those references reach out to the contractor and visit their job sites to get an idea of their quality of work.
Had 2 successful BRRRR’s so far, but both were last year. This year is a different story, and we are worried about the BRRRR strategy. The tough part will be - if we go into a recession - and prices drop over the next few months - how do we guess the ARV when we try to pull out the $ through the refinance.
The trick now, and the only way we will be BRRRRing in 2020, is if we buy it really low and have enough cushion for the cash out refi later on.
BRRR is an awesome strategy and there is already good advice on finding contractors in this thread. I would just add to be careful if we move into a property downturn. You may find the value you are using in your numbers decreases when it is time to Refinance. You may also find the banks tighten up and finding the financing is higher. Having more conservative numbers and buying right will help minimize this risk. If the market does go down then BRRR will be the best strategy when the market is at or near the bottom. You will be able to buy cheap and financing will come back. You can hold the rental through the upswing and cash out when it approaches the top.
I’m essentially echoing what others have said here but here goes.
You must buy right! If you pay too much at the start you simply can’t regain that money…unless you cut serious corners. Pay the right price WITH a built in discount…as by all appearances the market is headed down…‘post-covid, limited inventory, motivated buyer’ environment aside! If the price isn’t right, be patient. Buying the WRONG house will haunt you AND your pocketbook for a long time.
One of the best pieces of advice I ever heard was its better to hold 5 good properties than 15 bad ones. Heck its better to have 15 good properties than only 3 bad ones! REI is not a contest.
2a. To find good contractors, instead of going to Lowes or HD, go to all the specialty supply shops…as in an exclusively plumbing or electrical supply shop. This is where many of the best trades shop. Many will be too pricey, but if things get slow, they will be motivated to drop prices. And be sure to ask for the rehabber price. You don’t want the home owner price.
2b. Ask good contractors if they know of any other good trades. Collect contact info for GOOD people, even if you have 3 or 4 names. You never know when you’ll need them. Birds of a feather flock together.
referals forums facebooks and your gut feelings when you meet them. I always ask them about billing and ask about a 4 day job - how that would work. I dont work with anyone that cant float a job that is less than a week.