I have found a home and a motivated seller. The home sits on a corner lot and is currently boarded up. I have not offered a price on the property to the seller because I want to make sure that I am getting the best deal, and sometimes boarded up means disaster!
Since I am working with a hard money lender I must provide a detailed cost estimation for repairs. I would also like this cost estimation before making my offer to the owner.
I have called several contractors all of them inquiring if I own the property. When I said no they immediately asked for a fee for the estimate. The last contractor said “My time is valuable and it is a better chance that I will get the deal if you own it.”
I guess the way around this would be to ask my 80 year old seller to call and request an appointment.
I just wanted to know if those of you who use contractors ran into this the first time? And if not, What do you recommend?
It’s common and just for the reason stated. The Contractor knows that, as an investor, you’re going to “shop” his offer and get multiple estimates (due dilligence)…
Ask him, “If I pay your fee and chose you as a contractor, will you credit the estimate, in full, to the work?”…
Once you get fully engaged and the contractors see that you’re for real and that you come through with the work if they give you a reasonable estimate and do quality work, the requests for paid estimates will lessen or go away. You can also leverage and tell Sam the Contractor that Bill the Contractor doesn’t charge you and he does a great job and that you just thought he might lke a chance at the work…
how much are they asking for estimate? Can you do some work yourself??? Figure for a flip house, do an estimate of $6-7 per square foot for do it yourself, and maybe $15 per square foot for a contractor. I have done 1 house myself and am working on another, and it is coming out to $7 per square foot, and i was told between $5-$8 as a general rule of thumb, before i ever thought about rehabbing, and then double it for a contractor. Hope this helps.
If flipping the house, you can use cheaper materials that look the same, perform the same but have less of a warrenty for about 30-40% cheaper…for carpet, look for remenants…do all the painting yourself…goto the Lowes website and they have How-to-Librarys to do things that really help out. If you have the time and willing to put in a little effort do as much as you can yourself and you’ll be better off…
Thank you for the responses. This is my first rehab and I am trying to prevent a horror story from happening. This is why I wanted to use a contractor for all the work the first time. I know some things will be unexpected but I cannot afford any major problems.
So I guess I will need to suck it up and pay the man! :-X