Fear! It can be incredibly difficult to make your first real estate investment. You don’t want to screw up and lose a lot of money. One key to this is finding a good contractor or contractors.
For your first time unless you have knowledge of building you will probably want to hire a general contractor who then hires and oversees all the subcontractors. Sometimes it is more expensive this way and other times good general contractors can actually save you money. But to start, use them and then get to know some plumbers and electricians and maybe to some of the subcontracting yourself.
How to Estimate Repairs Before Making an Offer
To put in a bid, you need to have a general idea how much a renovation will cost. You also need to make repairs that are appropriate for the neighborhood. You can put top of the line everything into a house in a blue collar neighborhood and lose your shirt and never get the value back out. Or you can put really cheap appliances and fixtures in a nicer neighborhood and have no one want to buy the house.
One way you can find contractors is to look up REIA on line. It stands for Real Estate Investment Association. Most cities have one. Go to their meetings and ask around for suggestions for good contractors.
Contractor as Consultant
When you find a house you think is a good buy, ask 2 contractors to meet you there (not at the same time) and go through the house with you. Tell them you will pay them for their time. It might be $100 to $200. But consider it paying for education. Your cost could be much much higher if you estimate wrong and buy at the wrong price.
Have them go through and tell you what they think should be done to fix up the house and what it will cost. You want prices for different things, not just a total price. You also need a list of what will be done. Most likely they will make different suggestions so you won’t really be able to compare their two proposals in a direct comparison. But you will get a good idea of the ball park number for repairs. You can then make your offer.
If the contract is accepted, you might then bring in a third contractor to give his ideas and a price. What you then want to do is figure out what features you like that all three have given you. Combine them into a list of features / repairs that you want and ask them for a price on this list. They shouldn’t have a problem doing this because it probably isn’t that different from what they gave you to start with.
Then choose one and sign an agreement with him to do the work. You do not have to pay this one for his time. The other two you should pay for their time since they are busy and could have been doing something else and have taken the time to educate you some. As you gain more experience you can still get 2 or 3 quotes but you won’t have to pay for their time usually because you have more experience and can tell them more specifically what you are looking for.