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• TAO of Flipping and Investing in Real Estate - Part 4.4 - Repairs

  I always have fun talking about this subject because it can be very subjective for the most part and takes years of experience to master.  Being able to assess the costs of repairing a residential property, office building, or really any permanent structure can be a daunting task.  Not only is it important to be as knowledgeable about the costs of the different repairs that may have to be made, it is essential in determining your purchase price.

  There are many ways to get accustomed to working with contractors and handymen, but the method I prefer to use is referrals.  If you have a close relationship with some handymen or contractors in your area, you may approach them for referring you to a plumber, painter, carpenter, electrician, and even other handymen, although they may be a bit reluctant for the handyman referral.  I have had great experience in the past by doing this, and you will too.

  You can also coordinate with your realtor to have 3 or 4 contractors look at a specific project and give you bids on them.  For example, if you have a nice little fixer that your looking to purchase and it has some foundation problems, you may work with your realtor to make the house available so you can have multiple foundation repairmen to come in and give you a bid.  You will not only learn about what the prices are for a certain repair, but you can deduct what your costs could be for other similar repairs on other houses you might be looking at.  This method can be applied for other types of repairs as well.

  Not all Realtors will be willing to work with you, I know — you may have to build a working relationship with a broker or realtor that is willing to take a chance on you.  Show them the money and they will show you the love seems to be the way it is.  If the house is not one that is listed with a realtor, you may be able to have the owner let you in the house to evaluate it for purchase and even if someone has a realtor for their house, you can still talk to the owner if you can find their contact information.  Most owners that are using a realtor are typically going to ask you to call the realtor, hate to say.

  If you have trouble being able to evaluate properties for repairs it is also common to hire a general contractor to oversee and handle all contracting on your repairs.  There are many ways to locate general contractors and foremen such as your local paper, hardware store classified ads and even through sites such as www.craigslist.com.   They are usually not used for small jobs, but if you have a significant repair with a lot of different contractors needed, this may be the way to go.

  Flip This House - Ok, some of you have seen this show and most that have think that by watching it you have been able to hone the skills needed to do a flip or learn the tools you need to buy investment property.  Watch Out!  These shows do not show you the real costs involved, nor do they divulge all the repairs that a house may be needing.  Being able to smooth-talk and handyman into a low bid does not make you a quality or successful flipper.  If you cannot evaluate a property yourself and figure a close value of the repairs and cost, you will most likely get screwed by any handyman or contractor no matter how honest you think they are.  Its the way it is, learn to negotiate like a champ, or learn how to evaluate repairs!

  Don’t rush to find a handyman, make sure you get multiple bids on a project and always pay close attention to what they say while looking through the house.  You may hear one handyman say there is a leak in the roof and another totally misses it, this is another reason its good to have a handyman or contractor walk through the house before you start tallying repair costs.  If all else fails and you cannot get someone in to look at the house, move on to the next deal and start keeping a log of the contractors you have called so you can build a team of people to help you get started.