| LUIS COMMENTS... Mark, several things to consider here. First off as to where you find a general contractor (GC) you find him the same way that you would find a plumber, carpenter or drywall guy that works with investors; you ask other investors for referrals. I have built a substantial list for every trade this way. In the case of a GC is even more important because of how much they will be responsible for. |
By meeting other investors and/or joining your local investors association you can talk to them and find out what kind of rehabs they have done, who have they used and how did they work out. Investors are typically glad to help out a fellow investor and they are very happy to recommend someone that does good work and will probably let you know how their pricing is.
The other part you mention is the pricing. First off do bear in mind that if this is the first time you are working with a GC or any trade for that matter you might not get "wholesale" pricing like you mention. One of the reasons I get some aggressive pricing from some of my contractors is because how much work I have given them plus the work they have gotten from my referrals.
That being said you can still find a GC that will give you fair pricing. One of the things to watch out for is to avoid the GC or any trade that pulls up to your project in a Hummer decked out in company
logos, he is wearing a company shirt and hands you a glossy brochure. That type of operation is probably very big and professional but probably carries a lot of overhead and is meant towards retail buyers i.e. home owners, and will not give you the price you need to make it work.
In the case of a GC you want the guy that definitely has experience, that you can verify, but that works by himself and has established a long list of trades. This type of GC has a much lower overhead that he can pass on to your quote (hopefully).
Make sure you let him know that you are an investor and what you are trying to do with the property and be very clear that one of the deciding factors in you giving him the work will be the fact that his pricing has to meet your project budget. Also, if you find a GC that works with investors he probably understands how the business works and will have the right mindset going in.
As far as quotes go, yes I DEFINITELY get quotes in advance. At the beginning of my investing career I was getting three quotes from GC's for a project. You will be surprised at how much they can differ. But wether you use a GC or not I highly recommend you always get quote in advance for any work. Letting a contractor just show up and start working and then letting him give you a cost later is a recipe for disaster, I think. Plus, remember that this is also a learning process for you. By getting different quotes and talking to different trades you will learn a lot about pricing and estimating. Make sure you ask them plenty of questions.
Finally, you can check out this article I wrote on hiring contractors and this one on how I calculate my potential profit on a flip.
Does this make sense? Let me know if you have any other questions.