In this episode, I answer another listener’s email question: how do you know if the quote that you receive from a contractor is competitive? In other words, how should a new real estate investor determine whether or not the quote is fair and the prices are reasonable?
One of the biggest fears that new investors have is not knowing how much things should cost.
Here are three things that will help you understand how much things should cost in a rehab:
- Get more than one quote.
- Ask your mentor/friends that you have made in the industry their opinion.
These are the three ways that will help you decide whether or not a quote that you receive from a contractor is competitive.
I almost always get a competitive bid on all of my projects. That’s because my target market is accessible to all of the contractors that I use. It’s very convenient for me to meet with them, go over the project, and get a quote from each of them.
Once you get enough experience, you will no longer need to consult a mentor or other friends in the industry about the price of the rehab. Experience will help you determine what is a fair price and what isn’t.
Don’t underestimate the importance of knowing what a rehab should cost. In the beginning, I definitely suggest that you consult someone who knows the numbers in your area. Not knowing the numbers makes you a little bit vulnerable to contractors who might take advantage of your inexperience.