Welcome to the Real Estate Investing From A to Z series. Each week we’ll take a letter from the alphabet and define all the real estate investing terms you need to know that begin with that letter. Today’s letter is……G!
The words for this week are: Good Faith Estimate, General Contractor, and Guarantor. Short and sweet this week
A Good Faith Estimate is the cost a contractor would submit as a bid to perform a certain unit of work. This estimate is generally good, or honored, for a specific time period before it expires. You can have a number of contractors submit these estimates, and you can choose the best price for your purposes. Good faith estimates are also used by mortgage companies to estimate the costs you will incur at closing (points, fees, etc.).
A General Contractor is a company that will contract out the required work to subcontractors, who will perform the different units of work. A general contractor rarely performs the work with their own work force. They usually contract with other companies, then supervise the job to it’s completion. The general contractor adds a percentage to the overall cost of the job as their fee. You can keep the cost of the job low if you act as your own general contractor and sub the work out yourself.
A Guarantor is one who provides a warrant or guarantee to another. A guarantor is going to guarantee that the service or merchandise you’re supposed to receive is rendered.
Not many words, but important nonetheless. We’ll try and make up for it with our “H” words next week.