Finding And Working With The Right Contractor
By JD Esajian on June 1, 2016
If your investing focus is on rehabbing or flipping one of the most important team members is your contractor. A good contractor can not only deliver quality work but will make your life infinitely much easier. Instead of having to micromanage every aspect of a project you can focus on other areas of your business. Conversely a poor contractor will make every new property feel like an uphill battle. There will be constant battles and you won’t enjoy the process. Finding the right contractor for you takes a little legwork on your end. Doing these steps will help ensure that you are on the same page and are comfortable working together. Here are a few tips for finding and working with the right contractor.
- Cast A Wide Net. How do you find people to work with? The most common method in the real estate business is through networking meetings and referrals. While these are both acceptable methods you should never settle on the first contractor you meet. Like anything else in business finding a good contractor is a numbers game. The more contractors you talk to the more likely you will find one that is a good fit for you. Every meeting you have or investment club you attend is a way to find a contractor. Even if you don’t currently have a need you should always take their information and follow up. You never want to wait until you have a deal to start your contractor search. Just like no two investors are the same either are two contractors. You may talk to a dozen contractors before you find one that you are comfortable with. If you settle on the first person you speak with you may end up regretting it.
- Set Up A Meeting/Ask Questions. After you have made your initial contact it is important to set up a meeting as quickly as possible. Talking over the phone is nice but you can get much more information from a twenty minute meeting. During your meeting you need to treat it sort of like a job interview. You need to be prepared to ask plenty of questions and listen to the answers. Most good contractors understand that these questions are part of the process and will not get annoyed. If they do it is an indicator that they may not be the best fit for you. You need to ask about past projects, scheduling, licensing/insurance and the team they would bring in. This is the time that you should ask about anything that is important to you. At the same time you also need to be prepared to answer questions they may have. The really good contractors have the ability to pick and choose their projects. Even though you are interviewing them they are doing the same thing to you. After your meeting you will both have a pretty good feel of whether or not you want to move forward.
- Bids/Pricing. Your meetings should provide you with a short list of contractors you can call if a new deal comes your way. As you are trying to secure the property reach out to your contractors and ask if they would like to submit a bid. It is important that you make it known that you have multiple contractors bidding on the property. As a rule of thumb you should start with three bids and work from there. Make it clear what you intend to do with the property and what kind of a budget you are working with. You always want to compare apples to apples when reviewing bids. While everyone wants the lowest price there are other factors you need to consider. Look at the timeframe for completing the job and how professional the contractor appears. If they are not licensed or insured you should not even consider their bid. If something happens on the property whatever you will have much bigger issues. The bottom line is that you want to work with someone you can trust. If you are not comfortable with contractor the price doesn’t matter.
- Finances. You should never be afraid to discuss financials. It is much better to get everything on the table before the project starts than when it is halfway done. In addition to the agreed upon price you need to discuss who is paying for the materials and how they are getting to the property. You should talk about payment schedules and methods of payments. You also need to touch on the budget and the funds available for the project. When the work is completed or a scheduled payment is due you need to pay as soon as possible. As much as contractors get reputations so do investors. You don’t want to be known as the investor who makes their team wait to get paid. What will happen is that your contractor will not be so quick to get you a bid the next time you need it. A subcontractor will not rush to your rental property in the event of an emergency. The world will eventually travel throughout your community and it will be difficult for you to find good help. Whatever the agreed upon financials or payment schedule is you need to make sure you do it every time.
The key to a good relationship with your contractor is communication. While it sounds simple enough too many investors rush into working together without knowing who they are working with. Take your time and find the right contractor for you.