Hiring Your Contractors

The hiring and management of contractors are crucial in any rehab project.  If you are handy, your instincts might be to save yourself some money using the do-it-yourself (DIY) approach, don’t.  Your time is too valuable and is much better spent finding your next real estate investment opportunity.  Remember that it is better to work on your business than in your business.  

So, whether you are handy or not, know you’ll best be served by building a dependable team of professionals to help take your rehab projects from start to finish in a timely, predictable, and profitable manner.  Hiring the right contractor(s) is critical and essential to the success of your business.  

Our goal is to share some tools to assist in finding quality contractors, the types of contractors you may need, the steps for prescreening them, setting expectations, and lastly, evaluating their bids.  

How to Find Quality Contractors.  To find a quality contractor, you’ll need to do a little due diligence.  It is not as difficult as it sounds, but it doesn’t happen overnight either.  You will need to go where they are working, see firsthand what they do and their skills.  A quality contractor is a person who is professional, competent, licensed, and insured.  They will have demonstrated that they have the skills and desire to work within a given system to do the best and most efficient job possible.  Straying too far from a system could lead to lost profits and additional headaches.   

Some Suggested Places to Find Quality Contractors:  

  • Local Job Sites
    • Home Improvement Stores (early morning)
    • REIAs (Real Estate Investment Associations)
    • Websites (www.the bluebook, www.HomeAdvisor, www.bid clerk, www.angieslist)
    • Building Supply Stores
    • Local Building Department/City Inspectors
  • Referrals

Contractors You’ll Need on Your Team:  Each rehab project will be different depending on the scope, scale, and exit strategy.  It is SMART to have a list of contractors you have prescreened, met with personally, and vetted so you are ready when they are needed.

Common Contractors:  

  • General Contractors (GC’s)
  • Roofer
  • Plumber
  • HVAC
  • Electrician
  • Exterior Painter
  • Landscaper
  • Flooring

Specialty Contractors:

  • Septic
  • Well
  • Mold
  • Oil Tank
  • Garage Doors
  • Pool Repairs
  • Windows
  • Gutters
  • Granite/Marble
  • Tile (Ceramic)

Prescreening Contractors (phone or in-person):  Finding a contractor through a search or referral is a great first step, but meeting with a contractor is essential in the process.  A prescreening interview will confirm if the contractor is the right fit for you and your rehab project(s).  While you are interviewing a contractor, know that they are interviewing you as well.  Integrity and character should matter on both ends.  It’s important to emphasize the value of a good working rapport and the equal benefits of a long-term relationship.  Again, the importance of having a solid, trusting, dependable team is worth its weight in gold.  Make your decisions easier by finding out the answers to the following key questions:

  • How many years of experience do they have?
  • How many jobs are they currently working on?
  • How many workers are part of their team?
  • Do they use subcontractors & if yes, for what?
  • Do they have their own equipment?
  • Are they licensed and insured?
  • Do they get permits for their work?
  • Do they carry liability insurance & workers comp?
  • Can they provide referrals, and are their current or past jobs that you can walk through?

Some additional indicators will help you in your screening process.  Utilize the checklists below to help fill in some essential details:  

Good Contractor Checklist:  Busy, minimum experience of 3-5 years, good clear communication, licensed, carries liability insurance, carries workers comp insurance, financially stable (no bankruptcy), provides at least three (3) referrals, provides recent sample projects, is on time, can plan, organized, it’s a business.  

Bad Contractor Red Flags:  Desperate for work, new to the business, unprofessional, poor communication, no insurance, financially unstable (bankruptcy), cannot provide references, cannot provide examples of work done, your gut says not the right person, late.  

Share Who You Are & How You Work:  While you are meeting and interviewing contractors to see if their answers line up with what you are looking for, know that the good contractors are doing the same thing for some of the very same reasons.  Time and energy are important, so you need to present yourself as a solid business partner.  Wasting time and energy is costly for both parties and set’s each other up for a potentially big problem down the road.  Address items that will motivate a contractor and have them choose you over someone else looking to secure their services.  It should be clear that cooperation works on both ends and is mutually beneficial.  The value you are looking for in a professional will be reciprocated.  They are in business to make money legally, ethically, and doing the right thing just as you are. They should expect to be compensated for their value.  

Develop your introduction with confidence and honesty. It will go a long way in building trust.  Share your position as a real estate investor. You have a network of investors that may also present additional opportunities, that you will not waste their time, and that a relationship could be lucrative for both.  You have a network, systems, and a solid approach to finding investments and exit strategies.  You run a business as well, proper paperwork is filed, and money is not distributed until the work is complete. As importantly, you pay for quality work.  Working with you and your team would be mutually beneficial.

Setting Expectations:  As with any valued relationship, knowing what to expect is extremely helpful and saves everyone time, energy, and money.  Nobody likes surprises or assumptions in any business model, let alone a time-based, large dollar investment.  Here is a list of expectations that you would provide before any formal agreement. 

  • Open Communications
  • Contractors get all necessary permits & inspections
  • Contractors must be licensed & insured
  • Contractors must be willing to sign six (6) “Critical Documents.”
  • Contractors must buy and pick up all materials.
  • Contractors must share examples of past work & provide references
  • Contractor to provide a detailed bid for projects based on the scope of work on/before the deadline.

Evaluate Contractor Bids:  With the expectation that you have successfully secured multiple viable contractor options, you will need to review all contractor bids and evaluate them based on what is most essential and choose one.  Once you have decided on that, you will begin the next phase of hiring the contractor(s).  You will meet at the job site for a final walkthrough.  This will be your first formal walkthrough with the contractor(s) working on your project.  Review the six (6) critical documents that you will have them fill out.  Having a system in place will help reduce or eliminate mistakes that could happen, and you can build on a successful, beneficial business relationship with your contractors and team.