Working with Contractors

The subject of today’s blog is an essential part of your real estate investing business, your contractor. You are doomed without a good, professional contractor on your team; this is how important they are to your business, especially when working on fix and flip projects. Any fix and flip success depend on the speed at which you can turn around the property. The longer it lies idle, the more it will cost you, so a professional contractor is worth their weight in gold. I have a video presentation on my Youtube Channel if you would like to view it.

Contractors can make or break you. They are the most inconsistent of all of the professionals involved in real estate transactions. One of the best recommendations I can give is always to look out for handymen or general contractors because they work differently at any time. For example, the contractor that finished my basement only wanted a big job and was not interested in a small job such as minor plumbing or changing a cabinet. That is why you need someone available for the different types of jobs you require. Also, depending on the season and if the contractors have a good reputation, they will be booked up for months. You want to have several contractors on your speed dial for each job because you never know when somebody is unavailable. You meet three types of contractors during your real estate investment journey.

A general contractor is a person who acts as your project manager, overseeing the entire project from start to finish. They will hire the sub-contractors for each specific job and manage their work. They are the most expensive option, so ensure they are licensed, insured and have good references. When hiring a general contractor, all the scope of work you require them to do will be outlined in the written contract, which protects you if there is a dispute. I would always advise that you employ the services of a general contractor if you are out of state or don’t have the time or experience to oversee the project yourself.

An independent contractor is usually a small tradesperson like an electrician, plumber or painter. Depending on the level of repair required, you will have to manage these contractors individually and oversee their work. You will most likely use these people at short notice if there is a problem with a rental property that needs to be fixed quickly. Just like a general contractor, you must have a work contract signed with your independent contractor outlying the jobs they will be doing.

The third option available when booking a contractor is my favorite person, the handyman. This is someone you always need to have on your speed dial. They are essential for the small jobs that the general independent contractor is not interested in, especially with the maintenance of properties. They are a jack of all trades and can complete jobs from mowing grass to replacing a door. A good handyman is ideal for small jobs that would cost you a lot more to hire the services of a licensed general or independent contractor. In my experience, they work best when supervised, as, for some reason, they take longer to complete jobs if you are not there. They also like to be in control but don’t forget you are the boss and make sure you call the shots, or they may take advantage of the situation.

Once you have determined the type of contractor you need for your home renovations, it’s time to find the right one to partner with. There are several creative ways to find and vet general contractors, but the most reliable one is through referrals. If you know people in the area you will be working in, ask them which contractors they’ve worked with and have reputations they can vouch for. Real estate investment clubs in your area may also have directories of recommended contractors. Look for a proven track record or a finished project on time and under budget. Viewing a finished project will provide you with the best information regarding the skills of a general or independent contractor. So I suggest you inspect the properties they’ve worked on if possible.

Another way to find contractors is to scope out building sites of houses under construction in the neighborhood. You will find the contractor team working there, so flag down a worker, introduce yourself and ask for their contact information. Or you could leave your contact details and ask for someone to get in touch with you about a potential job. You can also visit the city’s local building department and ask which contractors were granted permits for construction, as contractors are required to file for and obtain permits for specific work. The projects must pass an official inspection to ensure they are up to the city’s code. These permits and inspections are public records, which the building department can provide. Real estate is still a bit of an old-fashioned industry, and most house-flipping investors employ offline methods, such as the ones listed above. But there are also online tools to source general contractors. Some contractors have reviews and ratings that you can check out online.

You can also visit your local hardware store or Home Depot and ask the people that work there if they know a particular contractor, like an electrician or a roofer, and they can give you their contact details. Some of them are contractors that work there. So just continue asking, but always keep looking for contractors. That is the best advice that I can give you. So there you have it. If you find a good contractor or a handyperson, keep them happy, and keep working with them. But remember to keep looking for some others, just in case. Until next time, invest wisely. 

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