In my previous posts I discussed how I went through and assessed what I needed to do to get the property rehabbed by using my Property Inspection Sheet and figuring out the budget. In this post I want to discuss hiring contractors.
Contractors are an essential part of any real estate investor’s team, especially as you grow and expand your business. Sure, it is OK to do some or all of the work yourself when you are starting out (in fact I would recommend this so you get a feel of what is involved in a rehab job), but as you grow your business you will need to spend your time on more important matters, such as finding more properties.
Hiring contractors can be one of the most challenging parts of this business. And when you are just starting out or have little experience it is quite easy to feel lost and out of your element when dealing with contractors.
We all have heard the numerous stories of people being ripped off by contractors, perhaps even someone you know was ripped off once. So the stories are true. Some contractors do rip people off. Dishonest contractors will abscond with prepaid funds, they will use inferior materials or take forever to get the job done.
So how do you find a contractor that will do an honest job, produce a quality finish on time and on budget?
To be honest it is not always easy.
I have found the best resource to be referrals from other investors. Other investors are after all in the same boat you are. They need someone reliable who can offer a good product at a good price. This is why it is so important to get out and network with other investors at your local REIA group. Some of these REIA groups will even have contractors as sponsors. I have found several good contractors in this manner.
Sometimes other investors may not like to share their contractors as they may have enough work to keep them busy. So referrals may be hard to come by. Other times referrals or sponsors can be real duds or so overworked that they just cannot provide you with the level of service you need. At this point you are simply going to have to go out on your own and find them. While this task may seem daunting, it is not as hard as you may think. In fact, you likely pass by numerous contractors every day you just have not been looking for them.
Where?
At your local big box home supply store. This is where the contractors go to get their materials.
If you are like me, you probably go to Home Depot or Lowes just about every day. There is always something you need to maintain your properties. You should start your contractor search when you enter the parking lot. You will see the contractor’s trucks all over the place. They will have placards like “Fred’s Painting” or Ed’s Plumbing.” You get the picture. If you see someone in or near the truck, go up and talk to them. Get their business card or contact info. Same goes when you are inside the store. If you see someone in the plumbing parts section, ask them if they are a plumber. Get their contact info.
Other good sources to find contractors are your neighbors. If you subscribe to a service like Nextdoor.com many people in your neighborhood will post recommendations. If you see someone working at a home in your neighborhood, ask your neighbor about the job and the contractor’s contact info. Better yet, just walk up to the contractor if you see them and get it yourself.
Trust me, if you do all of these things you will collect a lot of business cards. More than you will ever need. And that is OK, because when you go to call these guys later on for estimates, many will not even return the phone call, eliminating them right off the bat.
For those that do call you back (and many will), here is what you need to do:
- Have a rough assessment of the work outlined for the contractor
- Ask for a detailed and written estimate
- Ask for references (and call them!)
- Ask for liability and workers comp insurance info
- Ask if you can possibly see an example of their work (they may let you visit one of their current jobs)
- Do a Google search, see if there is anything good or bad out there
- Ask how they want to get paid. Beware of anyone who wants large sums up front.
- Trust your instincts. If something feels wrong move on.
If you follow these simple steps you will soon find a trusted contractor who can get what you need done. You may have to try a few. You may spend a few dollars doing so and you may even need to fire one or two before you find the right one. But with persistence you will find one that “works” for you.
Next time – Making sure the job gets done on time and within budget.
