Five Steps to Finding the Right Contractor
For a new investor, finding a contractor can be an intimidating affair. The time and cost invested into the remodel of a property will affect profitability, while the quality of the work will be part of your reputation as either a Fix-and-Flip or Rehab-and-Rent investor. Below are five steps that can help you find the contractor you can build a long-term relationship with.
1. Finding Candidates
Investors are often looking for reliable contractors that don’t break the bank – or undercut the profitability of an investment. There are multiple ways to track down viable candidates:
• Ask other investors for recommendations. Don’t know other investors yet? Ask your current network – someone has likely had a kitchen or bathroom remodeled.
• Visit local networking events. You can meet contractors there (and those other investors!).
• If you see a house being rehabbed, well, walk over and ask for a business card!
2. Getting Quotes
As a new investor that wants to take on remodeling as a part of your business model, the key to finding the right price for a particular job is getting multiple quotes. It may seem daunting at first, but it is best to split the job into multiple layers such as: structural work, windows, tiling, hardwood, painting, roofing, siding, etc. A project scope that is well defined can help perform an apples-to-apples comparison between quotes.
Once this is done, the next step is to get quotes from general contractors and specialized professionals. Remember to get multiple quotes that are itemized and in writing. Not only will the comparison be easier, but you may be able to leverage prices between the competitors.
3. Vetting the candidate
Once you’ve narrowed down the candidates, it is important to perform appropriate checks on the candidate that you’ve decided on.
• Check references. This may include references they provide, or online reviews (keep in mind that people are more likely to post negative reviews with fewer satisfied customers taking the time to voice their positive experiences).
• Check credentials. These may include licensing boards managed by the state, county, or local municipality.
• Visit the candidate’s ongoing job sites to see how well-organized the work is.
• Check the Better Business Bureau for any complaints.
4. Negotiating
When working with contractors, negotiating is expected. However, keep in mind that both parties need to feel the project is worthwhile. If a contractor feels like they’ve been pushed into giving you a bargain, you might just get bargain work in return. You don’t undervalue your work, do not expect others to do the same. Be prepared to pay what is fair and budget accordingly. When both parties feel like the agreement is fair it paves the way for a good relationship moving forward.
5. Payment Structure
Some contractors may ask to pay a large deposit. I recommend working out a structure which pays as the work progresses. You may also consider providing an up-front payment to cover materials for the first portion of the project.
With careful consideration, cooperation, and continuous communication, finding and building a long-term relationship with the right contractor is possible. Most importantly, it can be a key piece to building your own real estate investment business.
