How Your Contractor Can Make or Break Your Deal
Having a good contractor can make or break your deal.
But how can you find a quality contractor with a good reputation to complete your fix and flip, rental, or other value-add property?
One of the easiest ways to find a good contractor is to ask friends and other investors for referrals.
Word of mouth is a powerful thing in this business. If someone had a good experience with a lender, title company, or, well, contractor, then it’s worth investigating.
When you ask friends and other investors about their contractor, make sure to ask them if they were happy with their contractor’s:
- Overall experience
Once you collect a list of potential contractors, then it’s time to interview them.
Because, again, choosing the right contractor to help you fix up a property can be the difference between making a big or small profit.
Or no profit at all.
So, what kind of questions should you ask during each interview? Well, here are some of the most important ones to consider:
- How many employees do you have?
- How long have you been in business?
- Do you have a referral list with current and past customers? Make sure to get phone numbers so you can verify this list.
- Are you insured? With this one, remember to ask for a copy of their policy binder page showing their name and coverage. They should have General Liability and Worker’s Comp.
- Who will be doing the work? Will there be any subcontracting, or will you and your team do all the work?
- Has your company ever been sued or had a lawsuit against it?
- Have you ever sued a client or filed a lien against a property?
- Have you ever declared bankruptcy or had a company under a different name?
- If the project falls behind schedule, what happens?
- Has your company ever had a serious accident on the job?
- Who will be at my house and when? Be sure to ask if background checks have been completed, and if there’s a set schedule.
- May I have a written contract? You’ll want your attorney to review it before signing. Make sure the contract spells out timeframes, as well as how and when the contractor gets paid.
We suggest making a list of all the questions you’d like to ask ahead of time. That way you won’t forget anything during the conversation.
Once you find your ideal contractor, it’s important to stay alert and watch for red flags.
For example, if your contractor demands 25%-50% upfront, find someone else. Because a good contractor should have enough reserves to cover minor expenses to get the job started, except for materials. As for those, you should order everything and have it delivered to your property.
If your contractor has a problem with this, find a different one. Or tell them to purchase the materials themselves (pre-approved by you, of course). You can always compensate them when the job’s done.
They should also have pre-set dates for payments and money for materials.
Above all else, never assume anything. Get everything in writing. It’s your only resource if you need it later.
At the end of the day, it’s all about having a contractor that will respect you and your property. They should:
- Be trustworthy and treat you fairly
- Complete the job on time
- Meet your budget
- And provide quality work
This might seem like a lot of work to do before the real work begins, but trust us, it’s worth it! If you take the time to find the right property, the right lender, and the right contractor, then your flip or rental project will be a lot easier.
And the payoff will be much greater.
Ready to chat? Great! Our team is always here to help.