Contractors… love ‘em, hate ‘em.
But as a house flipper, you do need ‘em…
No doubt, finding a good general contractor for your House Flip Power Team to renovate your flips is no easy task when you’re first starting out.
You may need to go through a few frogs before you find your…er prince, so to speak…
One of the best places to find these guys is through networking and asking around, but I wouldn’t rule out a quick Google search as well.
For the contractors I’ve found that have worked the best for our team, we hooked up with them through referrals and networking. You get a sense of what they’re all about when you meet them at a social event and then after that initial meeting, its best to sit down to interview them and get a feel for whether they’re a good fit for your particular goals.
House Flipping Goals and Contractor Alignment
Personally, we have a goal of doing 48 renovations in 2014 - a little trick I’m using here to state in publicly to force me to achieve my goals btw :-). So to achieve that lofty goal, I’ll need more than just a single contracting team to get that done.
Right now, we have three separate crews working on our current projects and so far in 2014, we’re in-line to reach our goal of 48. We are currently interviewing a fourth crew right now to get that done.
Your goals may be to do one flip this year or maybe three flips or even 100 flips. Whatever the goal, you will need a contractor or a team of contractors to help you achieve that goal. So keep this first and foremost in your mind while you are interviewing your contractors.
For us, there’s no way I could ever get to the goal of 48 unless I had a really strong team of contractors. And thankfully, I’ve had just a little bit of experience interviewing and hiring them over the five years – making many mistakes along the way, while learning a lot in the process.
In that process, I noticed that I tended to ask the same general questions to anyone I interview to work with my house flipping team .
Enclosed is that list so you can achieve your real estate investing goals in 2014, whatever they may be.
13 Killer Questions to Ask Your Contractor
So here’s the complete list of questions I ask my contractors when I interview them.
By the way, the general contractor could be a “she” as well, I don’t have a female contractor on my team and the majority I’ve met have been dudes so I’ll strictly refer to them as “he” here. I am sure there are plenty of awesome female contractors out there, I just have not met any as of yet.
Let’s start with the super basic questions, then move into some of the more complex ones that you may need to tailor to your individual needs and goals.
1. Are you licensed?
One of the basic questions indeed. You may want to ask for a copy of their license. Make sure their licenses are up-to-date and they are registered with the state you’re in.
2. Do you have insurance?
Another basic one that you MUST ask. You’ll also want to follow-up with asking them for the type of insurance they have and how much coverage they have. Having an insured contractor on the job protects you and it protects them in case of some unforeseen disaster.
3. How long have you been running your own crew?
In this question, you’ll find out if they’re a one-man show or if they’ve got 20 guys working for them. You may want to ask them about turnover on the crew as well. If he has to fire his framer every other week, you may have a hard time getting that part of your renovation done.
4. How many guys do you have on your crew?
There’s nothing wrong with the one-man crew if it’s a small job. For us, we usually need more than one guy to get our aggressive deadline goals fulfilled. Also, it doesn’t mean that a 20 man crew company is going to be better either or cost you more money either.
The right answer here is all relative to the breadth of the job you’re doing and how they run and operate their business. If he has a crew of twenty and an office, doesn’t necessarily mean it’s a better fit either. You just need to interview them on this question and find out if it matches your renovation needs.
5. Do you have a list of references?
Very important and very much overlooked here for the new investor. We still do this even though it may take some time. Even beyond that is ask them if they have any projects that are going on and ask to visit them.
This is a great way to not just HEAR what they do, but SEE what they do as well. Show up at an undisclosed time and check out how the crew is working together and how the job site looks. We do it all the time and it works.
Its one thing to SAY you do this and that, it’s quite another to SEE if they actually do it. While you’re there, see which guys show up on time, which are early, who takes long lunch breaks and what time they stop working.
6. Will you be using subcontractors on this project?
With the majority of GC’s, they use subcontractors. In fact, I haven’t hired anyone that’s been large enough where they have an employee that’s a staff plumber or an employee that’s a staff electrician. Most general contractors will have subcontractors who work for them.
Most contractors will have guys on their crew who hang windows, do roofing, do the kitchen cabinets, trim the doors, do the finish work and do all kinds of other jobs. In most cases, they then they sub out the electrical and plumbing. But regardless, its good to ask how it all operates.
7. Do you give written warranties?
Asking this one may include asking how long the warranties are as well. I don’t really request this in most cases, and we haven’t actually had a written warranty from any of our GC’s in quite some time because we’re at the point where if they do something that fails, they simply fix it. But when you’re first starting, its good to cover this because you just don’t know.
In this case you may want to pose the question less formally like; “If you’re doing an all new interior, what happens if something goes wrong?” If he says, “We’ll go back in and fix it”, then you’re all set. It may be a good idea to get this in writing, but you need to feel this out. You may want to write that into your contract just to cover yourself just in case something goes wrong during the project. If you get a bad feeling here, you may want to look elsewhere however.
8. Where is your office?
If they work from their personal house, that’s fine too, no need to drop by to visit. But if they have offices, I’d suggest a visit just like you did with the job site. In that visit, you’ll get a quick sense as to how their offices run and see how things operate internally.
9. Have you ever had disciplinary action filed against you?
Unfortunately, this is a tougher question to ask, but one that you should ask, albeit gingerly. As these are somewhat personal questions, tread lightly here. But certainly you have the right to ask them. You may want to approach it with a question like; “have you ever had any legal trouble?” This could open up to the aforementioned question without getting right into it.
10. Have you ever declared bankruptcy?
Personal question, but important. I’d suggest you ask it because it happens more than you’d think in this trade. Whether you feel comfortable asking this question or not, is up to you but consider asking it anyway. You have the right to do it.
Having said that, I wouldn’t start off an interview by asking questions like that – but a quick background check on the Internet will turn up the answer to this one fairly easily, as will the disciplinary action question as well. If you ask this one, you’d rather have them tell you up front that way you’re not surprised by anything later on. Personal issues can get in the way of your job getting done.
11. What is the most complicated job you have done?
This is a really good to know because you’ll get a quick understanding of the complexity of what they can do. They might tell you, “Oh we did this custom 10,000 square foot $4 million house in Nantucket.” In this case, your response may be, “Oh so I guess doing rehabs for me would be fairly easy because obviously we’re not doing houses that big yet.”
12. How often do you communicate with your customers?
That’s a good one because you’ll get a sense of how often they will communicate with you. You may also want to ask it like this; “If I gave you this job and it’s a 60 day job, how are you going to communicate with me?” If they say, “I’ll call you daily and tell you what we’ve done or I can call you weekly or we can do a job site visit each week”, those are pretty good answers.
Ask him first and don’t lead him with the answer that you want to hear. The answer will quickly give you an understanding of his professionalism and how he’s updating you on the process of a rehab. You could also have him text you pictures of what he accomplished that day in lieu of a daily visit. Your call here. Depending on where the rehab is to where you’re located, the answer to this question could be varied.
13. How do you clean up your job site?
Don’t lead on this question by saying; “Do you clean up your job site daily?” Of course, he’ll say yes. I’ve walked in some of my job sites at the end of the day and it’s a total mess. I then pick up the phone and call my guy and he starts blaming the sub or blaming this one and that one…everyone except himself.
This is why the site visit in the interview process is so important because you see first hand how the site looks. If it’s a mess, its a liability for you and it looks like crap to the neighbors…which you don’t want either.
So a better way to ask this might be: “What do you do at the end of every job? Do you clean it up?” And then they may say yes or give you some kind of half-answer, then you might say, “Would it be an issue if I wanted my job sites cleaned up at the end of every day?” See what he says and make your decision.
14. How many projects do you have going on right now?
With this question, you’re able to gauge as to how fast you can get your job done. Remember that in house flipping, time is money. And if your contractor is juggling three jobs at once, you will not meet your deadlines.
If he says, “I’ve got two small ones and one big one going on”, your next question should be, “How many jobs can you normally handle at one time?” If he says he wants to do your job and he’s already got three going on then you might ask the question; “How will you handle my job at the same time as those other three jobs?” If it’s a three-week or four-week or six-week job for you, you don’t want your jobs taking eight, ten, twelve or even sixteen weeks.
Your soft costs will start to eat up your profits every day if you have to wait that long for him to complete the renovation. All you care about is your job, so make sure he can handle it and hit your deadlines.
If he commits to doing your job in six weeks, hold him accountable and don’t accept excuses. Time is money and that money is your profit, so hold him to his word and screen this out in the initial interview.
If you’ve made it this far, please leave a comment below! What do you think? What questions do you ask your contractors? Please leave a comment and share your questions — or ask me anything you’d like about flipping houses!