Flipping Houses

10 Expert Tips for Finding the Perfect Contractor for Your Latest Project

Expertise: Real Estate Investing Basics, Real Estate News & Commentary, Personal Development, Flipping Houses, Landlording & Rental Properties, Personal Finance
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find-contractor

One of the most popular questions on the Forums is, "How do I find a good contractor?"

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My husband and I are very handy. He grew up with an electrician dad and helped on sites a lot. He picked up things here and there and knows how to do a lot of the work involved in renovations. I grew up without a lot of money — and a dad who grew up with even less. He never hired anything out. He just always seemed to know how to do it.

When we flip houses, we do much of the work ourselves because we know how to do it, and finding someone you can trust is extremely difficult. Twice we needed to hire someone, and both times we hired the wrong person before finding the right one. Here are some tips to help you weed through the bad to find the good.

10 Expert Tips for Finding the Perfect Contractor for Your Latest Project

Ask Around

Do you know someone who recently remodeled their home? Ask how they liked their contractor. Would they recommend him to you, would they use him again? What did they like about him? How did they decided on this contractor over the others they interviewed? What was the scope of the work? How did they find him? Just as important, ask if there was anything he did they didn't like. Would they have done anything differently?

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Walk Around

We hired a contractor off Craigslist (please don't throw tomatoes at me — I learned my lesson), and after we decided to stop using him, we had to find someone else to take over the project. We were walking around the neighborhood and saw a house being added on to, which was exactly what we needed done. We talked to the builder and the homeowner. This was her second project with this company, and she was falling over herself to tell us how wonderful they were. We toured the property and saw the construction techniques firsthand. High quality all the way around.

Ask the Local Building Supply Company

Chance are good they have some sort of policy against recommending a specific contractor, but there are ways around that. Ask them who they would use if they were doing a project, or who they would hire to do work on their mother's home. Who do they notice is prepared for the jobs, and who comes back over and over for "one last thing" they forgot? You might even get lucky and they have a list of contractors they would recommend.

Ask the Building Inspectors

The inspectors in your city deal with a lot of people. One-time project homeowners don’t stick out in their minds, but they remember the builders and remodelers they see over and over. They also remember the guys who try to slide things past them and the guys who do things right the first time. Like the local building supply company, they may not be able to recommend someone to you, but ask them the same questions and see what they say.


Related: 3 Ways to Ensure Top-of-the-Line Contractors Will Want to Work for You

Check References

Almost everyone says to check references, but some people think it is a waste of time. I got a list of references from a potential contractor, and when I called one in particular, he said, "I don't have any idea why he would give you my name. I am currently suing him for shoddy work." Guess who I didn't hire?

Make sure you ask questions regarding the scope of the work performed. If you guy only has references for bathroom remodels, perhaps he isn’t the most qualified to add a second story.

…But Don’t Put Too Much Stock In Them

Just as bad tenants will give friends' names to pose as past landlords, a bad contractor can do the same thing. When every reference you call gives a glowing review, that is only the first step. Ask the contractor for information about recent jobs. See if you can go to the current job site. Talk to the homeowner at the current site and see how the contractor works.

Walk Them Out to Their Vehicle

Just like tenant screening advises walking them to their car to see how they keep it, the same can be applied to contractors. If their vehicle is a disaster, chances are they won't be able to locate that receipt for you, find those nails, etc. We interviewed a contractor who seemed amazing. When we walked him out to his truck, it was the cleanest automobile I had ever seen. We asked him what year it was because it had the body style of an older model, but looked absolutely brand new. When he told us it was more than 20 years old, we were floored. We ultimately ended up not using him because he told us the scope of the work was out of his range. Honesty on top of cleanliness??? Holy cow!

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A Great Contractor Can’t Start Tomorrow

If your guy is good, he’s busy right now. And next week, too. That’s OK — wait for him. The guy who can start tomorrow — and seems desperate to do so — is probably so eager because he isn’t getting word-of-mouth recommendations.

…And Won’t Need a Downpayment

I have a friend who decided to finish his basement. He found a contractor who needed $10,000 up front for materials. My friend smelled a rat and somehow finagled the delivery of materials to his house, but the contractor walked away with a lot of his money, and he was left with just a pile of supplies he didn't know what to do with.

Related: How to Choose the Best Possible Contractor For Your Next Renovation

Google Their Name

You might be surprised at what pops up when you Google the name of a contractor you are thinking about using. Along with the good can come some bad, so click on to that second page if his name warrants. Check out the Better Business Bureau, but understand how that works. The BBB rating of A+ could just mean there haven't been any complaints lodged against the company. It doesn't mean they do good work.

Inevitably, you will find a contractor who doesn't do work up to your standards. The best thing for you to do is let them go. The longer they work on your property at a sub-par level, the more work you will have to pay someone else to fix.

Never pay for work before your payment schedule requires. You may think you are being nice, but they are taking advantage of you and that “being nice” is a one-way street. Hold back at least 10% of the final payment until you are satisfied that all the work is complete. When that last check is in their hands, you won’t ever see them again.

Any tips you’d add?

Let me know with a comment!

Mindy Jensen has been buying and selling homes for almost 20 years. She buys houses, moves in, makes them beautiful, sells them, and starts the process all over again. She is a licensed real estate agent in Colorado, author of How to Sell Your Home, and the community manager for BiggerPockets.com, where she helps new and experienced investors learn the proper ways to invest in real estate to grow their wealth. Mindy is an alumnus of the School of Hard Knocks and will happily share her experiences with anyone who asks. When you can get her to stop talking about real estate, you can find her on her bike or adventuring in the beautiful mountains of Colorado.

    Brandon Halley Flipper/Rehabber from Durango, CO
    Replied about 3 years ago
    As a fellow contractor and REI I would have to say this article really hit the nail on the head!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Thanks! I’m glad others have seen some of the same things. There is a lot of misunderstanding about contractors. I hope I can help bridge that gap a little bit.
    Suzanne P. Investor from Toronto, Ontario
    Replied about 3 years ago
    Amazing blog post, Eric! And a great discussion as well. There is one question that i”d like to explore in further detail. I have several flip joint ventures in the United States and Canada, mostly as a money partner. Now I am forward towards becoming an active investor, and together with my business partner we will be starting some of our own active flips in the near future. I have been doing various joint ventures so far and I simply love joint ventures, bringing different people with different knowledge and resources together so that everybody comes out ahead in the end. I have been thinking about doing JV deals with contractors as business partners. How would I go about finding them and how should the deal be set up? I’d love to hear from some contractors as well and get their opinion on joint venturing on a flip.
    Jesse Meader from Duluth, Minnesota
    Replied over 1 year ago
    Totally. There are so many posts about how to get what you want out of a contractor, but not enough about what your contractor might want out of you. Being a good customer is essential.
    Tim Kunz Contractor from San Luis Obispo, CA
    Replied about 3 years ago
    Great post, as a fellow contractor I’ve had the same thoughts over the years and wanted to put them to paper like you did so investors understand the realities of finding good contractors. Thank you. We’ve been having a pretty good discussion in the forums recently about expecting free estimates from contractors and why it’s worth paying for them.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I’m really glad this article is resonating. You should drop a link here to the discussion and then drop a link to this article in the discussion. It will help people who stumble upon this topic to get a more in-depth discussion. Estimates are a tough topic. The reality is people will pay for estimates no matter what – it’s just a question of who pays. When they are “free,” the paying customer has to pay for all the other estimates. If you charge, each person pays for the time they use. I think if you are getting an estimate with no intention of hiring them, you should just offer to pay. Really complicated projects that include design should be paid for. Simple stuff like flooring, a roof, or a water heater…maybe not.
    Patsy Waldron Rental Property Investor from Orlando, FL
    Replied about 3 years ago
    Interesting post. I agree that contractor work is a service and, as with most services, you (mostly) get what you pay for. Your post seems to be targeting those with a fair amount of experience and several projects under their belt already (e.g. categorize the contractors according to their strengths and then decide which qualities you need). How do you suggest new investors vet and categorize contractors and ensure they get good value for what they pay?
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I don’t think “new investors” is a category all by itself. A lot of new investors have a ton of experience with contractors before ever getting started as an investor. But, if you have zero experience with contractors you can still figure out exactly what you need based on the team you already have put together. You know your own strengths and abilities, so put together a team that fills in the gaps.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied about 3 years ago
    Eric, I enjoyed hanging out with you at our conference a few weeks ago. I’m so happy to wrote this article. It should be required reading for anyone who wants to be a rehabber!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    It was awesome to meet you too Mindy! Thanks for the compliment! If I remember correctly, you’re the one that got me on the tangent about investors & contractors and then convinced me to write about it. So I should thank you for the inspiration.
    Sandeep Singh
    Replied about 3 years ago
    Great advice. It certainly puts things in perspective.
    Brad B. Contractor from Marietta, Georgia
    Replied about 3 years ago
    Good article Eric. Also as a GC myself, the best thing an investor can do to work through the points you made (very good btw) is to understand what the Scope of Work should be for the contractor to perform. Whys is this important? Well if, as an investor who depends on a contractor to figure out how to do something and how much it will cost and provide a quote, these quotes will be un-reliable since every contractor has “his way” of doing things. Newbie’s to fixing up / repairing structures, this is probably the most difficult aspect since they probably don’t know how to develop a Scope of Work document such that every contractor who receives one can quote based on it. It is also the best method to address several of your points in your article. Once the Scope of Work is developed and published, your contractor will be much more appreciative and responsive to achieving the project needs while providing the investor some meaningful numbers. (P.S. – EVERY level of govt. is wanting Low Bid,,not just the Feds!)
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I completely forgot to mention a scope of work and it’s a great point. Try as much to standardize the project before asking for a price. It will clarify exactly what the contractor is giving an estimate for and help give a more fair comparison. I’d still find the contractors I can work with the best, then give the SOW so they are all bidding on the same work.
    Matthew Shumaker Flipper/Rehabber from Lakewood, OH
    Replied about 3 years ago
    Great article! As someone currently building his team that doesn’t have a contracting background, this is invaluable! I just met with 5 other investors the other day and at least 3 of them are currently dealing with contractor issues and one will lose money on his rehab due to rework. Makes me wonder where they could improve their process. Do you have a sample scope of work you could provide or know of one on BP I could look up? I am wondering what level of detail to provide when asking for quotes. Do you provide all the items you want installed in each room with exact details on work? I appreciate your time.
    Chris Luksha from Jaffrey, New Hampshire
    Replied about 3 years ago
    Hey Matthew, I don’t know if its further down somewhere but I highly recommend J Scott’s book here on BP.. The Book on Flipping Houses and The Book on Estimating Rehab Costs You also get a great SOW attached to it. You can get it from the BP bookstore https://www.biggerpockets.com/store/store_front Well worth the money and the education to read. As a GC, I have found a ton of things even I don’t think of regularly w/o a good doc like his SOW. It is very helpful. Blessings! Chris
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I completely forgot to mention a scope of work and it’s a great point. Try as much to standardize the project before asking for a price. It will clarify exactly what the contractor is giving an estimate for and help give a more fair comparison. I’d still find the contractors I can work with the best, then give the SOW so they are all bidding on the same work.
    Julie Groth Residential Real Estate Investor and Broker from New Orleans, Louisiana
    Replied about 3 years ago
    Spot on with my own experience as a remodeling GC and investor. I had gotten to the level of my CG career where I didn’t really bid against others anymore. People wanted me and I gave them my price. The entire bidding process is a terrible business model, in my opinion. It sets up a sort of adversarial relationship from the very beginning. Whether it is with an investor or homeowner. I’d like to use a different biz model, but not sure how. I’m doing some new home spec building. Mid-range cottage style houses, about 2000 sf. Have 2-3 different models and do, maybe, 12 per year. Very rinse and repeat. I’d like the builder (yes, I will hire a GC) to ‘buy in’ and be part of a team. However, not sure how to structure this? Suggestions?
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    You could find a GC to partner with on the project. They could be a partial investor, float some of the costs for 0% interest, or whatever other things you can think of to get their cash involved. As part owner of the project they would have a vested interest in getting it done fast and for as cheap as possible. The more you make the more they make too. I don’t have much experience with building, so I’m sure there are other ways to go about it as well.
    Julie Groth Residential Real Estate Investor and Broker from New Orleans, Louisiana
    Replied over 2 years ago
    I’ve now been through the building of one new house with a builder. ARRRGH… Starting 2 more new houses and 1 rehab and this time IT WILL BE DIFFERENT. Ok, not exactly sure how. Eric, I love the idea of a GC being a partial partner because when someone’s cash is in the deal, then there is a buy in. There is plenty of profit in the deals I do so price is not as important. I need quality and speed. Suggestions? I’m also going to post separately because I have figured out a couple of things that will make managing projects and GC’s much easier.
    Mike Harding Investor from Reno, Nevada
    Replied about 3 years ago
    Great article. I have GC that I use on most of my flips. I found him from a referral from another tradesman and it has worked out great. After doing several flips together, expectations are clear and we trust each other. I have found it is way better to pay a little more but not have to babysit a project.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Finding someone you can truly trust is the most important factor for me. Like you, I don’t mind to pay a little more because I can just trust what they do and the prices they give will always be honest.
    Robert Steele
    Replied about 3 years ago
    You can have it done cheaply, quickly or well. Pick two. My contractor is cheap and does top quality work but has problem keeping appointments and sometimes doesn’t show up. I don’t ask him for quotes at all. I just tell him what I need done. He knows that if he overcharges me he won’t get another job from me or my network. Same with my plumber. My electrician started to over charge so hey presto new electrician!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    That’s a funny saying. basically, low price, high speed, or good quality. Low price can get you either quality or speed but not both. Quality and speed won’t come at a low price. Very fair assessment I think.
    Stephen S. Wholesaler from Holiday, Florida
    Replied about 3 years ago
    The Low Bid is always the wrong one to take. And the “get three bids” process was never intended to be used at it typically is. The original and most correct method is to get 3-5 bids and then add their totals together. Then divide that total by the number of bids and hire the contractor whose bid was closest to that number. BTW: Another name for the ‘Low Bidder” is: the guy who missed the most when preparing the proposal.
    Bo Hardy from Shawnee Mission, Kansas
    Replied about 3 years ago
    I am brand new to this game but this has been very enlightening. I have been to a few seminars where they told the investors to build a material list with sku’s and everything in your SOW and have the GC bid on labor only and in the same breath tried to tell us to build a solid relationship with a good contractor. I am glad you pointed out that I probably will not attract a good contractor using those methods. I was also hoping someone could point out a good way to come up with a quick rehab estimate so that I can make an educated offer to the seller on the spot. Maybe with the use of software or something.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I can’t imagine that a “GC” would ever bid labor-only…since a GC rarely actually works the project physically. His time would be considered an overhead expense. They are essentially telling you to “GC” your own project and find subs, but use someone who is licensed to carry your liability. I’ve seen lots of people run projects like that. I found that It’s easiest to get some estimates for a decent project and then follow a project-based cost model. Maybe you know that an average kitchen costs you 10-12k and a bathroom costs you 4k. You can toss together working numbers pretty fast and then adjust. Perhaps the kitchen is a bit big so I’ll add 15% to my estimate but the kitchen needs only a little work so I’ll take 20% off that…etc
    Julie Groth Residential Real Estate Investor and Broker from New Orleans, Louisiana
    Replied over 2 years ago
    Robyn Thompson (rehab guru) tells story of very large investor who furnished 12 sheets of plywood for roofing for one of her houses. A helper fell off roof and died. Even tho investor had contract with GC and Roofer, they were found by the courts to have been acting as the contractor and therefore responsible. She’s a huge proponent of not furnishing one thing for jobs. I’ve taken this approach too and like it. It also keeps the management and responsibility where it needs to be…with the GC.
    Duane Kidman Professional from Mansfield, Texas
    Replied about 3 years ago
    Besides real estate investing, I have a W2 job. In my and most industries, every contract includes a well defined scope of work. Why should real estate contracting be any different. This scope of work serves multiple purposes and should include key points: define tasks, deliverables, expectations, key assumptions, division of work, administration, schedule/timeline/deadlines and terms of acceptance, otherwise the work is “out of scope” and needs to be resolved separately. I find that once a contract has been agreed to, out of scope work tends to be more costly than if included in the original scope of work. This scope of work replaces the need for itemization, and provides a better understanding and justification of costs, and brings together alignment and focus that the investor and contractor can appreciate. Lesson, write a complete and well defined scope of work to minimize misunderstandings on all levels. As for costs. A good Investor should know standard costs for each task. I maintain a cost/sq.ft., cost/linear ft, cost/square, etc for all tasks in my cost estimating spreadsheet. i will not hire a contractor if they grossly underbid, in fear that they don’t know what they are doing and/or I will get nickel and dime to death later in the project because they ran out of money; nor the high bidder (here I assume they are overly proud or as mentioned above – don’t need the additional work, or cannot handle the project). I don’t mind sharing my spreadsheet, and remain open to correction. Although I use the same sku’s on all projects and built my numbers over time, they tend to be fair and accurate. My RFQ (request for quote) on each rehab includes pictures of each task, taken on either past rehabs or online photos of work that I really like. This sets an expectation for the contractor to gauge his pricing. The end result, a compete set of expectations at a fair price with no surprises.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    A solid scope of work will help solve a lot of problems for sure. The problem is that a huge number of investors are small-time people that don’t have a high volume. These people look at their contractors from the point of view of a homeowner. This article is geared toward that crowd. The goal is to help people prioritize contractors they can trust and work with over finding the cheapest guy.
    Alejandro Riera Contractor from DFW, TX
    Replied about 3 years ago
    Duane, I like very much your comment. Tha is the way we real state inversotr have to do things. Have our own list of standard costs in order to make good estimates for our jobs and be able to analyze the properties. It is only a guide, but having that, you can be a better inverstor. Eric, excellent article.
    Dave Thitchener Investor from Hyde Park, New York
    Replied about 3 years ago
    Can you share your spreadsheet?
    Jonathan Frederiksen Investor from Santa Fe, New Mexico
    Replied about 3 years ago
    That’s an excellent article. Thanks for taking time to write and post.
    John
    Replied about 3 years ago
    I know just about every guy on Angie’s list or in the phonebook does not even answer their phone or return calls. If I put an ad on craigslist, I sometimes get lucky and sometimes get Larry Since I am a DIYer and generally know I can do some of these things myself or I have a pretty good idea of how long something should take I am not an easy “mark” for these charlatan type contractors. For example I just had a guy bid $400 to change a couple of rubber boots on my roof, which we ended up doing ourselves in less than an hour My rule of thumb is if it comes out to more than about 50 bucks an hour I am not hiring you unless you are very very good I had a guy come bid a tile job for me. he told me five dollars Per square foot, and then he bid $1200 on the job, and I only have 60 ft.², so somebody can’t do math or thinks I am stupid. I had an unemployed guy on craigslist who really wanted something so I gave him a power washing job. Next thing you know he wants $50 an hour to stand there with a hose and do something any 12-year-old can do. Back when I was practicing law, there was a time when I worked as a contract attorney on multi million dollar cases, with a seven year degree, and a bar exam passage, doing very demanding work, and I made $30 an hour. I take offense at these guys who think they are worth exorbitant amounts and I don’t even have their own tools I once heard a contractor friend of mine say I can’t work for $30 an hour doing painting, while he was moonlighting at Walmart for eight bucks an hour So my response would be if your overhead is that high you were not a very good business person. Because if you can’t even answer your own phone, I’m sorry I don’t see all this is extremely exorbitant overhead What I do see our people trying to make a quick buck you have a very over inflated sense of the value they add
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Mistake #1: Education is not in any way related to market supply/demand or value of your skills. You may have been paid $30 an hour but your firm billed you out at $120/hr to cover their overhead expenses. A decent contractor charging you $50 is really getting paid $35. That was pretty thoroughly explained in the article.
    Sherry Byrne Rental Property Investor from Ozark, Missouri
    Replied about 3 years ago
    Amen to that. I have also experienced this attitude with laborers and contractors. Your example of the power wash job being something any 12 yr old can do, and thinking they can make $50 an hour! Crazy! I have a friend who is a Paramedic. She actually SAVES LIVES, and makes only about $17pr hour. So it is hard for her as an investor to pay somebody 25 or $35 an hour to do simple things like painting or simple carpentry. And then they don’t return phone calls, don’t show up at all, or take three weeks to do something that should’ve taken two days. It’s frustrating!
    Michelle Fenn Real Estate Agent from Brecksville, Ohio
    Replied about 3 years ago
    My solution to this problem was to partner with my contractor, he contributed half the acquisition funds and materials were paid for with a no interest credit card. He kept track of his hours and all materials, he was reimbursed for all his time and we split the profits at the end. The quality of work was great, he was on the job everyday, this project was his priority. We pre-sold the project for full asking price barely past demo. From the time we took possession to close to an FHA buyer was 55 days. This was not a cosmetic upgrade, we undertook full renovations of the kitchen and 2 bathrooms, new hardwood flooring on first floors and paint and carpet upstairs and in basement rec room. A new A/C and Sump with a custom built enclosure were built.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    This is one solid way to “align your goals/interests.” Your goals are now his goals. Not saying it’s “the way” but it’s definitely one way that works.
    Sherry Byrne Rental Property Investor from Ozark, Missouri
    Replied about 3 years ago
    Good idea. May I ask, what was your split? And, although this is a great idea, I have not been able to utilize this strategy because I buy and hold. Any ideas from other investors who also buy and hold as to how to incentivize contractors?
    Julie Groth Residential Real Estate Investor and Broker from New Orleans, Louisiana
    Replied over 2 years ago
    The cost of the project seems a bit open ended w/out actually bids from him. That would stress me out too much. I hate paying people hourly.
    DeAnna Nieves from Phoenix, Arizona
    Replied about 3 years ago
    Excellent article! Can someone elaborate on the ‘scope of work’ mentioned?
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Scope of Work is the job description. What is and isn’t included in the project, what materials you expect, etc. The more detailed the better. If there is ever a conflict about what was supposed to be done (or wasn’t supposed to be done) everyone can refer to the SOW to settle the dispute.
    Brian Horton Real Estate Investor from Houston, Texas
    Replied about 3 years ago
    This article should be required reading for ALL homeowners! LOL. Great insights, and hopefully this will help to set straight some of the misconceptions held by both contractors and homeowners. I will take issue with you on the markup, however. As a niche remodeling contractor (carving out a niche is the only way to go in my opinion), I was marking up projects 125% – 170% (2.25 – 2.7 cost multiplier), in order to make enough money to cover my costs and advertising, and still make good for myself. $80k doesn’t cut it for a business owner these days. The truth is that most contractors need to get a business education first, then radically re-think what they charge, and how much they can get away with charging. Success with this is 100% based on positioning and marketing. Ask for what you want, ask confidently, and 20%+ of the target market will go for it, whatever your price (assuming you are targeting the right folks). I contend that with few exceptions, the vast majority of remodelers in America (and probably the world) should shift their business model to completing many fewer projects with a (much) higher markup. Too many contractors burn out and have zero time to spend with their families because they chase ignorant customers with ridiculous expectations and then charge prices that are insufficient to afford them a good living.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Every business is different. You also might be looking at your markup differently than me. Just like an investor should count property management time into their numbers, even if they manage it themselves – your hourly wage on the job is included as “job costs” and your overhead expenses (part of markup) include all the work you do when you aren’t doing the 8 hours of labor at the project. You should actually be counting your “job” time and “manager” time separately. Either way, it doesn’t matter as long as you were getting paid well. Contractors are definitely a terrible group of business owners as a whole. As contracting laws get tougher and licensing becomes more stringent, I see contractors coming from more educated groups of people, many of whom have actually studied some business at community college or university.
    Todd Hanks from Crowley, Louisiana
    Replied over 2 years ago
    I’m one of the ones you are referring to coming from an educated background. I have a small printing & ad specialties (brokering mostly) business in a small town. A few years ago I got my MBA from the University of Louisiana – Lafayette (near me) but stayed with my business rather starting from the ground up at the age of 42 in another field. About that time, I started flipping houses, too. In the last 3.5 years, I’ve flipped 7 houses. Last November, I got a Home Remodelers License (along with insurance, worker’s comp, etc). After getting that, I also did 2 full house remodels, another half-house remodel, and a bathroom/kitchen job for other clients. Now I have 8 lots that I am going to build spec houses on. To do this, I have to study just a little more to get to the next level and get a full GC license. I mainly got the Remodelers license (and will be getting the GC license) so that I can do my own work, pull my own permits, build from the ground up and not get any flack from the city or state. I would have never dreamed that after being a minister for 11 years and owning my printing/promotions business for 10, I would end up with a contracting license. The good thing at this point is that, by having my own properties to build, I can pick and choose which jobs from others I want to take. BTW, I totally agree with your article above. I am new to giving people quotes on large jobs. I know how much it will generally cost me to flip a house because I know what I want, how picky I will be, what I will be worried about, etc. But trying to give line item bids is a royal pain. I told my wife that I hate it so much, it almost makes me not want to do contracting. I’m on that learning curve. I hope I can figure out the best way that works for me when doing jobs for others. Thanks for the article!
    Tony Castronovo Rental Property Investor from Katy, TX
    Replied about 3 years ago
    Really good article @Eric Bowlin. I have a few different contractors. Some are very informal and highly competent handymen, while others are professional firms with high structure and processes. I have to look at the project and determine how much of my involvement it may need and how much I can afford. For example, I did a rehab that was a labor only situation and I was heavily involved (was there nearly every day bringing supplies, exchanging items, etc….despite my high degree of planning and experience with renovations). It was very economical, but if I put a price on my own time….well then. On the very next job I hired a more expensive contractor that was pretty much turnkey. It involved very little of my time and pretty much hassle/stress free. But I did have to pay more. On the next one I will assess the “stress quotient” to see which way to go. Your 9 item list is a good way to think about it.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Great points. I didn’t even get into the value of your own time and headaches. What you need also depends on how much time you have to devote and how busy you are.
    Sam Shueh Real Estate Agent from Cupertino, California
    Replied about 3 years ago
    Like every one else a professional needs to make a living. In our area a skilled craftsman is expected to receive that kind of compensation. Hey I have a section of fence needs to be done just 8 ft wide. Can you do it $15 and hour and get it done in two hours? Same with real estate business. Can you find some tenants to be my tenants? I will give you $250. I expect the following: ………….. blah blah….. What differentiate one is better than other is service quality. One needs to stay on top selection material, supervise. A good one will get it done as promised. The terrible contract substitute inferior quality and do not honor their warranty.
    Katie
    Replied about 3 years ago
    Great article! Do you have any advice about where to go about finding the right fit contractor? I seem to have no problem finding the “fancy kitchen and bath guys” or the “pure labor, cheap project guys” but can’t seem to find middle of the road solid, but not fancy, contractors.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    That’s a tough question. I like to ask other sub-contractors. For example, I ask every electrician if they know a carpenter and a plumber. They all know tons and tons of other contractors, so it’s great to pick their brain.
    Isaac Frost General Contractor & Investor from Portland, Oregon
    Replied about 3 years ago
    Amen Brotha! I’m going to make my customers read this article : )
    David M. Investor from Torrance, California
    Replied about 3 years ago
    Good article – it gets me thinking about getting better alignment with the contractor by focusing more on the qualities that are important for my projects, and not wasting their time when they provide (and charge for) qualities that I don’t need. I understand making a fair living and that GCs have overhead expenses, but what I don’t understand is why their markup is also based on materials. Whether the project uses 1/2″ drywall or 5/8″ fire-rated drywall, or a $100 toilet vs a $1,000 toilet, their overhead doesn’t change, right? I can see building in breakage to overhead – that $1,000 toilet will sometimes get damaged, etc. – but that cost/risk/overhead is typically built into the sub’s fee (the plumber in this case). So what’s the business case for including materials in the markup, other than to make the overall percentage look smaller because it’s based on a larger number?
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    There are a lot of reasons why contractors include materials in the quote. You mentioned one obvious one is the markup appears much higher when it’s just labor rather than L + M. A contractor would have to make adjustments to his pricing scheme if there were some extraordinary considerations like you mentioned. If the materials are a ridiculous percent of the cost compared to the average project then, of course, they would have to adjust. Another reason is because homeowners want to pay for materials to get cheaper prices and nickel & dime the contractor on labor. It’s one warning sign (to be considered among many) to contractors to not waste their time. The last reason that comes straight to my mind is that people want to save the money on the purchase, but generally have poor follow-through. Even if they make the order and coordinate delivery (rare), I’m sure they won’t be available to go grab 3 extra 2×4’s and an extra bucket of nails exactly when it’s needed. I’m sure the homeowner isn’t going to want to pay all the labor costs to go get the materials and definitely won’t want to pay for lost production time, wear and tear on the vehicle, and any allocated insurance expenses for the time they spent. It just creates unnecessary issues. The contractor can’t take the 3 extra tubes of caulking and use them on another project, even if they are half used. It’s technically stealing from the homeowner. Plus, imagine what they will say when you hand them a $45 receipt and ask for $62 dollars to cover the other costs I mentioned.
    David
    Replied about 3 years ago
    Investors are so tight, everything is money, they will step over dimes to pick up nickles. I have seen some of the work construction on the low bid that takes 3 times longer to do then the next bid. Doesn’t time mater? Doesn’t quality matter? Doesn’t babysitting mater? Just food for thought!
    David
    Replied about 3 years ago
    Investors are so tight, everything is money, they will step over dimes to pick up nickles. I have seen some of the work construction on the low bid that takes 3 times longer to do then the next bid. Doesn’t time mater? Doesn’t quality matter? Doesn’t babysitting mater? Just food for thought!
    Cj Juan Contractor from Olympia, Washington
    Replied about 3 years ago
    As a client driven GC I wish that I could stand up for other contractors but lets all face it.. Contractors can be a pain in the you know what! Eric your BLOG is right on point! Thank you for saying what I’m sure a lot of us are thinking on both sides of the fence. Bottom line is in my opinion if you find a Contractor that you are happy with try to keep them around, come up with a game plan that works for the both of you (scope of work), has the same end game in mind and wants the both of you to succeed. Always remember most Contractors are hard workers at hart and there strong point is not in the paperwork… Good luck to you all!!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Right on! I think the vast majority of problems arise from a lack of SOW and bad business knowledge from the contractor (allowing people to unintentionally take advantage of them). All this causes a breakdown in the relationship and it’s always the contractor that gets blamed.
    David
    Replied about 3 years ago
    Want a great contractor, things to notice at first sight, His clothes, His truck, his handshake ,His teeth, His hands. It he is in G.Q. clothing, run, His truck is $55,000 and new, Run. His hands have no scares or no paint or caulking, run! His teeth are gone, He’s a druggie, Just food for thought!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I disagree. A contractor that takes the time to clean up and throw on a polo shows he is serious about his business. Truck…that depends on the type of contractor you are hiring. A 350 or 3500 style truck that tows heavy equipment is going to run well over 50k. A 3500 Silverado for a finish carpenter….probably overkill. High volume flippers and investors want a professional who runs multiple crews. He shouldn’t be covered as he should be overseeing and not actually working the jobs all day. A small flipper who needs the cheapest prices, I’d agree. Teeth..no argument here.
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied about 3 years ago
    Great Article! My father (and business partner) has had his own contracting business for 40+ years, and he is always telling me these points when we are reviewing the budget and timeline. I am going to send him this article to show him I am listening to him:) For us, we have fortunately we have found some really good subs. We are on the lookout for more, and we are also on the lookout for back-ups because when you find the really good ones (that fit most of your criteria) they are always in hot demand! Thank you again for some great advise!
    David
    Replied about 3 years ago
    Hard to find contractors with a Investors brain. Curb appeal, cleanliness, on time, easy to get a hold of, keeps you updated daily, sends pictures of progress, these contractors are worth 15-20% more then the others. Food for thought!
    Aaron Gaffney Flipper/Rehabber from Seattle, WA
    Replied almost 3 years ago
    Indeed!!
    Patrick Desjardins Real Estate Investor from Amherst, Virginia
    Replied about 3 years ago
    I had a lot of issues finding reliable contractors this summer. 2 things stood out: – The ones with high ratings on sites like angie’s list were booked out for a month+, so I had to go down the list until I found some pretty terrible workers. Wasted a lot of time and money from it. – I got 3 bids for an HVAC job which I thought should be 5k. Bids came in at 6k, 10k. and 10k. All 3 gave completely contradictory information on what was needed and how to do it. Contractors will look you in the eye and quote a ridiculous amount without blinking. I ended up going with the 6k one and it went fine, though I still think I overpaid.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    I’m not sure I would ever use Angieslist to find a contractor. I’m an investor and what I need is probably not the same as what a homeowner needs. I’d rather just evaluate them on my own.
    Lee Carrell Investor from St. Louis, Missouri
    Replied about 3 years ago
    I enjoyed the article! It is very informative and helpful for anyone looking for a contractor or anyone who has hired a contractor. I’ve noticed that everyone on the planet wants low prices when they are buying, but high prices when they are supplying! Unfortunately, due to the bad actions of a few, contractors are in the group with used car salesmen and lawyers. You never know who you can trust until you find out that you can’t trust them! I’ve learned not to just look for the low price, but to look for the best price! After completing “due diligence” and with all items and issues included, what is the best price that corresponds with the quality, service, and completion time that I want to pay for. This is working well for me!
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    You’re essentially doing some variation of what I mentioned. Find the best price related to the service you are getting.
    Sid Harriel Investor from Las Vegas, Nevada
    Replied about 3 years ago
    My compliments! You know you’ve done well when you spur this much comment. Looking forward to your next post. Perhaps one on identifying the potentially fraudulent or fly-by-night operator or options for resolving issue that may arise. Thanks.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Almost at 60 comments! Though, probably 25 of those are mine. Not a bad idea, an article that flips the question around. Perhaps, 4 reasons why you hired a really bad contractor.
    Sandra Reed Professional from Valley Springs, California
    Replied about 3 years ago
    Good article, so true! Would love to use it in our newsletter, with the appropriate credit.
    David
    Replied about 3 years ago
    Bottom line from a contractors point of view. If a contractor has done over 500 flips, he know his business. He can get the property done in half the time, on budget, and will continue to make a living at it. You will continue to have him give you bids, you can always get others to bid it, just make sure it is apples for apples, time, cost and quickness should also be considered and also quality. In Ogden Utah you can have a B- Job, In Fruit Heights Utah you must get a solid A job. You get what you pay for and if you have a good reference then you have a good contractor. Remember theses three things, 1- quickness, 2- quality of work, and 3- price. If you can get a good bid that has 2 of the 3 your lucky. Most good contractors are more costly then the bad ones. Just like every profession. A good contractor is busy and you will need to wait for him, but sometimes even waiting up to 2 weeks is well worth it. Try and line him up while before you close and get he committed to do the job soon after you get your property. Most investors wait to close, before getting there contractor to the site for a bid. Get him there 2-3 weeks so you can get a business arrangement made prior to closing. Food for thought.
    David
    Replied about 3 years ago
    Eric, I have flipped over 2600 properties , mostly in the Wasatch front almost half of the State of Utah, far east as Atlanta, West to Pueblo Co. and West to Weiser Or. Ogden Utah in the 90’s was my “Hay day”. Have flipped most of the 4 plexes their, some of them 3 times! Yes i have made hundreds of mistakes and I think , have it down to a science . I am presently the Southern Colorado area flipping. Hopefully within 5 years, retire and then move to either Florida, or San Diego. If we ( investors and contractors) could get on the same page. Mostly respect both ways, extra’s cost extra and need to be paid. Contractors need to communicate and get job done. Just need to get things resolved better. Life working with contractors and investors would be a simple task. I don’t see it in my life time, but hopefully my 2 sons. Thanks for your article, I do think most of it is pretty accurate. David Avery
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Thanks David! That is a huge compliment coming from someone as experienced as you. I don’t think any short article can cover everything or get everything correct. I need to keep it broad enough to make it relevant to anybody but focused enough that everybody can take something from it. Inevitably something gets left out or glossed over. I was just hoping to get people thinking about creating a great relationship with another person rather than just racing their way to the bottom of the barrel chasing pennies… Thanks again for your compliment!
    David
    Replied about 3 years ago
    Eric, truly welcome again. Very good article. Maybe we could team up on a similar subject. Just moved 14 days ago from Northern Utah to Pueblo Colorado. So my wife will get a picture and all that tech stuff so you can see a person with the comment. Can we give each other emails, phone numbers on this BiggerPockets on this site? I owned mortgages on two houses and a duplex at age 22. Thanks again Eric David Avery
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Sure David! Your name doesn’t like to a profile so I can’t contact you. For obvious reasons I’m not going to put my personal email/phone up here, but you can contact me through my BP profile. You can contact me directly through the contact page on my website http://ericbowlin.com/contact. My site is also linked in my bio at the bottom of the article and in my profile.
    Chris T. Investor from Downers Grove, Illinois
    Replied about 3 years ago
    Great article! Investors wants fast, reasonable and quality contractors. Contractors want to be paid fairly, on time and get consistent work. There must a happy medium somewhere !
    Aleksandar P. Investor from Chicago, Illinois
    Replied about 3 years ago
    Terrific article Eric.
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied about 3 years ago
    Very good perspective (especially the part about always taking the lowest bid… newbie mistake number 1)
    O'brian
    Replied about 3 years ago
    Fantastic article Eric! Very interesting perspective from someone’s who’s been on both sides as an investor and contractor. I admit, I’ve balked at extremely high bids and hourly rates that just didn’t seem right. I think many investors often see a contractor hourly rate through the lens of their own employee wage. Unfortunately, this is not an apples to apples comparison. The contractor is acting as a business owner with a ton more expenses whereas the hourly rate investors often compare them to, is an employee wage that doesn’t have the same overhead. Every business charges overhead for their services, which far exceeds the actual cost they pay their individual workers.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Exactly! An employee making $30 per hour is actually making WAY more than a self-employed person making $30. The benefits, time off, insurance etc are worth a lot. The self-employed person needs to earn something like $45-50 just to make the same as the $30 hourly employee.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    You’re charged for it every day. You think the attorney actually gets paid $150/hr or whatever you are paying? Nope. He probably is getting $50. The rest is overhead. Explain to me how a contractor is any different.
    Monika Gurg
    Replied about 3 years ago
    Great Tips! Nice advice to find the good contractor.
    Chris Low Investor from Redding, California
    Replied about 3 years ago
    This is a great article! Not only is it applicable to our REI business, it’s something I deal with daily as a Superintendent for an industrial construction company and that my wife deals with (on the other end) as an operations manager of third party contractors. There is so much disagreement about what constitutes “fair” markup, labor-only bids, etc. Your perspective was really helpful in dispelling some myths.
    Eric Bowlin Investor from Plano, Texas
    Replied about 3 years ago
    Thank you! I’m glad that my article resonates with investors both really big and really small. Thanks again for your compliments.
    Ivy Royster from Stratford, Connecticut
    Replied about 3 years ago
    Number 3. “You get itemized quotes or push for “labor-only” quotes even on complex jobs” details can be true for just about any business, not just construction. You can lower your prices to stay competitive, but in the long run it can hurt a business unless that customer turns out to be a long time big biller or sends lots of referrals. However, when you lower your prices for a customer that makes you feel as though they think you are not worth your prices, respect that feeling that they really do feel that you are not worth the money. Those tend to be the most difficult customers to deal with once the project starts. Great article. Thanks.
    Stacey Miller
    Replied over 2 years ago
    Same is true in the Accounting World. Nickeled and dimed by the biggest PAINS IN THE A$$! 🙂
    JL Hut Investor from Greenville, Michigan
    Replied about 3 years ago
    One thing I’ve noticed that you all must be immune to and colored your vision as you look at Labor and contracts is health insurance. I figured I need to earn $10 an hour x 40 hours per week just to cover my health insurance cost weekly.. if you hire somebody at $15 per hour they should have bad teeth. In my small town all the dentist charge $500 per hour or more. So how do you all get free health insurance?
    Bevla Reeves Real Estate Agent from Scottsdale, AZ
    Replied almost 3 years ago
    Awesome article Eric, you broke it down so well! I’ve long since had these very questions and you answered them all for me! I still want to hire by the job though…do contractors get offended when you want to pay them for one job at a time to stay in control of your budget and to be able to part ways peacefully if you turn out not to be a good fit for each other? I learned the hard way NOT to give one GC the entire project! I hope you do a blog on Crowdfunding (if you haven’t already), you’re a good teacher! 😉
    Eric Bowlin Investor from Plano, Texas
    Replied over 2 years ago
    Hi Bevla, I could be wrong but it sounds like you are trying to GC the project yourself and hire subs. If you are doing something like this, then, of course, the subs would not get offended to do different parts of the job. But, keep in mind, you wouldn’t hire a GC for a project that you are directly managing and overseeing in this fashion. On my website I do talk about crowdfunding a bit. You can navigate to my site through my profile.
    Booz Celestin from Miami, Florida
    Replied almost 3 years ago
    Excellent article! Highly informative.
    Chad Gaglioti from Jacksonville, Florida
    Replied over 2 years ago
    I like how this is written. I am not a CG but do professional renovations for myself and clients. I do understand the issue with finding the right person to do the work. I worked for a property management company and they wanted the best work at cheap prices. I walked away from them after about six months of the same thing. Yes, I am busy enough to walk away from those who want itemized prices. It is not worth the time. I am fortunate enough to have a great client list and have never been short of work. My clients hardly ask for a price anymore and just say what they want done and when I can get to it. Thanks for the article Eric!
    Eric Bowlin Investor from Plano, Texas
    Replied over 2 years ago
    Wow, this article must be circulating again! I appreciate the comment. It’s absolutely true about the value of time… You usually pay for what you get. The question is, can you afford it and are you willing to pay for it? Sometimes the budget just doesn’t allow for it.
    Duane Wood Commercial Real Estate Investor from Roswell, Georgia
    Replied over 2 years ago
    Good post! My comments are coming 9 months after the original post but still had to comment about the quality of the post. I am a longtime buyer of construction services (developer – investor) and have owned a commercial GC business since 2010 and I was reminded of the quality of the people in the process and to your point focus on fit. We all tend to go to price immediately, but I see jobs where I have taken bids and have a good set of pricing plans and get bids that vary by 50% or more. For me, the key to buying the right GC is asking the correct questions about means and methods of doing the work. Some GCs have better teams and better ideas on how to complete a job. I think always about the best way to complete any job and matching the correct GC to the job is a key. Thanks again for the post and reminder.
    Eric Bowlin Investor from Plano, Texas
    Replied over 2 years ago
    I really appreciate the compliment! I totally agree that matching a contractor the job is important and something I didn’t really cover in this article. I think one of the faults of most contractors is they think they can do any job. The reality is, every crew has what it’s good at and what it should avoid. As investors, hopefully, we can figure that out and place the right crew on the right jobs.
    Scott Holmes Rental Property Investor from Aldie, VA
    Replied over 2 years ago
    A couple questions from a newbie, so my apologies if I’m a little dense on the subject… Itemized quotes = bad Scope of Work = good …but doesn’t the scope of work just include the cost of each part of the project? Is it just less detailed than itemizing quotes for all materials and labor? How would most contractors respond to monetary incentives/penalties, e.g. a bonus for finishing within a certain timeline or within 10% of budget or a penalty for egregious cost/timeline overruns?
    Joshua Howaniec Contractor from Indianapolis, IN
    Replied over 2 years ago
    It’s not the itemized quotes are bad, the article is saying the a contractor is goinig to overbid somewhere on a project and underbid elsewhere. The contractor then doesnt have the meat to cover the loss for that part of the job. This is probably the only place I would disagree with the article. If the contractor underbids or overlooks a part of the project then what he really needs to do is have a serious discussion with the investor. Sometimes a contractor just cannot forsee everything he will run into and he needs wiggle room for that purpose. I install floors only. I cant remember the last time I overlooked any part of the project that was worth changing the itemized estemate. And that’s because I do floors only. Contractors who handle multiple parts of the rehab process are more likely to miss something than those who specialize.
    Sharon Vornholt from Goshen, KY
    Replied over 2 years ago
    This is a great article Eric. I love the way you’ve broken everything down. I think it’s really helpful to folks to understand the contractor’s “big picture”.
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied over 2 years ago
    Speed, Quality and Price. Pick any two, you won’t get all three with a contractor. Although I should note, you can certainly get less than two.
    Derek Christian Investor from Cincinnati, Ohio
    Replied over 2 years ago
    I own a large Handyman company in Cincinnati, Ohio. We charge $100 an hour and we are booking 3 weeks out with 11 full time guys on payroll plus some sub contractors. The one thing I do value is people that will let me do will in work so I have a list of landlords I work with who always seem to need work. For example we had a large deck project scheduled for today but it is pouring rain so I have two really good guys with nothing to do on about 24 hours notice. I will offer these guys at big discounts, as much as 65% off, just to keep them busy for the day but it has to be last minute only.
    John Murray from Portland, Oregon
    Replied over 2 years ago
    I’m very successful in the BRRRR. Here are some real numbers and I do all my own work. Each day in reno I spend about $100 per day in parts and materials (held true for my last 8) . I purchase all my houses with a 20-30% discount. Each reno is from 60-90 days. I increase the value of the house between $60-$90K in those time periods. If I had to deal with a contractor my BRRRR biz would break even. Each day would cost me almost $1000. The 90 reno house would cost me $90K. My BRRRR biz would be a failure. If you hire a contractor you need to buy at least a 40% in my market where the median value is $420K in Portland Oregon. In Seattle, San Fran and LA, forget it.
    Joshua Goran from Cleveland, Ohio
    Replied over 2 years ago
    60-90 days seems like a long time for any sort of rehab work done by a contractor, even if you’re talking about new kitchen and bathroom and other big stuff – do you think that perhaps a hired pro might get the work done faster, thereby costing less than you’re assuming? Have you tried having an estimate done on one of your projects to see how it compares to your budget? If your system works for you, great! I just am curious.
    John Murray from Portland, Oregon
    Replied almost 2 years ago
    Man hours are time spent on labor. I’m really good at what I do. Journey level skills are the most important aspect of the BRRRR investor. You will make more money faster than paying a journey worker. You are paying their wages , benefits and overhead. This is about $75-$100 per hour in my market where median house value is $420K. Adding a contractor to your investment will bring your profits down close to break even, unless you find a way to squeeze more profit from purchase, flipping or refinance.
    Joshua Mccaffrey Investor from Seattle, Washington
    Replied over 2 years ago
    Fantastic!! As a GC who focuses on higher end homes and an investor in seattle and SE Minnesota myself I have written his same article countless times in my head everytiem i read a blog about not being able to find a good GC but get so worked up about the unrealistic wants us investor expect from their GC’s i have to put it on the back burner. I am a huge fan of Michel Stone and his mission to educate the renovation consumer and general public on the Contracting Business. Anyone looking to get a quality insight into what it takes to run a contracting company and provide stellar service and product while making a profit, (which is the only way to stay in business) should check out his website https://www.markupandprofit.com. it might open your eyes and help give a different perspective when selecting your team for your rehab. Again, Thanks for writing such a spot on post!
    Naren Gunasekera from Moorpark, CA
    Replied over 2 years ago
    Great post. My experience from running an unrelated business and vendors was that if they provided value and the cost was in my budget, then I had a winner. Especially if they provided value and exceptional service, I didn’t mind paying a bit extra to make sure they valued me as a customer and continued to work with me.
    Herman Virgen from Los Angeles, California
    Replied over 2 years ago
    Great Article. I don’t do much work for investors. I have my niche which is soundproof construction and acoustics. A lot of my clients are celebrities or big companies. You would be surprised that some of the richest people are very uneducated in business. They don’t understand mark up and profit, etc. Some of them never had to work and come from old money. Those are the people you gotta have patience with. Investors in areas like Los Angeles are also mainly a pain in the ass trying to cut every little expense. I have had a few instances where I was hired as a consultant because our design bid was too high for them. That never really works out but at least I do my job right and then it’s on them and their contractor.
    Joshua Howaniec Contractor from Indianapolis, IN
    Replied over 2 years ago
    As a flooring contractor myself I saw the title of this article and decided I was going to hate it. Just the opposite. You did a fantastic job be realistic about how realistic many investors expectations are. They almost always want the best for the lowest possible cost. Great article.
    Michael Steven Harris
    Replied over 2 years ago
    I knew a contractor growing up and grew up around them only the government goes with the lowest bidder because of the law requiring them to. Major for profit companies often get three bids and throw out the high and low bid. This stops alot of uninsured nobodies from bidding and it cuts off the rip off artists food for thought.
    Brandon Johnson Investor from Baton Rouge, Louisiana
    Replied over 2 years ago
    Fantastic blog article sir! Thank you for helping us see it from the contractor’s perspective.
    Travis Phillips
    Replied almost 2 years ago
    “Speed, Quality, Price”…impossible to get all three from a general contractor? Why is that? Just curious. We, as a society, have no trouble making those demands sucessfully in other service related industries. I’ve reached the point where I absolutely loathe having to call any kind of contractor. My wife and I are average middle class people and relatively easy to deal with. We can afford to pay cash for most of our projects and my sense is we have never made unreasonable demands. The overwhelming majority of contractors in my region never bother to return calls. Most, as mentioned above, have no proper business accumen. In addition, there is a severe shortage (skills gap) of young people entering the trades. How is this being addressed? On one occassion, we had a contractor inform us that dealing with the city permitting process was just too time/labor intensive. Really? I suspect that for most of these GM’s, it simply comes down to nothing more than cherry picking. From my perspective, they seem more interested in making easy money rather than building a rock solid reputation of reliability, honesty, value and professionalism. These are qualities which all of us, as consumers, have a right to expect.
    Todd Hanks from Crowley, Louisiana
    Replied almost 2 years ago
    Travis, I have an MBA, own a print business, and have been flipping houses for 5 years now. Because my state (Louisiana) requires house flippers who do more than $7500 worth of work to a house to get a home renovations contractor license, I ended up getting one. After I got it, I was licensed and insured to not only do my own houses, but also do work for others, so I decided to take the guys that work for me and get some extra jobs. What I found out is that contracting for other people is a totally different beast than doing my own flips. After successfully doing business for over 10 years, managing supply chain, meeting deadlines, staying organized, keeping customers happy, etc, and then successfully doing the same in a new house flipping business, I found that I had run into one of the most difficult things I’ve ever done: CONTRACTING. Quite simply, contracting, although it is the same actual work that is required for flipping, is a much bigger pain in the butt. And it is a bigger pain in the butt because of all the things that Eric mentioned in his article and a few that he didn’t. A contractor has be able to be good at everything, give the best prices, control the weather, never forget anything, have workers that are always perfectly dependable, never run into any unforeseen problems, etc. Basically…..Supermen! When I work on houses I own, if something arises at one house, I can stop work on the other houses and get my men to focus on the problem at hand. Is there anyone at the houses not being worked on who gets mad? NO! Because I own it, it’s no problem. But, if that house was a house being remodeled for a client, then that client wants to know what the holdup is all about. When I flip houses and run into something unexpected that cost me money, I don’t like it, but I get over it because I figured for contingencies. Sometimes those things have put me a $1,000 over budget and sometimes they have gone as high as $25,000 over projected cost. Once again, since I am in control, I get over it. But, if that is a paying customer, he will usually get pretty incensed about extra funds being needed for things he didn’t foresee. What the average customer doesn’t understand or get to see is the balancing act between: 1) Seeing clients and putting together quotes (which is a very laborious process if the client is very money minded and wants it itemized) 2) Keeping crews running and on schedule 3) Having to run to Lowes or Home Depot sometimes 8 times in one day to get minor things that were forgotten or overlooked but that are necessary for the jobs at hand (yes, the contractor would often rather not pay his carpenters to do a lot of driving and shopping) 4) Having to run to a nearby city an hour away because every building supply store in your town is sold out of a particular product that you need to finish something that other subs or employees are waiting on to move forward with everything else 5) Having tools break in the middle of work and the short term delays and chaos it produces 6) Having a worker not show up or who needs to leave a job site unexpectedly 7) Having weather delay you for days or weeks 8) Having to start other small indoor jobs (in the middle of your other bigger jobs) due to persistent weather conditions because if you don’t, your workers are going to get restless because they need their bills paid. Starting that “small, in between” job might cause a slight delay on the bigger jobs that were delayed due to the weather once the weather clears up, but that small job isn’t finished yet. 9) The permitting process that you mentioned and the rest of the govt bureaucracy and headache that often comes with it (yes, it is a headache). 10) Having the building supply store deliver wrong or defective products, which in turn can cause very long delays (i.e. having to reorder windows that take 3 weeks or more to come in because they ordered the wrong size or because they were broken on delivery). You expected this project to be done by X date and now it isn’t going to be finished for another month, due to no fault of your own. 11) The building supply store either didn’t apply your contractor’s discount to a large order or either put it under the wrong account or didn’t credit you for things you returned and you have to go spend very unexpected hours at the store getting it all straightened out because it is a considerable amount of money. 12) Subcontractors who you have used regularly all of a sudden are nowhere to be found because they decided to take another good job offer in a related field. Your bid and timetable was based on their work and production time, but now you have to scramble to find a back up. When you find one that has a good price/quality, you find that he won’t be available for 3 weeks. This, in turn, causes a delay for the several things that are dependent on it being done. 13) A subcontractor has an employee who is taking pills on the job and falls off your roof, and you end up having to deal with a lot of rigmarole related to it, which is a time stealer and delays you in other ways. 14) The city won’t give clearance for your plumbing and gas to be turned on because, to get a very small job done, you hired a non-licensed plumber on the side (for a 10 minute job doing a pressure test). The guy you hired has actually worked as a plumber for a major plumbing company for 15 years and knows everything there is to know, but works “under” the owner’s license. Even though the pressure test was good and there was video evidence of it and the city came and verified it as well, because of this state regulation, you end up having to pay a separate company $125 to come do it all over. This causes a 2-day delay waiting for the new plumber and the city inspector, which causes everything contingent on it to be delayed as well. 15) You find that a worker you hired has been running to the store on your dime and buying cigarettes and taking excessively long bathroom breaks, so you have to get rid of him, which causes more unexpected delays. 16) One of your long time, good employees starts having interpersonal problems and the quality of his work reduces drastically. After being very gracious and forgiving, you find that it has only gotten worse and he has slipped into alcoholism, sometimes showing up in the morning with it on his breath and then one day he just doesn’t show up anymore. Like that! Gone! A good worker who knew how to do almost everything, someone you depended on, and now you don’t have him anymore and he is hard to replace. 17) Finding out that the shingles on a roof that need to be removed have asbestos, and what you thought was going to be a simple job has now turned into a regulatory nightmare that costs you a lot of extra time, money, driving, disposal, etc. These are just a few examples. On and on I could go, but hopefully you get a semi-detailed idea of all the things that a contractor can run into on a weekly basis. It just isn’t as simple as you think. There are way too many variables to be taken into consideration and way to many things that happen that are beyond your control. These things all add up to contractors wanting to make sure they charge plenty enough extra to account for these things, as well as contractors often having a hard time being punctual about returning calls or performing things exactly on time. Having owned my own businesses and having been involved in other businesses as well, I can honestly say that there is nothing quite like being a contractor. I told my wife recently that there is so much junk involved in being one, that it is making me have second thoughts about continuing to do it (for others). It just simply isn’t worth the headache most of the time. And the only thing that does make it worth it is when you can charge enough to give yourself a decent buffer and profit margin and remove the stress that comes with it (which has everything to do with that cherry picking you mentioned). Anyway, hope it helps give you a glimpse into something that you really will never understand until you get into the middle of.
    Dave Rav from Summerville, SC
    Replied over 1 year ago
    Excellent points raised here. Yes, I’ve also found that too many don’t value the power of your return business. Heck, I’ve even had contractors where the relationship and experience was good on both ends, then I call them 6 months later and it’s crickets! They’ve disappeared.
    Dave Rav from Summerville, SC
    Replied over 1 year ago
    Good article. It really helped me understand the process of hiring a contractor. Investing for about 10 years now, I have accepted my contractor Rolodex will just be constantly evolving. I came to this conclusion 3-4 years ago. Contractors come and go, for whatever reason. Their goals can change too. Also, the contracts they get can change their availability (someone lands a huge contract with a local builder and they commit almost all their resources and time to that one client). You talk about itemization. That is one thing I definitely do. It just makes sense to know what it is you’re paying for. I don’t feel that’s wrong. And let’s not forget, the person paying for this is about to spend thousands, if not tens of thousands of dollars. Explanation and breakdown is certainly warranted.
    Darryl Lingle from Colorado Springs, Colorado
    Replied over 1 year ago
    The relevance of this article continues….. I was just meeting with a small group of investors the other day discussing contractors in the Colorado Springs area and as a new investor was eager to pick up a name or two of good people to work with. Turns out the comments from the seasoned investors came back to the old saying “you get what you pay for”. The better contractors charge more and the more competitive quotes are often those that cut corners and are not reliable. Thanks Eric for the information as one who has been there-done that!
    Brian Bailey
    Replied about 1 year ago
    Echoing those who have already commented, as someone who has worked as a project manager for an investor as well as for a very well run (albeit a niche market) general contractor, this analysis is spot on. One of my favorite quotes from when I was into auto racing and speaking with quality shops is “Cheap, Fast, Reliable, choose two.” I will say that as a general contractor we do provide itemized bids (this is due in large part to the market niche (insurance restoration) that we are in and their requirements) and I feel that they can be a blessing and a curse depending on the customer, another thing we don’t really have too much flexibility with due to how our business model is set up. That being said, it also quickly points out who is likely to be a ‘nightmare’ customer, which we do sometimes have the ability to creatively avoid. I think your article overall should be a must read not only for investors but anyone hiring a contractor in general, the most important thing is ensuring they understand your goals and that the way their business is setup will allow them to operate efficiently at a profit while meeting your goals. Anyways, nothing special too add but I was just really impressed by how well you laid this out as it is a conversation that I have seen frequently from both sides over the past decade and one that isn’t likely to go away.
    Eric Egeland Specialist from Long Grove, IL
    Replied about 1 year ago
    Great post.
    Alan Reza from Anaheim, CA
    Replied about 1 year ago
    Very well written and enlightening post! Thank you for this contribution. It makes me think about how to prioritize what I want and how to align this with the contractor’s goals. By finding a best solution for all, perhaps it will help build a long term relationship!
    Bill Gordan
    Replied about 1 year ago
    Very interesting article indeed. Very interesting topic for contractors and sub contractors in the construction business. I’m always curios to read about it from different perspectives. But as a contractor who has been in business for many years now, I’ve started to hire subcontractors for a little while now and have to admit at the beginning I had troubles and made multiple mistakes. Still learning my lessons, and one thing I know now is that I had to do my homework and learn more about the process, that’s what I’m doing now. I also just saw a good article about it: https://hammerzen.com/six-tips-for-hiring-the-best-subcontractors/
    William Clark
    Replied 12 months ago
    Wow. This is an awesome article and great responses as well as responses to those responses. I’m a newbie. I’ve read the rehab book recommended and I really like the incite that you’ve provided. I also like the idea of partnering with a GC and hope to use a GC that’s also an investor. I just have to find one first. I’m looking for my first property. My first flip, I want to do as much of the work myself as possible. My reason is because I want to develop more respect (than what I already have) for contractors. If I feel their pain, I’m willing to pay more and I understand much more and take much less for granted. Just my way of thinking. Again, awesome article.
    Marilou Ancheta from Clovis, California
    Replied 7 months ago
    Detailed, very well written and interesting post. Thank you!!