The 6 Commandments of Working With Contractors on Rehab Jobs

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For those of you who know me, I’m a full-time wholesaler right now, but for three years, I used to be a full-time rehabber.

There were a lot of reasons why I reverted back to wholesaling, but a major reason was the headache of dealing with contractors.

Through my experience, I’ve learned how to spot a great one, and how to spot one that will most likely steal from you. Everyone in real estate at some point will have to deal with these guys, so I thought it’d be helpful if I shared that knowledge with you.

Today, I am going to share with you the 6 commandments of working with contractors, and if you live by them, I promise that your experience will be far more pleasant than mine was.

Ready? Let’s do it!

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The 6 Commandments of Working With Contractors on Rehab Jobs

1. Thou Shalt Not Always Hire the Cheapest Contractor

When I first started in real estate, my logic was that whoever gives the best price wins. However (through a lot of pain, I might add), I have learned that typically the contractor with the lowest bid has underestimated the job, which translates to him putting your job second to other jobs and the work being sub-par.

Then, usually you’ll end up having to hire a new contractor to fix his sloppy work, which will end up costing you far more in the end.

Don’t do this!


2. Thou Shalt Not Always Use the Same Contractor

The truth is, your relationship with your contractor can be looked at as a marriage. In the dating phase, you always put your best foot forward. You’re pretty much Johnny-on-the-spot at all times — until you get married. And then things start to get loose. You’ll get comfortable and start leaving clothes on the floor, using the bathroom with the door open, things that you would have never dreamed of doing during the dating phase.

Well, it’s the same with contractors! When you first hire them, they’re amazing — until they get comfortable! Then things start getting slightly more expensive, your jobs start taking a back seat, and the work begins to become less quality.

So, the key is to have a handful of contractors that you use regularly, so that they strive to continue earning their keep.

3. Thou Shalt Not Use Contractors That Are Not Licensed and Insured

Through my experience, licensed and insured contractors will be a little bit more expensive, but they typically do a better job and are safer at work.

Related: The Simple Step-by-Step Guide For Rehabbing Your First Rental

At some point an accident will happen on the job, and you don’t want to foot the bill of an injury that should have been handled on the contractor’s end.

The truth is, when a contractor is licensed and insured, it’s a filter that signifies them as a better professional and helps you separate the gold from the dirt.

You don’t want to deal with anything else, trust me!

4. Thou Shalt Not Pay Contractors Too Early

Contractors will typically push you to pay as much for a job as possible before the work is done.

You don’t want to ever do that because paying too much on the front end will demotivate them.

If someone asks you to paint a fence and they say, “Hey, I’ll pay you $900 right now, and then $50 when you’re done,” instantly you now want to finish the job as soon as possible — usually at the expense of the quality of work.

But if I pay you $500 now and $2,000 at the end, then it keeps you motivated to continue the job and do it with excellence.

Make sense? Great!

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5. Thou Shalt Not Do a Job Without a Detailed Budget

When I was a rehabber, I used to typically have some idea of what work I wanted to do on a house, but if I was to be honest with myself, the majority of the time I was just winging it!

You need to have an entire breakdown of the project, a 100 percent layout with general ball-park figures attached to the things needing to be done before you ever get bids from contractors.

You need to have the end in mind, from the beginning. Otherwise, it will cost you more time and money.

6. Thou Shalt Always Put a Timeline on the Project

If you simply hire someone and you don’t give them the parameters around the timeliness of the work, you’ll find yourself in a never-ending headache.

Related: How To Find & Manage a Top-Notch Contractor for Your Projects

What I do is work out a completion date with the contractor, and then if they don’t make it, I begin deducting money off the original agreed price.

For example, if we agreed that the work would be done November 10th, every day after November 10th, I’d deduct $75 off the original price until the work is done.

I tell them upfront about this before I hire them, and it has drastically improved my experience with contractors finishing when they said they would.

So, there you have it, guys! These are the 6 commandments of working with contractors, and if you keep them in mind, I promise your life and work will be significantly more manageable.

In the comments section today, is there anything else you’d add to the list?

Leave a comment and let me know!

About Author

Brett Snodgrass

Brett Snodgrass is a licensed real estate broker and wholesaler who hails from the Indianapolis metro. His mission in life is to glorify God by serving as many people as he can through his real estate business. He has a pretty active community growing on Facebook and is also the founder of Come check it out now and connect!


  1. Peter Duncan

    This article is dead on ! I broke each and every one of these commandments on my first flip, starting with the first- attempting to go cheap. Unfortunately, this was not the route to an easier, softer way. But thanks to an AWESOME Creator the pain isn’t as bad as it could be. I’m looking ahead to the next project and I want to know if anyone can recommend forms for detailed budgets. Additionally, how does one determine whether a contractor is licensed or bonded? Is there a qualitative or quantitative judgment one should look for on bonding?

    • Brett Snodgrass

      Thanks for the comments Pete… You and right about “Our Creator”. I don’t have an FORMS that we have used, but I recently Used this one Company who was a Manager of the Contractors… They did a good job, and I loved this idea, as they were the ones who dealt with the contractors, and all were licensed and insured. The management company charged 2800 on top of the Contractors Fees, but it was worth it for not having to deal with the contractors. You might look into this in your area… Also we have Angies List, which is a great site for finding contractors and there are reviews for the contractors which is nice. It also states if they are insured. I would just ask the contractors for their insurance papers when talking with them up front… Thanks again Peter.

      • Peter Duncan

        Thanks for your reply Brett. Heck, thanks for writing the article! I like the idea of sourcing out the management of contractors. It’s like my accounting instructor once pointed out: “You can do your own accounting and miss out on that valuable time… or you can pay someone and use that time to make more money.” Still, this will likely be something I do down the line. If there’s one thing this first deal has shown me is that I’ve allowed a lot of money leak out through holes in the hull of the ship. Honestly, I’m still working out where all of those leaky places are. So once I get that handled and start making money I can foresee the out sourcing as viable. I may explore Angie’s list. Because “Thou shall not always use the same contractor.” LOL. And after paying the first guy twice to do a fraction of what was promised and paying someone else to come behind him I’ve learned my lesson: they will be licensed and bonded from this point forward. I will take your suggestion and ask up front. Thanks.

  2. Manolo D.

    Everything in the article is great, especially if you follow #5, it really gives out all the expectations. A good contractor need to follow it, if they think they are bigger than you, then they aren’t really contractors, that is the core meaning of contract, that it must be followed.
    To Peter, ask your local contractor license board how to protect yourself, a website and a phone call is all you need on how to vet your contractor. J Scotts book is simple to use, a detailed item of work is simply Line Items of what it is. Also, a good contractor could separate materials and labor for their bids, if you happen to get those kinds of bid, they are on a higher class type of contractor.

  3. cheryl c.

    Nice Article! I have made most or all of the mistakes you described above. “Price creep” is the reason I no longer use my contractor of 5 yrs. One thing that is very important (and most likely SOP for everyone here) is to make a detailed list before you do a walkthrough with your contractor. I give him a copy when we start walking the job. Compare this closely with the proposal to make sure the bid includes everything you discussed. If something is left off, you will get stuck paying extra when the contractor claims it wasn’t discussed and not part of the contract. It always amazes me when these guys walk the job and don’t take any notes!

    • Mindy Jensen

      This was the tip I was going to add. I always walk the project with my husband, and write down everything we want done to the property. I type it out and give a copy to each contractor as we walk around, so they have a good starting point. Sometimes, a contractor will point out something I missed – which always moves him up a notch in my book.

      When I get the quotes, I can compare apples to apples and those apples to my original request. Those that follow the request closely usually get more weight to their quote than those who miss things initially.

    • John Montgomery

      Agree completely. I’m doing my first rehab of a buy-and-hold property and found myself to be exponentially more detailed than the contractor. That said, I’ve made numerous mistakes. My greatest take-away from this project was the need to jump in and get started. I read and listened to real estate investing books, blogs, podcasts, etc for months… but until I actually took the plunge, I didn’t have a true appreciation for the endeavor. BP, along with several mentors, gave me the confidence I needed to get started.

  4. Jeff M.

    Here’s an analogy. When I was a kid I drove my car too fast and knew I was gonna get in trouble. Eventually, I got in an accident and was lucky no one got hurt. That slowed me down. Your post is the wisdom of a guy who has had an accident or two and lived to tell about it. I am 60% done with a duplex rehab now and am heeding most of your advice. The only exception is that I am using an unlicensed carpenter for some of the window, door and cabinet work. Thanks for the tune-up. It is just too tempting to go with a lower price for someone who works hard and does great work. You tell me, is this “driving too fast”? Thanks.

    • Brett Snodgrass

      Thanks Jeff.. For windows and Doors and stuff like that, Maybe using an unlicensed contractor might be ok… But I think a contractor having insurance is essential. Because if that person gets hurt, and the medical Bills start coming in, and they don’t have insurance, and they talk to an attorney… Guess who they are coming after. I know from experience. Thanks Jeff.

  5. I like the idea of a completion date. However, penalizing them for each day over schedule is hard to do. Isn’t it possible as the contractor sees the completion date looming overhead, they could get careless and sloppy? And the biggest fear I have is, he could get to a point in the job where he figures it is more cost effective to him to walk off the job rather than complete it and face penalties. I have a contractor that does great work, but has unreliable employees. As a result the houses he has done for me always take TWICE the amount of time he promises. That raises my carrying costs significantly.
    On another subject, any tips for where to buy insurance for a house under reno?

    • Brett Snodgrass

      Thanks Jerry… Yes this might be the case, but then keeping most of the Money back will help the contractor. And yes you can be reasonable in your conversation with the contractor if it’s taking too much time, but I think this at least gives them a dead line. It’s good to have a deadline. As business people, we need to set goals and deadlines. This helps us stay on track. We use Affinity Insurance for reno homes. Thanks Jerry

  6. mike waller

    Hello All,

    I am coming at this from the contractor point of view. I am constantly, truly AMAZED at the crappy work I oftentimes find, and have to fix/repair/replace. I am a state licensed builder/remodeler and I simply shake my head in unbelief at the “workmanship” I see. Why, oh why, do people pay for the cheapest contractor? You nailed it on the head with these types of workers. But to penalize for each day after a deadline is pretty tough, too many things can go wrong that are out of the contractor’s hands – weather, inspections, suppliers, etc. And on the flip side, do you pay them for each day ahead of schedule that they complete the work? I am guessing not.

    Now, for my preaching to the REI folks, do NOT call a contractor and lowball him/her!! I do not even take calls from investors anymore. (Several other contractors I know don’t either) If during the course of my initial conversation I find out the caller is an investor, I find a very polite way to suggest another contractor and end the call. Why? Because I have yet to deal with one who didn’t insult me with the money involved. You want a state licensed contractor? Real insurance? That costs money my friends. It takes knowledge to pass a state exam. You want a contractor with general liability, who’s bonded, and carries worker’s comp? Not cheap. So don’t call me and offer me $15/hour to rehab your house. You pay for quality and that’s the bottom line.

    And for those who don’t know, a license (city, county) does not require anything more than just filling out an application and paying a small fee. That’s it. You can get a licensed contractor who has the same amount of ability/shoddiness as a non-licensed contractor. Get enough complaints, they change their business name and do it again. I follow behind this guy/gal time and time again. Customers want it done cheaply and find out they got screwed (as pointed out in the article)

    I read a lot of articles slamming contractors on BP, and some I am sure are justified. But know that when you hire based on price, you get what you deserve. But please stop blaming contractors as a whole because you did not do your homework or were too cheap to pay for quality. I understand the point of rehabbing is to make money, but there comes a point when you are taking two steps back for each step forward, and for other contractors like myself, we don’t even entertain working for real estate investors.


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