Real Estate Investing Basics

Perfect Contractors Are as Elusive as Unicorns, So Here Are Your Choices

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11 Articles Written
Unicorn silhouette at sunset

Before I approached my dad about partnering on a flipping company, I knew he would be perfect. He was a general contractor, who had owned his own business for over 47 years. He had previously partnered with other investors, too.

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But most important of all, he was my dad. I knew him and trusted him implicitly.

Not long after that initial conversation, my dad gave me the best advice about working with contractors that I have ever received. Today, I am going to share that insight with you.

But first, let me set the scene. It was March 2014, and we had just had a conversation about partnering. We were both on board with the terms and division of responsibilities, and we had drawn up an agreement.

In short, my dad was responsible for managing the job, and I was responsible for everything else. We knew the price point we were seeking based on capital we had available. We just needed a house to get started.

It took six months for us to find our first house. Despite being in a bit of a panic because everyone told us we would make several offers before we finally got one, the initial offer we placed was accepted.

We forged ahead and started to discuss plans for the renovation. Part of those discussions involved the contractors we were going to use to do the work. As my dad had been in the industry for decades, he had an incredible list of contacts.

Calm middle aged man in checkered shirt sitting and looking attentively at his daughter while talking to her

We started scheduling estimates for each trade and waited. Fast forward to a week later, and we began receiving estimates. To this day, I still remember the shock I felt about some of the numbers.

The prices were way above what we had budgeted. I began to fear that the reason we got the house so easily was because we had overpaid.

It was at that moment, my dad said to me, “Ashley, there are only three things about a contractor: price, quality, reliability. You can only pick two.”

Being naive, I said, “Dad, that is not true. We must be able to get all three.”

Dad replied, “You can… They are called unicorns.”

It wasn’t long until I realized my Dad was 100 percent right. (I hope he doesn’t read this.).

To further drive home his point, let me detail what I learned.

Related: The Ultimate Guide to Finding an Incredible Contractor

Save Money (at the Cost of a Subpar Experience) With These Contractors

Uncle Sal

Everyone has that friend or relative who is handy. If you are lucky, he or she is an actual contractor. Typically, they are able to help you out and will probably do good work for little to nothing.

Unfortunately, they are never reliable. This is likely because they have another job and are only helping you out when they have time. As time is money in this business, having someone who is not reliable will impact your timeline and in turn affect your holding and opportunity costs.

This can also be true for contractors. Many contractors are very good at what they do, but they are awful business people. They will give you a fair price, but their scheduling and time management are the worst.

woman in business attired seated at desk looking at laptop computer with arms raised in wonderment and disappointment

CONtractors

While initially you think you are saving a ton of money, you quickly realize the work quality is poor—which could cost you more in the long run to fix. These people show up because they really need the money. Their pricing is typically reasonable, but they need to be watched carefully to ensure shortcuts are not being made.

What is potentially worse is that ultimately these people increase the liability on your business. Even if you are lucky enough to get through a buyer's inspection without major issues, due to the litigious nature in the U.S., it is just not worth the risk.

Related: The First Time I Was (Knowingly) Ripped Off by a Contractor

Pony Up the Money (for an Excellent Experience) With These Contractors

Les Entrepreneurs en Construction

This is the company you see everywhere that has five-star reviews. Their quality and reliability are superb, but their pricing reflects it.

The reason their pricing is high is because they typically have high overhead costs. So, while it is nice to get an estimate quickly or to speak to an actual person when you call, you are paying for this convenience.

There are obviously benefits to this, too. Working with a company like this requires little to no oversight and lowers your risk for inspection findings when you go to sell.

If you can afford these contractors, it will save you a lot of time and headaches. Just know that your bottom line will take a hit when you sell.

How I Choose Contractors

Now knowing all of this, how should you choose your contractors? Well, grab your leprechaun and go search for unicorns!

OK, that might not be the answer. So, let’s start with what we did.

For our first house, we actually did a lot of the work ourselves. But in parallel, we searched for those unicorns. We soon realized that there are varying degrees of the three metrics my dad identified (price, quality, reliability).

While certain contractors may not live up to unicorn standards, there are quite a few very good looking horses out there. They may take some time to find, which is why I wrote a whole other article about finding them!

It will be challenging in the beginning. However, eventually, you learn to adjust your rehab estimates and manage your projects based on the horses you have in your stable.

What tips do you have for finding good contractors? What bad contractor experiences have you had?

Share below!

Ashley Wilson, co-founder of HouseItLook LLC and Bar Down Investments LLC, started investing in real estate in 2010 with a single rental property. HouseItLook, located in the suburbs of Philadelphi...
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    Daryl Luc
    Replied 8 months ago
    Define each job spec by craft and classify it as a small job or a large one. Small, a 4 pc bathroom or two refresh with no wall or water/waste line relo. Large, a gut and redesign, move a wall, finish out a quadplex with two baths per unit, etc. Next, go to a couple of plumbing supply houses and talk to someone at the desk, share what you need and ask for a couple of subs that he thinks would be best. The people at supply houses, lumberyards, roofing supply etc. know who fits the bill for your pick two of the three gauges measurement. Also, they usually always will give you names of subs that always pay their bill! An important measure also. In sales, the three measures are: high performance, high quality, low price, pick two. With a couple of names for each job you can general yourself, pick not just based on low price, but your gut as well. Nothing screws with a sub's timeline like change orders, so know what you really want to accomplish before getting out the nailgun. And by all means, take a look at their work first, or at least talk to their offered references. Stay off Craigslist until you really know how to flush out the clowns with hammers.
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 8 months ago
    Daryl, couldn't agree with you more!! These are great ways to find contractors! I also wrote an article earlier about finding contractors: https://www.biggerpockets.com/blog/new-way-find-good-contractor Hopefully, this gives you some more ideas too:)
    Barry H. Investor from Scottsdale, AZ
    Replied 8 months ago
    ASHLEY - Great article and your father was (is) completely right. It took me 3 years and about $100K lost on 4 different CONtractors in Kansas City MO until I found my Unicorn. He works only for me know and this is why I have no fear Seller-Financing the sale of my properties to investors (usually with tenants already in place with mad cash flow) - because if I end up with a bad Borrower and taking back the asset, I know the asset (house) is solid - because it was built by a Unicorn ! :-)
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 8 months ago
    Thank you Barry. I am sorry to hear about the 100k loss, but ultimately it led you to the unicorn you have today! Thank you for reading!
    Nicholas Lohr Investor from San Francisco, CA
    Replied 8 months ago
    A thought from when I started a few years back.... One thing I asked myself when I first started renovating was, "Who is responsible for all the little things when there isn't a specific trade for whatever that little thing is?" Examples: doorstops, hose bibs, doorknobs, closet tracks, dryer vent cleaning, dryer vent installing, downspout replacing, door strike plate adjusting, cabinet pull replacement, threshold replacement, small fence slat repair, sink drain stopper replacement, etc... thats all I can think of at the moment. Yes a finish work person could do some of those things but if you only have a hodgepodge of those little things here and there it may not make sense to go out and hire someone special for it. I hired the licensed contractors for the big / time consuming things like plumbing, electrical, roofing, and painting but finding someone to do all the little things always proved a challenge. (and the local "handy person" always just ended in disaster. My point is the following.... You. can. do. it! And you should do it. "YOUTUBE!" When I started I literally didn't know a thing and had zero confidence in myself but I forced myself to try. For each little thing that came up I watched 2-3 YouTube videos for it, I took my time, got myself the correct tools, and the next thing I knew I was getting it done. And for way less $! In retrospect it's honestly not that hard. I can't tell you how much this has helped as I moved forward. Not only was I not blowing $$$ on some small repairs every time they came up but I was also learning for future properties and future maintenance requests. I was also using the skills to get subsequent properties done that much more cheaply. I highly recommend this strategy for anyone starting out who has their properties in their hometown. (long distance investors different story) At least give it a try, you may surprise yourself!
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 8 months ago
    Great points Nicholas! I think starting out it's always good to handle the small jobs. It allows you to be on site and see the process, learn what your trades are doing, and realizing the value of the work. As you scale, it is impossible to do these tasks by yourself, without jeopardizing time- both the time for completion and the value of your time. For us, we did this on the first house, and the rehab took 9.5months. A year later, when faced with a comparable rehab (but actually larger scale), it only took 9.5 weeks and we outsourced everything (even small jobs)! Our business plan now is outsource everything, and only step-in when there is an emergency. At the end of the day it's important to realize what your time is worth.
    Katie Rogers from Santa Barbara, California
    Replied 8 months ago
    Forget perfect. Good contractors are rare as unicorns.
    Isaac Bazek Contractor from Indianapolis
    Replied 8 months ago
    Ashley I couldn't agree with you or your father more price-quality- -speed choose your 2 but only 2! As a contractor this is actually a part of my conversation with my clients although I'm most prone to deliver on the quality-speed. Over the years of having different men work for me and with me this same rule applied as for their pay as well my expectations.
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 8 months ago
    Thank you for reading Isaac! My dad actually used to have almost 30 guys working for him, when I was a kid. He went down to only a few guys because of the same points I mention in the article. So these issues aren't just problematic to people who are looking for someone to work on their projects, but also the lead contractor too. Best of luck finding your unicorns too!
    Tushar P.
    Replied 8 months ago
    So basically all contractors are unprofessional or incompetent or both 👍
    John Logue Investor from Fairfax Station, VA
    Replied 8 months ago
    Tushar, I think you totally missed the point of the "pick two" concept.
    Sergio Altomare Rental Property Investor from Greater Philadelphia
    Replied 8 months ago
    Great article, Ashley. I have a saying about small outfit and independent contractors, they have an expiration date! These are the guys that are great for a period of time, then end up on a bender or some domestic challenge and go AWOL. On top of the CON guys, there are the rob peter to pay paul guys. These guys string you along while they find other jobs and deposits to finish your work. We have tiers of guys we use. Tier 1 is cheap, can get there and does only work that works or doesn't, like light plumbing, electrical or carpentry. Tier 2 are guys that can troubleshoot, figure out a problem and get it fixed. They tend to have diverse skills and good quality, but aren't cheap. They can't get there right away either. Then we have Tier 3, which are trades that are very specific, their work requires permits and are outfits that have crews. These guys are HVAC, roofers, plumbers and electricians. No matter what, we serve as the GC, which is a whole other part of getting isht done! One can't underestimate the work that goes into identifying the right contractor for the job, getting bids, coordinating work and verifying it before the last payment.
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 8 months ago
    I cannot agree with you more on the diligence that is needed to find good contractors. In fact, finding contractors can be a full-time job at times too! Interesting how you look at the different tiers of contractors. WRT to small, independent contractors, I have to say while I have had some guys go "AWOL", some of our best, and longest relationships...in all honesty, UNICORNS, are the small outfit/independent contractors! These guys don't have the overhead, and they typically are generational contractors, they are incredible, fair, have survived multiple recessions, and are amazing to work with. At the end of the day, they are very hardworking, have fair pricing, and have an an old time time management style/respect for people's time, because their parents were in the business, and that's how they ran it too. I guess this really shows there is no one size approach to guarantee good contractors, so trusting your gut, and be thorough in your due diligence is critical. Thank you again for reading!