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