5 Simple Steps to Thoroughly Screen Prospective Contractors
To be blunt, most contractors are going to be terrible for your landlording business. For this reason, you need to screen those contractors just as carefully as you might screen a tenant. Very few people put the work into finding a great contractor, so they struggle along with bad ones for years.
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This was our story as well! If only we had realized that by doing the careful work up front to find a great contractors, our lives would have been so much easier for years to come. Screening contractors takes time, but think of it as an investment that will pay off 1,000-fold if done correctly. The following is a five-step process we use to screen contractors.
5 Simple Steps to Thoroughly Screen Prospective Contractors
1. Pre-screen on the phone and in person.
Just as with tenants, our opinion of the contractor begins the moment we begin talking with them, whether over email, phone, or in person. Do they carry themselves professionally? Do they respond well to questions? Ask them some general questions, such as:
- How long have you been in this line of work?
- What skill would you say you are the best at?
- What job tasks do you hate doing?
- In what cities do you typically work?
- How many employees work for you? (Or “work in your company” if you are not talking to the boss.)
- How busy are you?
- Do you pull permits, or would I need to?
- If I were to hire you, when could you start knocking out tasks?
Then, set up a time to meet and show them the project, if you have one. Set an appointment and be sure to show up a few minutes early, just to see exactly what time they arrive. Are they on time? Late? Early? Do they look professional? How do they act? If everything feels ok after this first meeting, move on to step 2.
2. Google them.
The first thing we do now when looking for information on a certain contractor is to simply search Google for their name and their company name. This can often unearth any big red flags about the person. You'll also want to add your city name and some other keywords to the search, such as "scam" or "rip off." For example, if we wanted to find out more about First Rate Construction Company in Metropolis, we would search things like:
- First Rate Construction Metropolis
- First Rate Construction scam
- First Rate Construction sue
- First Rate Construction court
- First Rate Construction evil
These terms can help you discover major complaints about the contractor, but keep in mind, not all complaints are valid. Some people are just crazy. What it will do, however, is give you direction on what steps to take next.
In addition to Google, there are numerous websites (such as Criminal-Searches.com) that allow you to research more deeply into someone's past to discover little-known information about them. You could also run a background/credit check on your contractor, exactly the same way you would with a tenant. The choice is yours on whether or not you run a background check, but just know you can never be too careful.
3. Ask for references.
Next, ask the contractor for references from previous people for whom they have worked. Photos are nice, but names and addresses are better. Then, do what 90 percent of the population will never do and actually call those references! You may want to ask the reference several questions, like:
- What work did they do?
- How fast did they do it?
- Did they keep a clean job site?
- You are related to [contractor's name], right? (If they are, they will think you were already privy to that information and will have no problem answering honestly!)
- Any problems working with them?
- Would you hire them again?
- Can I take a look at the finished product? (This could be in person or via pictures.)
These questions will help you understand more about the abilities and history of the contractor. Then, if possible, actually check out the work the contractor did and make sure it looks good.
Another tip recently given to us by J Scott was to ask the contractor to tell you about a recent big job they've done. Contractors love to brag about their big jobs, so he or she will likely regale you with the story of how much work they needed to do and how great it looked at the end. Find out the address, and then go to the city and verify that a permit was pulled for that project. If not, the contractor did all the work without a permit, which is a good indication they are not a contractor you want on your team.
We talked about this earlier, but we’ll repeat it here for good measure. It’s OK to be trusting, but make sure they are worthy of your trust first! To do this, first verify that they truly do have a license to do whatever work you intend for them to do. If they are an electrician, make sure they have an electrical license. If they are a plumber, make sure they have a plumbing license.
Related: 4 Reasons You’ll Never Find a Good Contractor (Insight From an Investor/Contractor)
If they are a general contractor, make sure they have a general contractor's license. Next, make sure they do actually have the proper insurance and bond. As we mentioned earlier, you could ask them to bring proof, but you can also simply ask the name of their insurance agent and verify it with that agent. Either way, just make sure they have it. Remember: this protects you.
5. Hire them for one small task.
Before hiring the contractor to do a large project, hire them to do just one small task, preferably under $1,000 in cost. This will give you a good idea of what kind of work ethic they have and the quality of work that they do.
If the work is done on time and on budget, and if it meets your quality standards, consider hiring them for more tasks. Even if the contractor has passed through the first four steps of this screening process, 75 percent of them will still likely fail at this fifth step, so don't settle with just one contractor. Hire multiple contractors for multiple small jobs and see who works out the best.
[This article is an excerpt from Brandon Turner’s The Book on Managing Rental Properties.]
Do you screen contractors with steps similar to the above?
Let me know your experiences with a comment!