What to look for in a contractor

Question

Gary Charlton · Answer

@ karenbarber I have looked into the turnkey investing side of property extensively in Australia and its not really me. I am a realtor and a property manager here in Australia and enjoy the hands on approach to real estate investing instead of the passive investing that you get from turnkey investing. I will buy some turnkey investments down the road but that will mainly be when I am 1031 exchanging big gains into safer more lucrative investments.

@evacherkova Thanks for the link I will have a read shortly.

@Dassiva Thanks for the extensive answer. I will put a lot of that to use on this deal and will keep you updated on my progress as I go along.

Dash Siva · Answer

In real estate investing, choosing and managing contractors significantly impacts your bottom line, both positively and negatively. Here are a few items to consider, keeping in mind the list is not all inclusive:

Rely on your network (i.e. – other investors, appraisers, inspectors, building supply employees, agents, etc.) to find contractors – what type of work was done, was the project completed on time and within the budget, how was the communication, accountability, was the work done satisfactory, would the contractor be hired again, what did they do well, what didn’t they do well

One tip from the BP community is going to the local building supply store (in your case – have a trusted person on the ground) early in the morning and engage the contractors who are there picking up supplies. Chances are these are the folks in demand because of the good quality work they do

Get multiple bids from different contractors – get into the weeds with contractors. This will help vet those contractors looking to take advantage of folks, in particular since you’re investing from afar

Focus on punctuality and communication – did they show up on time, did they return your call/email in a timely fashion, do they keep a well maintained vehicle, do they communicate in a professional manner

Verify ID

Online search of their name and company

References with phone numbers, and previous work – call the references, find out the type of work done, does the type of work they’ve done match with what you’re looking for

Get a detailed, written scope of work (SOW) along with a detailed, itemized contract – define the payment schedule

How will the payments be structured –are they asking for money upfront (potential red flag)

Hire a licensed, insured contractor that is in good standing with the Better Business Bureau, and the local consumer protection agency; check the license number, insurance policy, and bond. Make sure they’re licensed for the specific job they’re doing

Find contractors that have worked on flip projects, and can provide example of previous jobs

If you’re looking at multiple projects, use this as a carrot for contractors to put their best foot forward

Is the contractor doing the work, or subcontracting the work out

Each of these points can be discussed in depth but should provide a starting point

What areas in the U.S. are you investing?

Happy to discuss further

Let us know how you go with your rehab

Eve Cherkova · Answer

Here is a great article https://www.biggerpockets.com/renewsblog/2015/12/27/tips-finding-good-contractor/

Karen Barber · Answer

In my opinion, I would be looking for people in the area you are purchasing a house in.  Ask questions to others in that area who they use.  Ask for references, pictures of their work, if they are insured...google search them.

May I ask why you want to do the rehab rather than invest in a turn-key cash flow property?