How to find a contractor that wont put me over budget

Question

How can i find a contractor that wont put me over budget if I need a contractor for the full rehab on a house flip?

Garrett Christensen · Answer

Finding a contractor who will stick to your budget can be super tough, especially if your budget is unreasonable, but here are some tips to help you:

• Get recommendations: Reach out to friends, family, or colleagues who have done similar projects and ask for recommendations for reliable contractors. You can also check online review platforms such as Yelp, Angie's List, or Houzz for reviews and ratings.
• Talk to Supply Houses: Many supply houses for parts and materials can make recommendations for contractors they work with. These ones tend to be ones that are consistently doing jobs and are big enough to get discounted materials vs a small handyman just going to Home Depot.
• Ask for references: Ask the contractor to provide references of clients they have worked with in the past. Reach out to these references and ask them about their experience working with the contractor and if they stayed within budget.
• Get multiple bids: Obtain bids from at least three contractors for the same scope of work. This will help you compare pricing and ensure that you are not being overcharged.
• Communicate clearly: Throughout the project, communicate clearly with the contractor about your budget and timeline expectations. This will help ensure that they stay on track and within your budget.

Remember, the cheapest contractor may not always be the best option. It's important to balance cost with quality and reliability to ensure that your project is completed to your satisfaction.

Eliott Elias · Answer

Only way you can mitigate this is with a realistic budget and a 10% buffer.

Joel Forsythe · Answer

Out of curiosity for detail response purposes, did you more specifically mean “How can I find a contractor (the one that provides the most affordable estimate) that wont put me over budget…….’?My experience is that the more likely accurate and reliable contracting company will be the one that comes in with the highest budget.  So there’s the answer to not going over budget, right? They will have the systems and experience that goes the xtra mile to uncover as many unknowns as possible, get as close as possible to reliable numbers, and know what that work and energy and execution is worth, which I know to be $$$$.Otherwise, it’s just a gambling exercise between less experienced guys or frankly ‘advantage takers’ hoping they are something they aren’t, and there’s no cheat code to that. There are gigs they ace and nothing goes wrong and everyone wins. The flip side is pretty awful though.

Mackenzie Grate · Answer

I agree with @brucewoodruff, often times this has more to do with the person wanting the renovation done than the GC. It does start with you first having a realistic budget AND a realistic contingency plan. But it also starts with you adjusting your expectations of the process. Changes will have to be made on a project. That happens every single time I start one. EVERY SINGLE TIME. And I'm a pretty decisive and organized person.

Do your due diligence. If someone is promising you the world and says they can stick to an exact budget no matter what, they are not being fully honest with you. A good contractor will tell you what you need to hear, not always what you want to hear. Work out a payment plan from the start. Banks do this with renovation loans to protect their investments. They usually pay 30% to start. Do a few draws after work promised is completed and checked. And then there is a final draw at the end. It has to be substantial enough to keep the contractor working. 20% or so.

Make sure they are licensed too and that they have a good reputation in town. Stop by other projects they've done unexpectedly and talk directly to the homeowners. Check if they are highly rated by the BBB.

You can't trouble shoot everything, but hopefully this will give you some help getting started and setting up your mindset for renovations success. I actually want a contractor to tell me if something needs to be fixed that I wasn't planning on doing. Because I'd rather do it now, while he/she is on the job then to have to go back later, and reopen a wall or redo it then. Scheduling a quality contractor to get on a project is hard enough to start. The thought of having to do that later down the road is not only stressful, but it ends up costing you more money in the long run.

Good luck. You got this. After going through the process a couple of times, you will find your stride.

Congrats on taking the next steps in your investment journey! I'm rooting for you! :)

Reed Rickenbach · Answer

Get a bid that includes labor & material from a reputable GC. Make sure the contract states that the quoted amount for the scope is firm and will not change. Typically there is a 3-10% allowance for material cost increases, etc. but if the contractor has enough meat on the bid he/she will typically freeze the price.

Nicholas L. · Answer

@Kyle Knab

put the work in to call LOTS and get lots of quotes.

i called 30 on my last rehab to get 2 solid quotes and then picked 1.  felt good about it.

Bruce Woodruff · Answer

Speaking as a decades long Contractor, that is always more up to the client than the GC. Assuming you have hired a reputable GC that is.

1) Be clear from the start exactly what you want done. 2) Spend the time to get a written-in-stone SOW that will require no changes. 3) Do not change anything just because you saw a nicer design on HGTV last night. That will kill every project right away. 4) If you come across a 'mandatory', like a  rotten beam that must be replaced, then put in writing, in great detail, exactly what will be done, exactly how much it will cost, and exactly how much time that will add to the project. Both of you sign it and you pay the extra $$ right then.

Then just assume that the project will go over time and over budget. There are always things that can't be discovered until the project is underway. And the owner (you or your wife) will always change their minds about something.

Caleb Brown · Answer

@Garrett Christensen had great info. I would avoid finding the cheapest bid. You should have a team in place so when you are finding deals you are not going to be surprised by the rehab being way more than expected. Now things happen and get uncovered but do your due diligence on deals. Get a minimum of 2 bids. The GC's you bring out get their track history, photos, reviews, look on social media. Try to do due diligence, if they can't provide any helpful info(to show they are real) I'd avoid. Also don't pay a large amount up front, see how the GC's structure the draws/payments.

How to find a contractor that wont put me over budget

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