One of the things that makes me nervous about RE in contractors. I hear so many bad instances with an RE investor or homeowner about contractor problems, though I have never hear the other side of those issues.
My question is, what are the key things to look for when hiring a contractor, and why do there seem to be so many bad apples?
There are a lot of good ones too. You just do not hear about them, and likely will not hire them as they are good enough to be selective about who they work for and often will only work as a sub for a general contractor.
Sometimes they are green and can not estimate the level of effort for a job and sink themselves financially on jobs. Sometimes its because of unexpected situations they did not anticipate when they bid the job. Sometimes they get tired of waiting for the homeowners to pay the bill.
A good contractor can accurately estimate when they can start and finish the job and how much it will cost, and they respect the other disciplines also working and do not mess with their work.
I can answer this from a contractors view point. I hate when I hear of people dealing with bad contractors, but I know it happens. A lot. There are probably more bad contractors than bad doctors, bad teachers or bad bus drivers, but they are not all bad.
In my opinion, the best way to find a good one is not to hang around Home Depot looking for the guy with paint on his clothes, but to talk to an investor in your area or a realtor and ask who they use. Get recommendations. The same guy that does remodels or additions for homeowners may not be the best one for an investor. You would be best served finding contractors who deal with investors and truly understand what the needs are. I do both and they are not the same ball game.
When you meet with one, have a detailed idea of what you want. Create a scope of work and have an idea of how you want the finished product to look. You may not know the mechanical aspect of how to get it there and that's ok. Just be clear on what you expect. Some people want top quality work, some just want it fast and they're not real picky how it looks. Let them know what you want. Same with timelines, payment schedule, everything.
I see a lot of times when things are not clear in the beginning, it can go south quick. Be realistic, but set a plan in the beginning and make sure you both stick to it.
Ideally this should be a relationship, not just a one-time thing where you are constatly looking for a new guy. If it's not right though, move on and keep looking. There are good ones out there.
I want to follow up on what @Charles Goetz mentioned. There are many bad general contractors just like there are many bad doctors, teachers, accountants, etc.....a lot of people just dont care and never forget the "almighty dollar" is still the main focus in America and the people who inhabit the country. Wit that said, I will list out what makes a good GC IMO.....
- Time!!!!-some GCs come and go when they please when they have work, not caring how long a project takes...these guys can totally ruin a project from inspections, your profit, etc....
- Under and Over rehabbing- a good GC should have a general idea where they are rehabbing and rehab the project base on that neighborhood....with that said more than likely a average to very good investor isnt flipping properties in bad areas, so the idea of just making things work and looking ok should be ideal so the investor can finish the project and place a tenant there
- Tidy & Cleaning up- Not just when the project is done, but some guys are just sloppy with stuff, at the end of each work day there should be atleast a nice pile of dust or whatever swept into a corner. If someone is doing roof work he shouldnt be just casually throwing nails and shingles on the ground without a tarp or some sort. Everything should be organize.
- Receipts!- this is also important because everything should be tracked and kept....If a GC is careless with that it means he also doesnt care about over spending on materials. Know ALL of your numbers and the cost of EVERYTHING. Little things add up overtime
Basically just interview and really vet the guy....unfortunately with GCs, you get what you pay for in most cases LOL....so hoping someone can do 75k of work for 30k is unrealistic unless there are some major terms negotiated. Also with good GCs, they are performing a service for you so, you should tip them something nice....even if its small.....$500-1000 extra can make someones day.This is business so both parties should be happy with one another.
Elbert, as far as a tip goes, would that be the same as a prenegotiated performance bonus, or separate?