Do all house flippers only care about getting cheap contractors?!

Buying & Selling Real Estate
6yFollow

Do all house flippers only care about getting cheap contractors?!

Justin P.
Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes

Do real estate investors think they are the only ones that need to be making the good money? I’m talking about from the perspective of a good quality contractor getting turned down to do a job because some shade tree dude was willing to do a job for some beer money?! It can be frustrating in the pricing of jobs. Contractors need to make money too! Or is it all about the investors pocket and who cares if the job is done properly behind the Sheetrock and paint?! Any suggestions for the contractor who does quality work but is obviously higher than that handyman or redneck due to the effort put into 4 years of college, exams, licensing, continuing education, Insurances, professional uniforms and vehicles, and other overhead?Thanks!😁

3Reply
167 views

Most Popular Reply

Natalie KolodijBusiness Member
Moderator
Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y

You decided this was your first post?

It's a numbers game, there's a balance. You may be too high to work with someone who does this for a living. There are contractors who will lower their pricing fora  flipper who keeps their crew consistently employed. 

Whining to a bunch of investors about investors being cheap is going to earn you exactly $0 of new business. This is an excellent platform for networking and building business- shift your motive. 

Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
Kolodij Tax & Consulting
WebsiteView Page
7Reply
See this reply in the discussion

38 Replies

Jump to latestLatest
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    @Justin P. Dont worry about the jobs you dont get . If its price the customer is the most concerned about thats the customer you want to avoid . Price EVERY job to make a profit . Low bidder is always busy and always broke . As a licensed contractor you are a business , dont leave money on the table . You will find flippers that will pay for quality work by licensed contractors but they are the few . Residential is where the money is , its where your word of mouth advertising will come from . Keep your prices on the higher side , you will always make great money . It will also help when problems arise .  As far as trucks go , the cheap contractors drive the cheap trucks , the expensive contractors drive expensive trucks . The cheap contractors rent houses the expensive contractors collect rent . 

    0Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Matthew Paul

    So good! Working for electrical contractors for 15 years then diving off and starting your own is a leap of faith to take! And yes, when working as a electrical service tech every day, occasionally you do get turned down by people just looking for the lowest price and that is just life but when you are your own boss you want to go out there and please everybody! The goal is to be the go to company in your town right?! I realize you cannot please everyone and that’s just life but sometimes it’s frustrating because you wish the contractor would give you a chance and he would realize why you are higher. Also, that it would be worth it to have someone you can trust to do the job right and not have to be looking over their shoulder the entire time! what about lowering your price if you really want to get in with the contractor or flipper or landlord then as you build up a relationship raise your prices? Maybe that would turn the contractor or house flipper off though and it would not work out? I really appreciate the discussion and pointers!

    0Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Todd Rasmussen

    Good points! The thing is, I am building a brand as a company and I feel it is important to be uniform and professional.  which is a benefit of growing your business faster and possibly selling it in the future from an entrepreneurs point of view. I guess it depends on what your goal is with the business model. Whether you will be just quitting the business and retiring when you feel it’s time or rather selling it at some point.

    0Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Justin P.:

    @Todd Rasmussen

    Good points! The thing is, I am building a brand as a company and I feel it is important to be uniform and professional.  which is a benefit of growing your business faster and possibly selling it in the future from an entrepreneurs point of view. I guess it depends on what your goal is with the business model. Whether you will be just quitting the business and retiring when you feel it’s time or rather selling it at some point.

    I see where you are coming from. As long as you keep a handle on cash flows, you'll be okay. Especially if you dial in a niche. Have you gone to local real estate meetups to network? You might find someone who the convenience of meeting you in person outweighs their need to compare pricing? Could even get you some sole sourced projects.  

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    @Justin P. I have a young electrician I have known since he was 19 , he is 26 now . He has been out there in business 4 years . He is rocking . I rent him space at my shop for his mini ex , bobcat , toro dingo , trailers and 2 trucks . He is installing whole house generators , he does about 12 a month . He bought equipment because rentals got too expensive and time consuming . Its him and 1 other guy . I helped him on a 150 KW generator install  ( for a 14,000 sq ft house ) that job alone was $94,000 . He doesnt go after the nickle and dimes . He qualifies his leads on the phone . He does a lot of pier wiring for new piers and boat lifts . And as far as builders , only custom home builders and remodelers .  Now we are in an expensive suburb between Balto and Washington .  You need to go to the area where the money is .  Do not bid jobs to get work , bid jobs to make money , you can get a job if all you want is a paycheck .  Have a great contract made up covering everything under the sun . Always get a deposit . Always pull a permit , its your license on the line . Stay on schedule , if you cant , communicate with the customer . It takes a little time but you will get there . 

    0Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Todd Rasmussen

    No, I have not gone to any meetings like that. I have wondered where I might find them for that reason and also to broaden my horizons for real estate investment. Haven’t been sure how to find out about them. 

    0Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Matthew Paul

    Thanks for the advice!  Our business plan is to have a good base of residential and commercial service clients and then I can branch out into more niche type of work in the future so if the economy does a downturn, we can be kept busy with the still needed service work. I’ve been working in the industry for 17 years but it is interesting and needed to get advice and encouragement from others. 

    0Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Brian Pulaski

    Yes, it is frustrating when price gougers ruin it for other people. It would be interesting to know if you used the exact same windows and options as he had priced you just for that example. That is also another hurdle that you have to somehow clear, the apples to apples comparison when dealing with price shopping clients.

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Justin P.:

    @Brian Pulaski

    Yes, it is frustrating when price gougers ruin it for other people. It would be interesting to know if you used the exact same windows and options as he had priced you just for that example. That is also another hurdle that you have to somehow clear, the apples to apples comparison when dealing with price shopping clients.

    Different window manufacturer on the main floor, the same windows in the basement, however the specifications were nearly identical.

    I spent years writing spec books for a design/construction administration girl and then scopes of work for a GC, so apples to apples bids/pricing always.

    I’m not sure why or how he priced it like he did, and have even used him for other work (and been happy with his quality and price), just not sure if this was a “I don’t want the job, but for this price I will do it”.

    0Reply
  • Jack I.
    Member since 2019 · 43 posts · 24 votes
    6y

    I am an investor and do a lot of the work myself. My labor people that I hire, I try to give them a wide space to do the job. If they do not hit the price and quality I require, then I replace them.  Most of my hired work is done at the bottom of a business cycle and I try not to do as much during boom times like today.  If I was a contractor, I would go after home remodels now ... when times get slow, you need to be with investors who have deep pockets. I will make work for my contractors... That said, I take good care of my contractors as I want them to be there when I need them....so I generally do not negotiate prices with them...if the price is not right, I either do the work myself or put it off in time.  I am not a flipper though, I buy, renovate, rent out and then find the next deal.. 

    1Reply
  • Justin P.
    OP
    Contractor · Fayetteville, AR · Member since 2016 · 21 posts · 4 votes
    6y

    @Brian Pulaski

     Interesting!. Yes that could be the case. It is a learning experience on how much to harp on the customer/contractor/house flipper to do an apples to apples comparison and turning him off from being too pushy in his or her mind. I guess the fix for that would be to give them two or three options with different qualities of end result.

    0Reply
  • Patrick Strain
    Member since 2018 · 61 posts · 22 votes
    6y
    Originally posted by @Justin P.:

    @Patrick Strain Understood. Do you usually have good luck getting the same contractor back? Or do you have a list of electricians and plumbers and HVAC people and it doesn’t matter if you use the same company that you know you can trust?

     Maybe my comment didn't come across properly. I was joking that I do all my own stunts. I am my own electrician, plumber, HVAC person, etc. 

    0Reply
  • Dan Marrero
    Member since 2021 · 3 posts · 2 votes
    2y

    I know this is an old post but I do have to add that contractors or handymen use keywords to try to over charge. Quality is the first one. In my opinion, it is not about quality, it’s either done right or not done right. When the person is not able to do it right they give up and the work looks bad hence then we use quality word. The spin to this is how they will expect full pay because of the time they spent to not do it right. That is the hilarious part.The other part of cost is this. Most start charging what their employer charges because people use the mentality of I can do this on my own to make the same money. What they fail to understand is the majority of per hour costs is based on business overhead. So if you don’t have a business lot, trucks or employees, they need to adjust their per hour when starting.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free