Hiring where to start?

Question

Hello everyone, I've been buying and rehabbing properties for long term rentals for going on 8 years now.  I enjoy buying properties, designing them, and seeing the end product.  However in the past I've done the majority of the physical labor and have grown weary of this part of the process.  I've tried hiring contractors but the cost seems so high it's hard to make deals work, so my question is where do you find people to hire full time for general work like drywall, flooring, painting etc...... I believe I've got enough work to hire a couple of people full time year round.  (Side note I live in a small town so may have to look in the larger city of Columbus which is an hour away.  I've even thought of buying a rental house to offer to a full time employee to move to this area but I'm not sure if that would just create more headaches in the long run)

Shawn Parsh · Answer

Gary,

I started out the same way doing most of the work myself until I was told and realized that I should spend my time doing what I do best which is finding and negotiating the deals. You may make a little less per deal, but you will have time to do more deals. I would not hire employees, but I would build a team of people that you can call on that have their own businesses. I have insurance on all of my properties for liability and by hiring people to do the work I have never had to pay workers comp. For example, I use my electrician a lot but he works for himself not me. Good luck.

Bruce Woodruff · Answer

@Scott Mac and @Marc Winter have good points. You really do not want to take on the angst of hiring your own construction crew. I assume you'd want to do it legally right? The cost of Workers Comp alone can be daunting. Your mileage may vary, but if it's like it was for me (in SoCal), they will count all of your employees as carpenters. Your lowest paid laborers, your bookkeeper, and of course your carpenters. That means adding 50% to their pay right off the bat, so a $30 hr carpenter now costs you $45 hr...that doesn't include the rest of the labor burden like payroll tax, etc.

And then you will have to manage them...if you do not do it they will take advantage of you in a big way. It's so much cheaper to just hire a good GC. You think hiring a GC is expensive and stressful? Lol, you have no idea, my friend....

Zac Mckenzie · Answer

@Gary Garrett,

Hi Gary Im a local GC here in columbus, and I completely understand your situation. We started buying and rehabbing properties around 2010, back then my wife some college friends and I did all the work ourselves we didn't know any subs or tradespeople. I was lucky to have a renaissance man for a grandfather and an extremely hardworking father as role models so that helped. One thing led to another and we developed teams and relationships to help grow our business into a full service large project GC and a custom Design | Build group. It is possible to build out your teams without hiring them as employes right out of the gate. I would suggest attending some local meetups, join some Facebook groups and start interacting. Work with licensed people, pay well, pay on time and treat them with respect and they will take care of you. Best of luck.

Marc Winter · Answer

Hey Gary,

I feel your pain!  But DO NOT hire an employee at your stage of the game.  You want independent contractors, paid by the job, not by the hour.  They need to have proof of insurance (indemnifying you) and can pass your background check (see your local unified judicial system website to search background).

Where to find these tradespeople?  One of my favorite ways is by going to your local plumbing/electrical/building materials supply houses and speaking with the counter person(s).  Who do they know that does... (what you are looking for to get done).  Don't ask if they would recommend them---ask rather if they would HIRE them to do that job.

Also, I like to go to my local Home Depot and ask the department head (ex: plumbing) about a particular project.  Often that department head is retired/semi-retired and knows the trade, the locals, the inspectors, and who's who in your area.  (I wouldn't waste my time at Lowes--they are more for DIY'ers and wannabe handyman types, IMHO.)

Hope this helps you, and keep moving forward!

Scott Mac · Answer

Research  The wage rates for the positions you want to hire, in your area.

Research rates for a payroll service for your employee that can handle your federal state and local employment taxes / calculations

Know your federal state local and county tax requirements as well as whether you must have workman's comp for the person or not.

Research any added insurance expense for yourself needed or desired when you have employees.

Research any governmental required benefits such as particular types of insurance that may be required when you have employees.

Research state and local laws regarding payroll day, and type of payroll days that you have available to you to choose from- legally.

Talk to some sales people and advisors from a payroll service such as Intuit or ADP, etc... About the requirements in your state for employees And find out if they can handle all of it for you at a price that you want to pay.

Good Luck

Celia Lumbroso · Answer

Hi Gary,

Finding reputable contractors can be time-consuming and difficult.

If you're located in a small town, I would suggest putting up flyers, visiting the local community center or create local job postings on Craigslist to gain some momentum.

Another idea would be to visit other construction projects occurring in your area whether it's residential or commercial and gain information on the contractors they're utilizing.

Jaron Walling · Answer

@Gary Garrett You have a long winded question here but I recognize the pain. The majority of investors face these issues when hiring contractors. The biggest players keep the wheels turning by deal volume and keeping people busy. They rinse and repeat until the money, deals, or REI motivation runs out. You're running a small business. The employees are dependent on your ability to get jobs (probably distressed deals), making offers, and keeping the train moving. When you stop people we start working for someone else. My Mom experiences this running her small biz painting company. I think it's just the nature of this industry.

Where are you finding contractors? We exclusively work with contractors that come recommended from other investors. We also search, vet, and hire small contractors from FB market place. Those are the only places we find contractors. We never Google search ____ and dial up a number. Every company that hits that search is paying $$$ to be at the top (my Mom included). Those costs get pushed onto the customer. The guys we hire don't have fancy websites (or at all) or drive new trucks with giant logos on it. It's really hard to remodel, flip, or BRRRR real estate and pay top end labor prices. In this market it's nearly impossible to make a profit. Like a good deal you have to search in the weeds, meet and greet at the job site, and "sus" out the contractors abilities.

If there's a secret that makes the above easier I'd love to hear about it! Cheers.

Alecia Loveless · Answer

@Gary Garrett I started small with my guy. He began by plowing for me and then started doing my lawn and then moved to some basic maintenance and now close to 20 years later I basically pay him a monthly salary to do whatever needs to be done.

Some months it’s a big renovation that may take 5 months on a new property and some months it’s just some mowing and maybe one or two little maintenance calls.

He knows all the electricians, plumbers, painters, drywall guys, you name it he can get the best bids on anything he’s not doing himself.

I originally got his number through a friend who referred him to me.

Alan F. · Answer

Employer responsibilities; payroll taxes, administration and audits. Workers comp, administration and audits. Payroll, Health care, PTO, vacation pay. Health and safety policies, resources, on going training are amongst a few. Whatever has been provide to any w2 employee you will provide.

Bruce Woodruff · Answer

Yep it is. You knew they weren't legally self-employed. Paid cash, No W2? No Workers Comp? They didn't have their own Liability Insurance? That makes it highly illegal.

That's not a good model to suggest people follow.

Unless I misunderstood?

Hiring where to start?

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