I am currently in search of a contractor for investments I plan to make in Philadelphia through the BRRR strategy. Although I haven't acquired my first property I would like to get aligned with a contractor to facilitate the process once I find a good deal:
- What are some questions I should be asking contractors to determine if I should work with them on my first project?
- How do I compare different contractors aside from price (because I know cheaper does not mean effective)?
- What are some things you've experienced that you wish you would have known when looking for a contractor?
- Given that I do not know the extent of the work that will be needed on my first project how do I go about asking for price ranges?
If you have any recommendations on general contractors in Philadelphia please feel free to message me. Thanks in advance!
Finding good people in Philadelphia is difficult. The smaller projects tend to attract poor quality people. There is so much work in Philly right now. Anyone who is good is busy, and those who aren't busy are not the ones you want. Get excellent references and make sure you control the funds for the purchase of materials and payment of subcontractors. I generally build about $5M of new construction each year in Philly (not huge). I've been burned by low bids. It's really important to have detailed specifications for the scope of work. That's the job of the architect. Hiring a good architect is one of the keys to getting good bids. Let me know if you need some introductions to good architects. My GC's would not do a small project.
There are also a lot of permit/license situations to consider in Philadelphia. There seems to be lots of paperwork designed to the city gets its "application fee". Here's what I have done so far:
-Commerical Activity License
-Use permit (even though there are no changes to the home!)
When I begin construction, I think I'll need an EZ Interior Non Load Bearing Demolition permit and
the contractor will get the following permits:
Once it's all done, I'll need another rental permit to rent it out.
The above is what I know so far....I'm sure I'm missing a bunch of stuff, which hopefully I'll find out about.
Hi Maricruz, Congrats on the new venture. I think the best way to go about this is find a few contractors in both philly and south Jersey and compare them both in costs and knowledge when discussing the renos. I actually know a contractor who invests in the area and I will send him a link to chime in.
This is not a recommendation, as I have never worked with this individual, but there was someone named Andresa Guidelli on podcast 314 who manages rehabs in Philadelphia for out-of-state investor.
Check out the app/website 'Thumbtack'. I have found a variety of good contractors on their phone app. There are a bunch of different contractors on there with lots of reviews. I've never looked for a GC on there but I've been able to find a subs. It's worth a look.
I feel like contractors are a different breed. Unlike a lender or a broker, personally I don't feel like they are the type to sit down at starbucks and have a conversation with you about what you're working on or plan on working on. With contractors, I feel like it's difficult to establish communication without having a job ready for them. A lot of them are busy self employed people, running all over from job to job, fielding calls, etc so I believe they can't really afford to just chat about a hypothetical job which is unfortunate. So referrals are the best way to go in order to feel out a contractor. I know it sounds harsh but I try not to waste their time if I can avoid it as much as possible.
Once you find a few contractors that were referred to you by other investors, have them come and look at your project during a walk through or an inspection while you have it under contract. Get each price from each contractor as well as their anticipated timeline and make your decision from there about who to go with.
I’m a contractor myself and I will tell you first hand which I’m sure everyone else can second that this part of the business is the hardest to fulfill with quality, integrity and reliability. My best advice to you is to exhaust all possible options and areas. For instance go to Home Depot and collect the numbers off the side of trucks. Most likely if they have their info posted on the side of their Truck then they aren’t a fly by night establishment. Talk to everyone and anyone you know about contractors and get referrals. Get pictures and references of past jobs completed. Like one guy said most contractors in philly won’t take on smaller jobs right now because of the amount of work in the city. That opens up the door for all the “guys with a truck” which won’t do quality and possibly won’t even finish the job. Never pay in advance or ahead of work done and always save a majority of payment for the end. I responded to a post about (labor only how to pay ) and I spoke about my 80/20 rule. Pay 20% after 1/5 of work is completed and save the final 80% for the final punch list. If a contractor is only Owed 10% or even 20% and they have a few days of annoying punch list items they are more likelY to walk out and take a deposit for a new job. Don’t under pay or negotiate price! One thing I can’t stand is someone who knows nothing about construction trying to get me to come down on my price. My price is my price. That’s it! If you want quality you will have to pay for it. Unless your going to be onsite managing the subs yourself then you’ll need someone to run the job or find a company that can do the entire job. Not really sure how big you are planning for your first few. Now myself I love what I do as a contractor but it is hard to find contractors to produce quality work all the time no matter what.
You’ll need to feel these guys out to compare different contractor aside from price. If your a good judge of character then meet with them on a specific property and have them walk it with you and give you numbers. Walk talk spend time With Them ask tons of questions because That’s how you get a feel for what type of person they are. If anything seems off then cross them off your list and move onto the next Guy. That’s how you be able to find guys with integrity and honesty. While you have them ask questions about remodel and what their price is for certain items and work loads. Walk a dilapidated property and ask how much to remodel this. Now what if the floor was good. What if the cabinets were good. Remember it’s rough numbers on the spot so they could change up or down but plan for higher. Also ask them about their time it’ll take them to complete the project. Ask about their past jobs. They should have tons of pictures on their phone. If they don’t that’s a red flag! Ask them the size of their companY, how many years they’ve been working, how many years for their company, etc etc. your really trying build a relationship of Trust with this person.
If none of this works. Offer to pay s contractor for his time to sit down with you and give you a break down on pricing and pricing for quality. Prices for flips are different from rentals because of the quality of materials. A tub surround take a couple hours to install. Tile takes a couple of days. So there is many factors that could change. If your going to be hands on and involved I would suggest educating yourself and learning the process. If not I would suggest finding someone and building a relationship with them so that you trust their opinion and have them run that portion of business for you. I will add though contractor, flipper, rental investor doesn’t matter finding quality workers in the construction field is very difficult. I’m trying to scale my business but I can’t because it’s hard to find quality guys I caN trust in the field to get the work done which is slowing me down.
I will help out in whatever ways I can. Message me if you want to chat more. Pleas don’t be offended if I don’t respond and just kindly message me Again. I’m very busy!
Also thank @Adriane Allard she’s the one who contacted me “twice!” To respond to this message for you. I Hope I helped. Good luck!
@Victor Menasce thanks for the advice! I actually hadn't considered the assistance of an architect do you think this is needed for smaller one family projects?
Architects can also help with referrals to good contractors. They know a lot of people in construction and they get to see a lot of projects. In terms of direct help, the key is in having a detailed specification as part of the drawings. If you don't have a proper spec document, your GC has the latitude to rip you off by cutting corners, even if you have a guaranteed maximum price contract. Ultimately you need to decide if your projects can afford the added cost of an architect. But in many cases, the result can be significant savings if you have the right investor focused architect.
A good way to find contractors is to look on L&I Records for properties that are under construction in your area, if you are in Philadelphia.
So for instance, let's say you see XXX League St under construction, you go to phila (.) gov, search up the address, and scroll down to the "View the L&I Records" tab.
You will be able to see who pulled the permits. I would recommend looking at the "Alteration Permit" section to see the GC, as the other permits were probably pulled by his subs
@Alyse Oz does your general contractor not deal with that? I asked the GCs I spoke with and they said all permits would be taken care of on their end
@Adriane Allard thank you for contacting Justin! I appreciate the support, it's what makes this community so great. Good luck on your investment ventures :)
@Kevin Grove thanks! I remember her episode I have to revisit that one.
@Marc Izquierdo thanks for the advice. Follow-up question for you? Do you typically get your properties under contract before having the contractor walk through the property? As a someone who is just starting how do you recommend I get comfortable with the estimated rehab costs that I need to get it into contract. I am currently looking into a property from a wholesaler they said repairs would be $20,000 - I am using a more conservative number of $30,000 (the property seems to be in generally good condition). I would like to get under contract but this requires a $2,000 deposit. If I get under contract and the contractor comes up with a $40,000+ estimate my numbers wouldn't work as well so I'd like to get into contact with someone before getting into contract so I don't lose $2k. Of course I don't want to waste anyone's time but is there any other way I can verify me rehab costs without having the contractor walk the property?
@Justin Sullivan thank you! I appreciate the thorough advice.
Follow-up question for you? Do you recommend I put the property I am interested in under before I ask the contractor to walk through the property? As a someone who is just starting how do you recommend I get comfortable with the estimated rehab costs that I need to get it into contract. I am currently looking into a property from a wholesaler they said repairs would be $20,000 - I am using a more conservative number of $30,000 (the property seems to be in generally good condition). I would like to get under contract but this requires a $2,000 deposit. If I get under contract and the contractor comes up with a $40,000+ estimate my numbers wouldn't work as well so I'd like to get into contact with someone before getting into contract so I don't lose $2k. I don't want to waste anyone's time as I know that if a contractor comes to see the property they are looking for a serious client but is there any other way I can get comfortable with rehab costs without having the contractor walk the property?
@John Oh thanks! This is really useful info, thank you for sharing
@Maricruz Romero As a seasoned Investor, I propose that you ask the following questions, when seeking a contractor. Even though it costs more, I always use a General Contractor.
1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?
2. How many projects is your company currently undertaking?
3. Do you work with Investors that need to adhere to strict timelines and scope of work?
4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?
5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?
6. Are you bonded?
To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.
7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"
8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?
9. Do you pull all necessary permits?
10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)
11. Do you provide all applicable warranties, for materials?
12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?
13. How do you handle dirty work such as debris disposal and clean up?
14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?
15. Would you provide references, from past clients?
@Maricruz Romero thank you and best business wishes your way. Glad to connect
Okay, so I've been in construction for my entire life and it took me years of estimating and running jobs to get to the point I am at today. I can walk into a house and get a close to accurate budget number just by a quick first glance. I know what issues lead to more issues and even more issues. That way you don't have $5,000 of unforeseen problems after you open up a wall. I know how much outlets cost, switches, light fixtures, tile, paint, lumber, drywall and labor for all of these things. I don't expect you to be able to learn this stuff quick enough or have enough knowledge to be accurate from reading books or speaking with someone who has knowledge. I would suggest for you to find a good quality construction company who covers all phases of home remodeling. This company would be able to give you an accurate number for your remodel.
As for calling them out prior to having house under contract...
Absolutely you should have your contractor walk the property with you before you put in an offer. I worked with several home owners on full house remodels. I actually just walked a second property with one of my clients yesterday. They were out bid on the first property we checked out so now we're on to the next. I will give them my rehab budget and that will allow them to decide what they would like to offer. It is my job to make sure I give them an accurate rehab budget and keep them in the right direction for their needs and wants. I understand that I might work with them for a long time before we find the house they close on but this is just part of my job. I worked with another client for over a year going to several properties before they found on that fit their needs and I just completed their project last month. I just started another project for a homeowner who closed on the first property I estimated for them. So its all different scenarios but I understand that its part of the job to give free estimates and this is how work is obtained in my field. Free estimate is almost mandatory nowadays. So call a couple contractors and tell them what you are doing. Tell them your needs and see what they say. Any contractor who denies walking properties with you for any reason either isn't qualified for the job or is just looking for quick cash a few days a week to get by and isn't serious about their work. You want to find the contractor that is excited to look properties with you and will advise you on what you could do for your remodel or tell you a house isn't worth it due to issues. You really need to find a contractor with whom you can build a relationship with and trust their opinion.
To sum it up, I would suggest you interview contractors like I said in my first post and find a couple with whom you feel comfortable with and invite them out to the property for an estimate. The most important thing is that your upfront and honest with them. Tell them your just starting out and looking for a good quality contractor with whom you can build a relationship with and plan to do more projects in the future. Get a few bids from several contractors with go with whatever person and bid you feel comfortable with. Doesn't have to be the cheapest but maybe there scope of work was more detailed and thorough. Whatever the reason let the contractor do his job and give you your price and scope of work. Make sure you get a signed estimate before you make your offer so that way there is no changes or issues after you actually make an offer. As for the wholesaler, I would always run my own numbers. Adding $10k is good but you want to be more accurate and not just guess. Get a contractor out there have them give you a quote and put your offer in according to their quote.
Now my way isn't the only way and may not be the best but I am a contractor myself and this is how I operate with my clients and with companies that I hire and it works for me. Just know that there is other options and ways to go about this and do your research and decide which way is best for you. If you like what I've said I'd be more than willing to connect with you and speak more.
I deal with a great many trades as a property manager. Feel free to im me anytime, for referrals.
@Justin Sullivan thanks again for your input, its always helpful to know how others work.
Why are you choosing Philadelphia? To BRRR
Is it just me or are houses in Trenton real cheap
Price, Quality, Speed. You can have 2, you can never have 3.
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