There’s a popular saying in the technology industry (an industry where I spent much of my career): “Better, Faster, Cheaper — Pick Two“…
Basically, the idea was that you can build something at 1) higher quality, 2) in less time, or 3) for less money — but you can’t do all three of those simultaneously. At best, you could could optimize for two of them, in which case it was generally the third that would suffer.
For example, building a new piece of software — you can build it better and faster, but it will cost more to do so; or you can build it fast and cheap, but the quality will likely suffer.
In my experience, this same principle applies to many aspects of business and life, and is certainly true when it comes to contractors and real estate renovation. While there are some contractors out there who churn out only high-quality work; and there are contractors who are tremendously efficient and always on-schedule; and then there are some very reasonably priced contractors; you won’t normally find a contractor who is all three of these things.
In fact, the “better, faster, cheaper — pick two” principle is very much alive and well when it comes to contractors.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
Better, Faster, Cheaper: Applied to Rehab Contractors
With that in mind, it’s important to determine up-front which two of these three aspects of your renovation you are most concerned with, and then expect that you might need to compromise on the third. For example, in my case, I’m unwilling to compromise on quality, and with my margins being relatively small, I’m not willing to risk my budget on most projects. So, if I want to ensure that that I have my contractors focused on quality (better) and price (cheaper), I must be willing to compromise on schedule (faster).
This principle is always utmost in my mind when I’m interviewing and evaluating potential contractors for my jobs. I went through several General Contractors (GC) before finding my current one. I had some that wanted to cut corners, so I fired them within days of them starting. I had some that tried to jack the price up by telling me repairs were needed that I knew weren’t, and I ultimately got rid of those as well.
My current GC has some amazing qualities — he knows construction and building codes in great detail; his workers produce high-quality results; and his prices are tremendously reasonable compared to other similarly-qualified GCs (and he doesn’t tend to find “surprises” that cost me more). But, I’ve found that — because he likely has many projects going on at once — he is not very good at keeping on schedule. Sure, I could probably push him harder to stick to schedules and to meet deadlines, but I’m willing to trade that aspect of my projects knowing that I’m going to hit my budgets and the results will be top-notch.
Again, I’m willing to sacrifice Faster for Better and Cheaper…
My suggestion to anyone getting into house flipping or renovation — decide up-front which two of these three things are most important to you, and optimize your contractor selection to those two things. Then be prepared to compromise on the third, as you’re unlikely to find contractors who can deliver all three.