To succeed as a real estate investor, it is vital to develop relationships with other professionals you can work with in mutually beneficial ways. Once you have identified industry professionals you trust and enjoy working with, you will have a solid real estate investment team. One crucial member of that team is a general contractor.
Wanted: An Honest, Reliable Contractor Who Performs High-Quality Work on Schedule and at a Fair Price
Whether you flip properties, wholesale them, rent them out, or purchase non-residential commercial property, you will need a contractor. Usually, the property you purchase will come with a to-do list longer than your arm. Surely your property inspector found some things they recommended you fix or replace.
The contractor you hire to work on your property must provide an accurate estimated timeline and project cost and stick to it. When they do the work, they must do it right.
This Will Be an Ongoing Relationship
You will need a general contractor who can perform maintenance, upgrades, remodeling, expansions, and other work on your investment properties, so look for someone you can work with on an ongoing basis. Choose a contractor you can count on to protect your bottom line as they do their work correctly. This has the added benefit of sparing you the stress of choosing the wrong contractor.
How Do You Find The Right Contractor?
It might feel like you need a crystal ball, but you don’t. Just follow our advice on finding a reliable contractor. Start by finding a contractor before you need one, if possible. Looking for a contractor when you are under pressure, or worse, in an emergency, like after a disaster, can result in a hastily made, poor decision.
Begin your contractor search as soon as you know you will invest in property. This will give you the necessary time to do your due diligence as you quality your candidates.
Start the Process of Finding a Contractor
Like when hiring for a position in your company, you don’t choose the first person you talk to about the job. At least not before looking at other qualified candidates. Start with a broad search. Then, narrow the field down and carefully consider at least five general contractors before making a final decision. Doing this will give you a better idea of what the industry looks like. You will also have some runners-up, which can be good if you find yourself in a bind and your usual contractor is unavailable.
Get Recommendations From People You Trust
Talk to friends, family members, and colleagues who live in the area of your investment property. If you have a real estate investment mentor, they could also be a good source of information on local contractors to trust–and who to steer clear of.
Check Out Online Reviews of Prospective Contractors
Good luck finding a contractor with perfect reviews. Every business person will have their fans and their detractors. Sometimes a negative review is justified, while other times, it is simply a troll, but the key thing to do is to look for common themes. For example, if multiple complaints say the contractor was sloppy, there’s probably truth to them. On the other hand, if the vast majority of reviews are similarly positive, you should also be able to trust them.
Do Basic Research on the Contractor
You can do a lot of your preliminary research online. Often, you can find the information you need on the contractor’s website, especially if they have a professionally built site.
- How long have they been in business?
- Do they have a business address and contact information?
- Are they fully licensed and insured?
- Are they a member of any professional associations?
- Do they have any specializations or professional certifications?
- Do they have attributed testimonials on their website?
- Do they have a portfolio of completed projects you can look at?
It’s Time To Narrow Down Your List of Candidates
You should now have about five candidates who meet the minimum requirements to be your contractor. They have the skills your projects require, integrity, and a history of pleasing their customers. It is time to talk to each candidate about your specific needs and determine whether they would be a good fit for your real estate investment team.
Meet Them In Person
Meet with the contractor in person to get a better sense of who they are and whether you have an agreeable rapport. Remember you are looking for someone you want to work with for years to come. Talk with each contractor about their typical availability and whether they could comfortably handle additional projects of the type and scope you’ll need. There are many things you should discuss. Here are just a few of them.
- If you own multiple properties or plan to grow your property portfolio, will the contractor willing to give you a better price in return for you guaranteeing them a certain amount of work?
- Do they offer a payment plan you’re comfortable with?
- Do they have relationships with other real estate investors?
- What are their relationships like with skilled laborers and subcontractors? Who does the work? Are the workers employees, and if so, how long have they been with the company?
- Are temporary workers regularly brought in?
- Will the contractor be on-site?
Evaluate Their Communication
You want someone you can count on to communicate clearly with you. What was the quality of your conversation? Were they responsive, friendly, and professional? Did you get detailed, satisfactory answers to all your questions? For those contractors you liked, you will want to ask for references. This is the important part: Contact the references. Ask if you can see the work the contractor did. This may not always be possible, but often in commercial buildings, it isn’t a problem.
Let the Bidding Commence!
Now that you have narrowed your list of candidates down to two or three, it is time to get bids from each of them for your first project. Avoid any lowball bids since they are a red flag that the contractor may cut corners, use lower-quality materials, or be desperate for work (which isn’t a good sign).
Only work with a contractor who presents you with a professional, contract that puts everything in writing. If a contractor is willing to be lazy with paperwork, they will be just as lazy in other aspects of their business.
Choose Your Contractor
Now that you know who you would like to work with, see how the first project goes. Communicate your appreciation to the other contractors who offered you a bid. Let them know that you will keep them in mind for future projects, and don’t lose their contact information. You have already done a lot of work to find good candidates, so if you ever decide to change contractors, you can contact your second or third choice.
A Crucial Part of Your Real Estate Investment Team
Along with the other members of your real estate investment team, you want to have a good Cost Segregation Specialist. Having a cost segregation study done can reduce your tax burden significantly. Find out how much you can save with M&E Cost Segregation!
Get a no-cost, no-obligation estimate today!