The right contractor can make or break your investing business. Having a good contractor that you trust will allow you to spend time focusing on other areas of your business. Conversely, it is never worth hiring a contractor if you have to constantly look over their shoulder. Finding the right balance between quality and affordability is typically a challenge for most investors. Everyone wants quality work, but not everyone is willing to pay for it. There is also something to be said about the level of communication that is needed for the relationship to work. Not every good contractor is the right contractor for you and your business. Here are 5 new tips for finding and keeping the right contractor:
1. Do your homework: It is important never to let desperation dictate who you work with. You need to spend time researching prospective contractors before you need their help. This typically means talking to your network and the people around you to get an idea of who is out there. You can certainly find a good contractor on Craigslist or by calling the first name that pops up in a Google search, but you will need to rely heavily on luck. You are better off asking your realtor, mortgage broker or attorney if they know a good contractor. You should take advantage of networking clubs and investment meetings to find as much information as you can. Once you have a few names, you can move on to the next step of your due diligence.
2. Don’t be afraid to ask questions: You need to treat your contractor search like you would with anyone else. You probably wouldn’t use the first realtor or mortgage broker that you speak with, so you definitely should not commit to the first contractor. You have every right to ask about past projects they have done and what references they can provide. Find out if they are licensed, insured and what kind of schedule they are currently on. Ask about specific things that you would like for your project, and if they are familiar with homes in your investing area. You should also be prepared to answer questions from them as well. The more you know about each other, the smoother things will go.
3. Iron everything out up front: The biggest area where most investor/contractor relationships fail is with a lack of communication. As an investor, it is up to you to be clear in what you want, how you want it done and what you are willing to pay for it. You can certainly listen to your contractor’s advice and suggestions, but you are the final decision maker and must have a clear vision. If you are clear in what you want before any work is done, there should be no arguments or disagreements once the project starts. Take the time to go over who is going to pay for the materials and what things are going to take place. You should ask your contractor to commit to a schedule before they start. Time is money with every project. If you have to wait for your contractor, everything else slows down. Don’t wait until you are a week in to talk about numbers and time-frames.
4. Be firm but not strict: There is a fine line between running a rehab with an iron fist and losing the respect of the people working for you. As a rule of thumb, you want to be firm but fair. You should demand quality and punctuality, but you also need to accept that things will not always go as planned. There is a certain amount of flexibility that is needed with every project. If you pop into the property and demand things to be done a certain way, within an unrealistic time-frame, your contractor will lose motivation. The goal should be to create a relationship that lasts longer than just one project. Sometimes you need to back off and trust your contractor and let them work.
5. Hold up your end of the bargain: Working with your contractor can’t be a one way street. You can’t ask for favors and make your contractor wait to get paid. Like anyone else, getting a paycheck is their ultimate goal. You lose major credibility if you don’t cut a check when you say you will. The odds are that your contractor may avoid working with you again in the future. You also shouldn’t nickel and dime the people that work with and for you. Giving your contractor $100 or so less than what they expect is petty, and not a good way to do business. You should remind them of your expectations moving forward, but don’t withhold money just to prove a point. You may end up losing a good contractor over a small amount of money.
Once you find a contractor that is willing to meet you at a property on a dime or work around your schedule, you need to treat them like gold. If you watch one of the many home flipping shows on TV, the common theme is the strong relationship between investor and contractor. This doesn’t happen overnight. These relationships are cultivated over dozens of deals and years of history. Getting to this point requires some give and take on your end, but if you follow these simple steps it will be much easier.
