Retaining good contractors

I was using a contractor for a while which i thought was being honest with me. He was great but the more wirk i gave him for some reason his prices started going up and he wasn' t as honest as i thought. My advise never trust one contractor! Always get multiple bids. If the contractor gets to comfortable and he or she knows that you are not getting other bids he or she will find a way to take advantage if you. I dealt with this problem in a different way. I obtained my contractor license and have hired great employees and i am getting my rehabs done much faster and even saving money, which means that in the end I will make more money. Before obtaining my contractor license I didn't meet a contractor that was honest and now i even have a contractor that is my employee and have learned from him how other contractors work and how you can not trust them. Please, don't let any contractor know that he is the only one you will always use, make him aware that every job you will obtain bds abd you will see that you will be treated with respect and the work will be done on time and cost effective. Hope ths hels.

Instead of paying $100 and hoping he's "honest," pay $40 and join AngiesList. Or save your money and ask around - word of mouth is always the best priced, and most effective way to find a good well, almost anything. Tell any contractor you meet up front that you're NOT a "retail customer" looking to pay off a contractor's house or vacation with 1 job, but you're a REI who wants to build a relationship and give someone multiple jobs, one right after the other. "You won't get rich with me, but you definitely won't starve or die of boredom," is the approach you want. Take the exact same approach with RE agents/brokers.

You can't buy honesty - we as Americans should know that better than anyone on the planet. Estimates are quick and should always be FREE. Get at least 3 before starting ANY project. BIDS are much more detailed and accurate, spending the contractor's time and skill to create. They usually charge a small, flat fee for giving you a bid. Every market is different. Where I live, they usually give you the 1st bid they ever do for you free. You decide to hire them, they may even eat that cost for future bids, if you keep hiring them. If you get a bid from someone though and don't use them, expect the next bid you ask them for to cost you something. Here they charge $50-250 for a bid, depending on the size and scope of the work involved.

Most contractors want a set percentage of the materials cost up front (put it in escrow instead) to begin work, usually 10-25%. As the work progresses and that money gets "used up," they will start to ask for labor costs also, usually in increments of 25% of the entire job cost. Keep it in escrow and make sure your agreement releases funds only after proving certain parts of the job have been done to your satisfaction (with pics to back it up in court).

You may be able to find someone you can wait to pay until closing, but it will not be easy. Expect another 25 or 50 to 1 ratio with contractors on this. The best way to get in their heads is to work for one or become one. Second best? Ask to "hang out" with whoever you hire as they do the job. Ask questions all the time if it doesn't bother him. Most honest ones enjoy it, and they'll be happy to explain what they're doing as they're doing it. I know at least one DG vet (Suzanna) was able to do this on her 1st flip, to great results and she used that contractor on future jobs. Best of luck to you...

Oh yeah! Don't forget the Contractor's Creed: "You can get the job done - well, fast, or cheap." If they offer any one out of 3, lose their number. If they offer any TWO out of the 3, hire them! If they offer ALL THREE out of 3, they're lying!

Thanks for starting this thread Tammy. We are getting very useful information here that everybody can use.

I have and use an awesome contract with my contractors. Keeps them 100% honest with ME in control. I have had multiple contractors that would not work under the guidelines put forth in my contract. This contract was written with the help of a person that was a G.C. for over 35 years. Between the two of us we came up with a great way to get an accurate cost and TIME FRAME estimate on a day by day basis on my rehabs.

Something else I do and require that is critical. After each payment or draw by the contractor he must sign a lien release on all the work already done and approved.

Materials are another area that I control and keep track of. Man hours are tracked on a daily basis. The contractor must sign off on and take responsibility for the materials as they are delivered to the job site.

As stated above, estimates should be free. Contractors will do this no problem if they feel they are dealing with a professional investor. (that is the key to a free estimate)

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Tammy,

you don't pay for an estimate; a good contractor will do that for free, because he knows that if he does it right, he will get the job.
Always get everything in writing, including the timeframe!
And never give them too much money upfront... when they run out of money halfway through the job, they will skimp on materials or start other jobs and make yours the afterthought...

you can never be too cautious when it comes to contractors; keep it professional, business is business...

Michael I do remember your info from before. I like how you have them sign off on the jobs done. That said, I am not looking to fix anything, so I will need to compensate them for going into homes and giving me an estimate. I just want to get an estimate of repairs, even a ballpark figure to use in passing my deal along. What is the best way in this case??? Thanks, everyone!!

Hey Tammy. I started calling for install contractors from Home Depot. I called Home Depot and while they would not give me specific names they did give me a general contractor who subs other contractors to them. They are a very large company with great reputation and ESTIMATES are FREE as yes they should be. From him I got a referral to another contractor, also free estimates and I use them exclusively.
I have spent most of my life in the building trades and yes as Valerie said you shouldn't have to pay for estimates.
Hope it helps.
Success in REI
Garold

Thank you; that is good information. Maybe I will try that route!

At first I was having trouble finding one that would give me a free estimate but I was just calling and asking if they gave free estimates. With that question, they said it depended on whether I was buying the property myself and/or if I was going to sell it or keep it. So I changed my strategy and when I called, I told them I was an investor and I needed to get 3 estimates for a property. They call it bids when they know you yourself are actually going to have someone do the work. But I explained to them that I would be finding an end buyer and that I would refer them to the buyer for fixing the house if their estimate (or bid) came in lower. When they came, I asked each of them for their business cards. And yes, I will refer each of them in the future. I hope they understood what I'm doing because I was very transparent with them. Now whether they will do it again for free remains to be seen. Hope this helps.
Shirley

As I travel around the country teaching students, the biggest complaint and concern is finding a good contractor. I feel sad that the trust has been ruined because of a few bad eggs. I wish I could travel the country and help good people fix and repair homes, but my body told me years ago, it was time to get out of construction.
Some of the best ways to find good contractors have already been mentioned, but in all the contractors that I have had do work on my projects have been a referral from others that I trust. Always have contracts signed and ALWAYS NEVER pay in full up front. Never pay the final payment until the project is complete and you have had a chance to inspect the project. Always ask to see their license and a copy of the insurance policy that they have for the company and for their employees. Remember you are the boss and they are working for you. Anything happens and you are responsible. Cover all aspects of your business.

Best of Luck

o.k. girl to girl talk......
just a thought to of something that helped me in the beginning (and to this day) if you look at 100 properties in a week, it's fair to say your probably going to get a bit of resistance trying to get 100 estimates/bids. What I would suggest you doing Tammy is yes get several different contracts to give you estimates on the same property. have then provide a detailed materials list. take that same materials list and either visit or pull up online Lowe's, Home Depot etc. Walk through the property with EACH contractor. Ask questions!!! Ask them how they charge for their labor on their quotes, material cost is material cost. They may fluctuate based on current price at buy time. My point to this is to get you able to know how to estimate your own repairs. Until you have team in place. Even with a team you should still have the knowledge. YES you will have some properties come through you'll have to get second opinions or something you haven't came across. Especially to offer on the property you don't have to be down to the last $1.00. You're looking for close but to the high side then verify and have written estimates, inspections AFTER you get an accepted offer.

I also asked them if they mind if I called them if I had a quick question and assured I wouldn't abuse the privileged. They ALL were happy to help. They'd rather answer a couple of questions then break their timeline/events to stop and run look at a property just to give a #. I've even taken a picture and sent if to them and they give me a ballpark over the phone.

(Also keep in mind there is a difference in a rental property rehab quote and a retail flip rehab quote)

If your wholesaling, I market to my buyers at estimate $4-6k on rehab etc. then give them items in which make that # up. 10/10 x either they will have their own crews in place, know what they are going to do to the property (have their own system) either visit themselves and/or send their guy out to the property anyway.

Coming from a girl that barely knew which end of the hammer to use in the beginning to my walk thru estimate being within $500 of my contractors quotes. You find what works for you, not depending on any person or LACK OF persons to hinder you.

You can call ANY distributor, sub, company and get cost of installation. Then the variable is cost of product and how much right? Ex. carpet. once you know the installation cost, get price on base/standard product (if your buyers a landlord) then you factor in the sq ft of property/area needed. voila - carpet cost

Don't sweat the small stuff. You may be having trouble getting help now, but you WILL have people come out of the woodwork once they know you are a true player!

btw; I personally control my money at all times. I cover materials, my contractors only pull labor draws.

hope it helps,
jen

Treat the contractor as you would want to be treated in business. Sure estimates are free doing 5 10 or 15 for free and getting no work well keep lookin like we do real estate agents. We low ball in buying the houses then we automatically think we can low ball the contractor and sure some who are desperate take the work. Good contractors are out there. Step in their shoes if you can.

Jen that was awesome information. I will have to make a note of it. An to cmithell the official coach I am so happy you mentioned having their liscense checked as well as their insurance. Best to cover all the bases. Thanks everyone!! Tammy

This is a very good thread! I have bookmarked it for future reference!

Karen

The reason I say check subs license is because, I have had several subs come on location over the years and at any given time, had one of them fallen or hurt them in any way, I would have been held responsible because I was the contractor overseeing the project. The home owner would be in line to be sued if that is what becomes of the injury.
Your best defense is to demand a copy of their insurance policy and license information if you deem it necessary. I have found over the years that you can never be too careful and never ask too many questions.
I don’t mean to alarm you, but it is best you learn this before someone sues for an accident.
Best of Luck

As my contractor said he would sub the work out, so now I am thinking of going with someone else, or checking all the bases. Thanks for bringing this back up.

Great comments everyone.
I totally agree that you should never be paying for estimates from contractors.
The only time I have paid for estimates is for major projects like a new roof, major HVAC issues, or major kitchen/bath overhauls. But I have always been able to have any money that I pay for the estimate, deducted from the purchase price to do the job. But as many people have said in this chain, most estimates are done for free.
Hope this helps.

Happy Investing!

Matt W.