How to Find a Great Contractor

When I buy a rental property or fix and flip they usually need a lot of work. One of the most important parts of my investing strategy is hiring a great contractor. It costs a lot of money to initially buy a real estate investment and it can cost even more to repair it. If you don’t have a great contractor to fix your homes, then the costs can skyrocket due to long timelines and increased repair costs.

For more detailed information on my rental properties and investment strategies, check out my complete guide to investing in long-term rental properties.

Why do I buy properties that need repairs?

I would love to buy only properties that need no work and can be rented or sold right away. In order to get a great deal most properties I buy need repairs. Usually the more repairs a property needs, the more of a discount I can get off of market value. A key strategy to my investing strategy is buying properties below market value. I must have a great contractor to get my rental properties and fix and flips repaired quickly without spending too much money.

What is the easiest way to find a great contractor?

Finding a great contractor is not always easy and can take a lot of trial and error. My advice is to ask your friends, family and co-workers for references of great contractors before you try any other resource. When you get a recommendation, it does not guarantee you will find a good or great contractor. Recommendations are usually a better indication of how good a contractor is then any advertising they can do. A few people who may know a great contractor are Realtors, property managers or builders. You will still have to keep on that contractor to make sure they are doing what they promised. One of the easiest ways to let a rehab project get out of control is little or no oversight from the property owner when using a new contractor.

A good recommendation does not mean a contractor will be good!

I used a new contractor two years ago when I had a lot of projects going on at once and my current contractors could not keep up. I got a recommendation from my broker and a couple of other agents in my office for a great contractor. The contractor was a builder and talked the talk so I let him get to work on two projects at once (bad idea). He told me he had a great crew and could handle as much work as I could give him. He ended up finishing one project on budget (always get a bid first), but the second project was not even started for two months! I had assumed everything was going well since that was what he had told me, but the property was 40 minutes away and I had not physically seen the work start yet. I was in for a big surprise when I went to visit the property that I thought was almost done and no work had been started. I called the contractor and he gave me a story about too many jobs, and his workers getting sick. The fact was he told me everything was almost done, so either he had not been overseeing his workers properly or he had lied to me. That job was eventually finished about 4 months after it was started and three months after it was supposed to be done. I never used that contractor again.

How can you keep an eye on your contractor?

It is always best to keep an eye on your contractors work and schedule, whether it is the first time you have used the contractor or the 20th. In my experience the more communication and oversight you provide on your properties repairs the better job the contractor will do. I have had contractors I have worked with on 20 jobs and if I don’t keep on them they will get very slow. I am going to write a new article this week on exactly how to keep an eye on a contractor once you hire them, but the basics are:

constant communication
visit the property often
always get a written bid first
get a written estimate for when the work will be finished.
Don’t prepay for any work that is not done
help pick out materials and paint colors
How else can you find a great contractor?

I have used many ways besides word of mouth to find a great contractor. I have looked for new contractors lately, because my current contractors are getting more expensive and slower on each job. I was not able to get any good leads on contractors through work of mouth, so I had to use some other methods.

Find a great contractor through large box stores

Home Depot offers a rehab program that will actually handle every repair on a project. Home Depot is going to be more expensive doing a large job then if you hired a local contractor yourself. I talked to Home Depot to price out their contractor program and they were very honest and said it would be cheaper for me to use my own contractors. They did mention a few names of contractors who frequent the store often and have been around for years. This was not a recommendation from them in any way, but it gave me a lead on a great contractor who I am going to start using. At least, I hope he is great!

Find a great contractor through Craigslist or Angie’s List

Many contractors advertise in Craigslist, but it really is hard to know how great they are until they do some work for you. I have hired a handyman and painters through Craigslist when I was desperate. They worked out okay, but it is hard to judge how good a contractor will be until they finish a job. I would always ask for references and talk to references about the previous work done by any contractor.

Find a great contractor the internet or Yellow Pages

There are many advertisements for contractors on the internet as well. Again you have to check references thoroughly when using these resources.

How to find a great nationwide contractor

Home Depot offers contractor services no matter where you are in the country. Even though they are more expensive than a local contractor may be, they offer standard work and stand behind their work. There are a couple of other companies I am aware of that offer regional or nationwide contracting services as well. These companies may not work with an investor that has only one small job. But if you can offer them consistent work in one area they may be a great choice.

Vineyard Services offer contracting services in most states across the country. They have been around for years and do property maintenance on many REO properties.
Asons offer property preservation and construction
ZVN Properties offer nationwide property preservation and rehab services
Conclusion

Finding a great contractor can be the most difficult part of real estate investing, but it may also be the most important part. It is vitally important you take your time when choosing a contractor, interview multiple contractors and keep a close eye on any contractor you hire. mferguson