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5 Step Guide to Pick The Right Contractor
Dated: August 20 2022
5 Step Guide to Pick The Right Contractor
4 minute read
There are more ways to invest in real estate that you can count on your fingers, and for those who are new to the game, it is easy to quickly get overwhelmed picking the real estate investing strategy that works for you.
Some will suggest you House Hack by buying a duplex, living on one side and renting out the other. Others will preach that you should buy a condo on the beach and rent it on short term rental sites like Airbnb and Vrbo. You may even decide to buy single family homes in great neighborhoods and use the BRRRR (Buy, Rehab, Rent, Refinance, and Repeat) strategy. Truth is – there is no one right way to invest in real estate.
However, one thing that most experienced real estate investors will agree on is that it is often wise to buy a property in distress for a discount and create great value by bringing it back to turnkey condition. It is most often cheaper to buy a property that needs work and do the work rather than buy a property that is already in immaculate condition.
Unless you’re handy and want to do the work yourself, to gain success buying the ugliest home in the neighborhood and bringing it back to its glory days you must have good contractors on your team. Below are 5 steps to take to ensure you pick the right person for the job and your investment is not going to turn into a nightmare.
1. Get Recommendations and Read Reviews
When traveling out of town and looking for a place to eat, we often rely on local’s recommendations and online reviews before making the decision where to fill our bellies. Same principle applies here.
Start with your family and friends, share some details about the project you’re working on and ask for referrals. People in your circle will tell you who did right by them and who is not allowed in their house ever again. Hopefully just from a few conversations you are able to take down a couple of names of potential contractors to hire.
Following, go on sites like Angi to find verified contractors in your area. Check out their websites, Google reviews and social media (local contractors will often post pictures of their previous work!). Get five or more names of potential contractors and move on to step two.
2. Interview the Contractors
Once you have a list of potential contractors to hire, call them and ask some common questions to help you narrow down the list:
- Do they specialize in the type of work you’re looking for? Ask for proof of past work
- Are they willing to take on projects of your size? For some your project may be too big or too small and they will not do the job right
- How many other project would they be working on at the same time? None of us do our best work while we are overwhelmed.
- Can they give you a list of previous clients? It’s a red flag if they don’t!
- Would they use subcontractors? If so, how long have they worked together? A bad subcontractors can mean poor quality and more money spent.
The answers to these questions will help you better understand the company’s reliability, work quality, availability and attention to details. This step is a must to continue narrowing down your list.
3. Research Each Contractor
If the contractor made it this far and is still on your list, chances are they know what they’re doing. However, it is better to be safe than sorry.
Make sure the contractors are licensed and insured to avoid liability and headaches if things go bad due to injury or other unforeseen things. You can check for a valid license on Florida Department of Business & Professional Regulation website. If the contractor does not have one of the two – they’re off the list.
Call former clients and ask how their projects went. Find out what worked best and what didn’t, as well as if they were satisfied with the finished product.
4. Get Bids
At this point your list should be down to about three contractors who seem reliable and on top of their game. Invite them to tour the property and get a quote from each of them. During your walkthrough note the communication and personality of the contractor. After all, the person you pick will spend hours working on your project so you want to make sure you work well together.
Don’t let the price be the deciding factor. If multiple bids are within your budget, choose the contractor with whom you communicate well. It’s better to spend a little more money to save yourself a headache.
Pro Tip: Schedule all contractors for a walkthrough at the same time. While it may seem like a mean thing to do, doing so will force the contractors to be more competitive on pricing and will show them that you have multiple options to choose from.
5. Put it in Writing
Like anything in business, your project should be documented in writing. Draw up a contract by using neat online tools like LawDepot to ensure each detail of the project is documented.
It should include contractor’s license number, proof of liability insurance, payment schedule, start and finish dates and materials and products to be used. Finally, include a requirement that the contractor must obtain a lien release from suppliers and subcontractors to protect yourself if the contractor doesn’t pay their bills.
Having the right contractor on your team is critical to achieve success in real estate investing and to maximize the returns on your money. A well done project that was completed in a timely manner means you just saved yourself a headache, learned something new and raised the value of your now newly remodeled property.
If your investing strategy includes renting it out, check out this pro guide to finding the right tenants.
Realtor, Trademark Realty Group
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