5 Tips For Hiring a Contractor

You’ve found the perfect investment property for your next project, and now you’re gearing up to give the space a much-needed glow-up. You’ve already binged all the remodeling shows, found inspiration on social media (ahem), and solidified your design vision. All that’s left is to hire a contractor to make your dream a reality, right?

Wrong. This is where your dream can quickly turn into a nightmare. Renovating a home is a big job, and you’ve no doubt heard horror stories resulting from partnering with the wrong contractor. Whether it’s them failing to show up, discovering hidden costs, or the work being sloppy, hiring the wrong contractor can be infuriating and costly. Don’t worry, we’ve rounded up the best advice from those that have been through it to help you skip all that and find the right person for the job.

Make your flip a success with these 5 tips for hiring the right contractor:

1. Shop around and compare

You’re the one in the driver’s seat here. Be proactive in researching potential contractors. Doing your homework will save a lot of stress in the long run. Ask friends or other investors in your network for recommendations, and try to get estimates from at least three different contractors before making any decisions. Also, be clear about your vision for the rehab and what your goals are to make sure you and your potential contractor are on the same page.

“Get several bids – as you’re establishing relationships and building your team, it’s important to get an understanding of the current rate for your market. Also, the lowest bid is not always the best option. All to often they have left something out and it turns into a change order. This adds costs to the project and reduces your ARV profit which is no bueno.” Paul S.

2. Do a background check

Ensure that potential contractors have the right credentials and check for any formal complaints. Have they had lawsuits against them in the past? Are they affiliated with professional associations? The last thing you want is to hire someone without the right expertise. Pay attention to your instincts. Look at how your interactions with them have been up to this point, and if something feels off, go with your gut and look elsewhere.

“Vet the contractor – a solid contractor will be more than happy to provide references, show you other jobs, introduce you to investors that they work with who can talk about the work you’ve done. Depending on the city, they contractor should also be licensed or registered with the city where the work is being performed.” Paul S.

3. Get everything in writing

Once you’ve narrowed down your choice, don’t rely on a verbal agreement. Always insist on a written contract. This not only safeguards your interests but also shows whether your contractor is professional. And be wary: a contract should be printed, not handwritten. Ensure it details all aspects of the job, from tasks to timelines. For added security, consider having a lawyer review the contract before you sign. Word to the wise: be cautious of any contractor asking for cash or full payment upfront. Finalize the contract before any money changes hands.

“Try to spell out the insurance coverage needed by the GC in your contract. Require proof at contact and again before each payment. Include liability, workers comp, business uto, and other coverage that may be appropriate to the job.  Require all their subs to have insurance for liability and workers comp.” John M.

4. Have a strategy for resolving differences

The contractor you choose will be a significant presence in your life for the foreseeable future. It’s essential to find someone you can communicate with openly and trust completely. In your initial interactions, discuss how you want to go about handling any unexpected issues or inevitable differences. This discussion will provide insights into their work ethic and communication style. If you’re left with vague responses, they might not be the right fit.

“I find that the biggest issue working with GC is communication. Setting the standard for discussion and changes are key, between your expectation and theirs. This includes the initial visits.” Andrew B.

5. Stay involved

After making your choice, be an active participant in the process. Regularly check in and walk through the property. Requesting updates and seeing the progress firsthand ensures that the work aligns with your vision and standards. Address any concerns promptly to avoid delays or expensive mistakes.

“You want to build a relationship with your main contractor, and include them in all of your walk-throughs if you are serious about buying the property. You do not want to drag them to every single deal your interested in. You want to look at it yourself first and make sure you’re comfortable with moving forward and have the resources to do so. You do not want to supply any materials: It’s not worth your time and effort. The best bet is to have the contractor do everything for you, one price, turnkey—that way they are responsible for everything, they have to warranty everything and any mistakes, theft or damaged materials is on them not you.” Greg D.

For real estate investors, hiring the right contractor for your next flip or rental property is paramount. The quality of the contractor’s work will greatly influence the overall value and allure of the property. By following these steps, you’ll be better positioned to find a partner who delivers quality work, on schedule and within budget.

This article is for informational purposes only and is not legal, financial or investment advice. To obtain advice tailored to your particular circumstances, you should consult a licensed professional advisor.