The contractor maze
While selecting the best attorney or home inspector for your property investment team is integral for keeping you out of financial danger, choosing the best contractor is important in order to save you money. Over not simply one project, but multiple ones, finding the best contractor can ultimately save you hundreds of thousands of dollars in repair and renovation costs. If you choose correctly, you’ll find a truly creative soul. He won’t be just knowledgeable in all phases of carpentry and house construction, but someone who can constantly make creative problem-solving design solutions for the hundreds of issues that will surely crop up on any major renovation on a daily basis. He’ll also be someone you can trust to come in on-time, on-budget, on every project. It’s called reliability. Eventually, he’ll earn your trust – and you’ll be looking to him for design guidance after a few projects.
Helping you choose the sub-contractors
A great contractor knows how to save you money on materials, as well as on labor. He can act as your general contractor – calling in sub-tradespeople (for example, the plumber, electrician, floor refinisher, etc.) as they are needed. He will most definitely be a carpenter extraordinaire himself. So he will be technically proficient, trustworthy with your money, and always paying attention to your budget and bottom line. In short, he will become your right hand man – your unofficial “partner.” He’ll also be able to help you choose the best hvac contractor, guiding you through the possibilities for best heating and air conditioning companies (or heating and air conditioning contractors). Let’s face it – heating and ac companies can be difficult for the layman to choose from. Maybe you only need an ac contractor for the job. A good primary contractor can help you choose the best air conditioning contractor as well.
Another key feature of your contractor will be his estimating skill set. When you go searching and locating investment properties to acquire, you will naturally be narrowing down the possibilities to a select few all by yourself. But it’s your top pick at any given moment that should garner his attention. You should be able to call him in – free of charge – to offer his opinion as to your top pick – and get his guesstimate as to the range and scope of repair and rehab costs involved with the potential project. Here’s where working with the same contractor over and over again becomes crucial. As the most important member of your crew intent on saving you money, his recommendations (or lack thereof) are crucial to your numbers crunching, and ultimately deciding whether you should even make an offer on a property – and if so, he will help you determine the maximum amount you should possibly be offering on it. A very important position indeed…
Avoid going with the cheapest…
As for choosing the best contractor, like selecting your attorney or house inspector, obtaining recommendations from local friends and family is crucial. So too are referrals from your real estate agent. However, even with recommendations, make sure the contractor you decide to use is licensed. Too many property investors go cheap – and tend to hire local talent that are not licensed. But this can cause big problems down the road. (For example, if one of his workers gets hurt, and they’re not carrying workers comp insurance on their workers, the local building inspector could shut down your renovations until you hire a licensed contractor. And that would be a financial burden to you if you have to wait months for another contractor to free up his schedule enough to clean up the mess your unlicensed one left you in…) It’s also helpful to obtain a list of licensed contractors from your local building department. While they cannot offer referrals, they can supply you with a list of local ones they always work with.
Bidding out your project
Of course, you’ll want to bid out your project. While choosing the lowest price contractor is not necessarily a bad thing, make absolutely sure each bidder is bidding on exactly the same thing. I find it very helpful to produce a punch list of work to be done, and hand it out to all bidders. Then, if they make a suggestion you didn’t think of that will cost extra, make sure they submit their bid with that extra itemized as a separate charge. In this way, you can compare different contractor bids equally. Also compare their payment schedules. Be wary of contractors looking for you to place down payments of the whole project that amount to more than a third down. Ultimately, you’ll want to be able to negotiate a payment schedule that is representative of the scope of the project. If it will be a potential two month project, ask to pay on a weekly basis, leaving at least ten percent to be paid after completion of the entire project.
Are they a good fit?
Once you’ve decided to go with your choice of contractor, you’ll be interacting with them on a daily basis. It will become apparent very quickly if he’s a good fit to your personality and way of doing business. As mentioned above, a good contractor is creative, offering you money-saving solutions to everyday construction issues that arise. The easier he is to work with, the more of a keeper you’ll know you’ve got. And you’ll then want to use him over and over again for all your succeeding projects.
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