Determining whether a contractor is "investor friendly"

[Justin R.]

I've been working with a contractor on my first couple projects - I got very lucky and happened to find someone who's skilled at the rehab game.  I've got a second concurrent project just about ready to go, though, so I need to find an additional contractor. 

How do you all identify an "investor friendly" contractor from your typical contractor?  By "investor friendly", I mean...

• Understands there's holding costs.  Works expeditiously.
• If it's a flip, understands current trends and can pick good value finishes that help the bottom line.
• If it's a hold, understands that, for example, a one-piece bath enclosure is far less maintenance for me than a tile bathtub surround.

I'm around for most of the big decisions, but it's the totality of small decisions that can make a big bottom line difference.

Other than networking, where do you look to find someone? And, what do you ask to figure out if they understand enough about REI to be able to work autonomously?

FWIW, these projects are in San Diego.

[Jason Mak]

I hear ya @Justin R. 

On one of the podcasts, someone mentioned to go to Home Depot at 6am in the morning because those are the hardworking contractors.  

For one of my houses, I literally walked the job with 8 GCs before settling on one.  It took a lot of time but each meeting was valuable.  I learned a little bit more about the house and process and I was also able to feel out which contractor I could work with and was investor friendly.  Most of the time the GCs would ask me whether this home was a flip or my personal home which I took as a good sign.

You could try asking questions related to per square footage costs or material sourcing questions to let them know you were serious.  Similarly, asking about their pipeline and gauging their ability to meet your time line.  I don't think there are any golden questions to ask, but the more you get them talking, the better you can determine if they are the right fit for you.

[Bruce May]

@Justin R. I don't think we've met, but you might also search for good contractors at the local REIA meetings. I know there are contractors there who work for investors and do good work.

[Michael Noto]

@Justin R.  Why don't you see if your main contractor recommends anyone in the area?

[Tyler Flagg]

@Justin R. I used the website Thumbtack to get a list of contractors that met my criteria and had good reviews. I then asked each of them if they could meet me at the property at 6am the next next day (a Saturday). Most asked to post-pone it until a more reasonable 9am or so. 

I went with the guy who met me there at 6am, and he has been awesome. He brought in a mattress and has been sleeping on the floor of the property for the last week. He even flew out his dad from California to help him finish it faster.

Lucky coincidence? Maybe. I have no idea. But that worked well for me. 

[Justin R.]

@Jason Mak Yeah, I feel very fortunate that the first couple projects went well - I chalk it up to luck that I ended up with the contractor I did.  I suppose it's a good problem when you need more of the same to keep up with demand.

I read that Home Depot suggestion somewhere too ... I can't *imagine* doing that and being successful.  It feels so random.  Either the contractor doesn't have work and is hanging around trying to get it (not a good sign) or he's busy and probably wouldn't appreciate being interviewed while he's trying to get materials for his crew (also not good).

Like your suggestion about getting down to cost-per-square/linear-foot.  Could cut through some of the niceties and shows you know what you're doing.  May help get to a fair price, but not sure it'd help understand who can do efficient rehabs and who can't.

Not surprisingly, the answer is almost always, "Of course we do that" when pitching a project to a contractor.  :) 

[Account Closed]

Why make things so complicated?  You figure out what you want and provide a 'scope of work'.  The contractor provides you with a written proposal and tells you how long the project will take.  

You choose the proposal that best meets your needs. Get references, verify licensing & insurance, etc. 

[Adam Anderson]

Originally posted by @Account Closed:

Why make things so complicated?  You figure out what you want and provide a 'scope of work'.  The contractor provides you with a written proposal and tells you how long the project will take.  

You choose the proposal that best meets your needs. Get references, verify licensing & insurance, etc. 

I agree with art. If you are bothered by the totality of small decisions you probably need to work on defining the contractors scope of work. 

Your contractor shouldn't need to know whether you need a 1 piece tub for your hold property because you should be defining what you want at the front end. 

Provide a written scope of work that spells out what you want. When ever you have a contractor coming to you for clarification on an item, ask your self what information could you have provided on your scope of work so that the contractor doesn't have to ask you.

[Robert Leach]

I agree with both Art & Adam here. Any general contractor worth his salt will take your scope and walk the house with you asking specifics and incorporating findings in his or her's bid to you. Frankly if I cannot get the answers I need before the project starts or the scope of work is ambiguous I would decline the work. It isn't the GC's responsibility to choose anything rather to recommend options and wait for a clear response from the owner. Anything less will ultimately cause both parties a ton of headaches and likely lead to a bad ending. 

[Laureen Youngblood]

I agree with a few of the suggestions above.  Your existing contractor should have at least one referral for you if he doesn't have the ability to do both projects.  Providing a scope of work and following the suggestions above regarding references, and insurances is a must.  Your contractor shouldn't be responsible for selecting the types of finishes you want in a property.  However, a good one might have a few suggestions.  In addition, I have written a few blogs regarding this topic. you can check them out here:

Contractors - The Final Frontier !

and here;

Characteristics of a Good Contractor

[Mike Baker]

My suggestion would be to be as specific as possible with your contractor.
The scope of work is your biggest time and money saver if you follow that rule.

[Manolo D.]

If you don't know what you want to end up in your property, then you might be in a little trouble, the contractor doing the job might have a fair idea on what sells, but it would be your money and holding costs on the line. I would probably ask the real estate agent and ask them which finishes/structures that attracts most clients for the area, they are the front liners of selling, they know that if you have an ugly color combination of red and blue on the bathroom, it wouldn't attract much. Plus, that would create a scope of work that you could compare apples to apples for the contractors. If it is a free range, then one might give you a price for stainless steel appliances to match the kitchen countertop, the other might price you white finish appliance to match their white quartz.

[Craig Jennings]

As a contractor and investor this always surprises me.  As several others have already said, its not up to the contractor to determine the finishes to be chosen.  I work exclusively with investors and I don't pick anything.  I don't want to be responsible for picking finishes that the owner ends up not liking.  That's what a designer does, not a GC.  All my clients get a list of selections I need at the beginning of the project.  

I can't over emphasize enough, spend as much time as you have to on the front building a detailed scope of work.  Take it down to the SKU number if you want.  You want to contractor to put in the finishes you choose.  It's your investment.

[Justin R.]

Thought I'd update the thread on what I ended up doing here (I'm the OP):

My primary GC is more than comfortable making decisions on finishes if I need him to.  He's done hundreds of flips for others, so I can say things like: "Let's put up one of those modern fences for the front yard" and he knows what I mean, gives me a $/linear foot, and we're done.  He knows the trends, whether I'm holding or selling, and what's most cost effective (which is also a function of what his lower priced labor can do well).  It's a beautiful thing, and that's what I consider "investor friendly."

From the sound of responses, it's also apparently rare.  :)

Since he wasn't avail for the project that this thread is about, I ended up hiring an "Owners Representative" who also has a design background.  She also happens to be a GC for the past 25 years.

This is my first time taking this approach, and it's got a couple advantages and disadvantages. On the plus side:

1. This is an old house and a low 6 figure rehab, with lots of stuff that's come up. She's been able to keep things going without me being a limiting factor.

2. I'm getting professional cost accounting to a level of detail I could only dream of.  It's AWESOME. Importantly, I'm learning costs for all subs, materials, overtime ... Everything.

There's some downsides too:

1. It has to be time and materials.  Fixed bid would have been more comfortable.  There's risk and reward for this.

2. What a designer thinks is good and what a buy-and-hold investor finds value in are not always the same.  There's still healthy tension, but by empowering someone else to make decisions, there are some extra expenses I wouldn't have voluntarily taken.

3. She doesn't swing a hammer.  It's always best if your GC knows how to do every trade.

I don't disagree with any of the comments on this thread, but for me I *do* want a contractor who feels comfortable executing on some of the details.  Are you reframing a wall and think a stock 4x4 window would be better than the existing 2.25x3.75 because it'll save time with stock over custom? Tell me.  Can I save $500 by moving a skylight to the hallway so I don't have to move a duct line?  Tell me.  Can I save $1000 in paint prep costs by ripping out the old trim and spending $500 on new stuff?  Tell me.  Can I save $1500 and 3 days by using retro stair treads and MDF risers instead of matching the stair treads to the 80 year old Doug fir floors? Yeah, tell me.

The main problem is that many of these projects don't allow for lots of planning ahead of time - we need to get in there, see what we're working with, and then keep it moving.

Which reminds me - I have total respect for the job a GC does.  It has to balance people mgmt, problem solving, cost pressures (especially if fixed price bid), and time pressure.  Not easy. 

[Steven Segal]

I've rehabbed and flipped a large number of houses. All of my favorite contractors I have came from Home Depot (I have some good ones who haven't as well). Spend some time out there. When you see a contractor go to the "Pro Desk" with $88 toilets and standard Home Depot vanities, he is probably a guy you can talk to. Also, maybe talk to the Pro guys at Home Depot. They are supposed to give you names, but they might anyway.

One good thing about this is that you can sometimes stay away from paper flipper GCs. My generals I work best with are doing parts of the work and on-sight. I don't need people paper flipping me AC units.