What strategies do you use to vet a new contractor?

Question

I'm looking to bring a few new contractors on board. My first was easy because it was my brother. Since I began working more in the investing space I quickly began to realize there is no shortage of crappy contractors. What are some of the strategies you use when selecting a new contractor to rehab your properties?

Cardell Beasley · Answer

@Grant Rothenburger that's a perfect strategy, we would both be seeking similar qualities in a contractor. Thank you for taking the time to respond.

Grant Rothenburger · Answer

You're welcome :)

Robin Frazier · Answer

• Get his references and verify them. Ask open ended question.
• Never pay for any part of the work up front.
• Never purchase the materials for the contractor, because they can claim they are your employee and not a contractor, then you could be liable for them and the withholding taxes associated with having an employee.
• Ask to see some of his work. If a former client is happy with their work they may be willing to show it off.
• Take your time and vet them carefully.

Scott Mac · Answer

Hi Cardell,

Ask the contractor for references, and call them. Ask about the quality of the work and if they showed up on time, and if they were a pain to work with or easy to work with. Ask the owner if they would hire them again or not.

Ask the contractor if you can go visit a similar to yours jobsite they are finishing up on now and look at the quality of their work.

Good Luck!

Cardell Beasley · Answer

@Thomas Franklin Wow you are a wealth of knowledge, Thank you greatly for your response. I copied the questions and will use it as my guide. This is awesome, Thank you greatly for your response.

Cardell Beasley · Answer

@Scott Jordan Thanks greatly, That's very solid information, I appreciate you taking the time to respond.

Grant Rothenburger · Answer

@Cardell Beasley Can always try asking other investors, though if they have a good one they may keep them plenty busy and not share. Worth a try. Still vet them like others have given suggestions, but that can be a way to find the GC to vet.

Thomas Franklin · Answer

@Cardell Beasley I only use General Contractors (GCs), on Flips. To vet GCs, I always ask the following questions:

1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?

2. How many projects is your company currently undertaking?

3. Do you work with Investors that need to adhere to strict timelines and scope of work?

4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?

5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?

6. Are you bonded?

NOTE:

To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.

7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"

8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?

9. Do you pull all necessary permits?

10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)

11. Do you provide all applicable warranties, for materials?

12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?

13. How do you handle dirty work such as debris disposal and clean up?

14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?

15. Would you provide references, from past clients?

You want to check there license, with you state Department Of Business And Professional Regulations, that their license is current as well as there are no liens, judgements, complaints, etc. filed against their license. In addition, you want to call their Insurance Carrier to verify their policies are current and their Insurance Coverage Limits.

Scott Jordan · Answer

@Cardell Beasley, as a general contractor who has worked with a lot of investors and worked on a lot of flips, you should definitely ask them a few things because things are quite busy right now.

• Do you have time for your job?  
• How many jobs do you have? 
• Do you subcontract your work or do all the work yourself? (if he does this may allow him to do more jobs than just yours but may also add to the price of your investment)  
• If they have worked on other houses or do this regularly  ask for references and photos. Anyone who is proud of their work will have photos and a list of references
• Also once you get quotes from a GC make sure you get DETAILED quotes.  make sure they are not swapping out poor materials for your job.

This is only a few things but I hope this helps,  feel free to reach out with any other questions.

-Scott

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