contrators exposed (long post)

[Tony Reale]

OK so going to post as one of the HATED contractors!

First as explained on the podcast there are three tiers of contractors.

The cheap....Probably one guy with or without a license who works for food, rent, bills etc. His only motivation is making his rent and possibly nightly beer money and or worst causes. I would say this is an avoid category or POSSIBLY a great handyman if you can keep him busy, not a contractor.

The middle.....where most people focus......He is a guy trying to establish himself....much like young investors are.....as a player in the contractor game. He has overhead. He pays his taxes. He pays his advertising. He pays for marketing. He has a few employees that he is responsible for. His motivation is growing his business.

The high end....the company. They have multiple people to deploy at any given time. They have a higher marketing budget, they have a higher "holding cost budget" if I may. They have many employees. They have anything an investor wants but you will pay a premium for it!

So where do you go?

The better question you should ask yourself is where are you personally? As an investor you don't want to pay too much for a service you can get cheaper, but you also don't want to go for the cheapest to create a headache. Look at the middle but understand how to leverage that as you study how to use a bank, or private funds, or even equity.

You can leverage contractors as many of the high end flippers will tell you.

If you are a flipper on your first project you may get multiple bids and not like the results. Here are the reasons why......the contractor always bids on worst case scenario on unknowns. The drywall has a small spot of mold on it? We will bid the floors in case. You want a door moved? We will bid on the chance that plumbing or electrical may need to be moved. This is for first time investors but "small time" investors are even worse.

You do one or two flips a month, and you have a 3 week window to complete a project, and you call your contractor to complete it and he says I'll be there in 3 weeks. He has mouths to feed, he has employees to pay, he has overhead costs to meet. If you offer a guy more business, great but not. Don't expect him to jump to your standards. Now if you are serious and can flip many house a month and secure him, he will be happy to work for you exclusively. If you promise this and he (and his employees sit for a week) he won't look at you as anyone that is looking out for him!

Investors are just like contractors. They look for the money. I assure you no matter how good of a relationship you have with your contractor, if you are offering him 500 for a days work and he has someone else offering him 700 for a days work you won't be on the top of his list unless you can realistically offer him more in the future.

As for the other big deal with contractors....the phone answer question I will say this. I return any call I get, ALL THE TIME, but as far as answering all the time, my fiancé will tell most of you that I answer about 50% of my calls at work because for one, we have a lot of loud stuff going on around us and two. Investors make money talking on the phone, we make money sawing, hammering, cutting, and really getting sh!t done, not talking about it.

My challenge is to @Joshua Dorkin and Brandon Turner. Most of the problems here seem to be contractors and property managers.......so don't accept the norm, but get their stance Get a big name contractor and property manager. for an outside stance to give their take, on the podcast. Would love to hear it!

I would be willing to bet this! If you can take care of your contractor full time they will be willing to take care of you full time! If you can offer your contractor 6 weeks a year you are not on their priority list.