How do I find good contractors/workers for my flips?

[Patrick Philip]

Ideally, I would have 1 contractor who would give me a reasonable price. I understand it's a lot of work. I did a lot of the work myself on the first one and I have good knowledge of most aspects of construction. I'm trying to expand to doing 25 flips per year, and it's not sustainable doing the work myself. I'm only 1 person and only have so much energy.

I've had some success finding cheaper "handymen" but they are often unreliable, etc. 

I know this business is work just like any, but is it possible to find what I'm looking for? I would pay a premium for a good contractor as long as he doesn't try to charge a huge amount.

I just don't know what to do. I realize it's a lot of work and I'm trying to hire someone else because I don't want to do it.

How do large firms find good contractors that don't charge an arm and a leg? Like the Blackrock Group or whatever. How do they do it?

Am I just stuck using Google, etc.?

If I could find good workers that I don't have to babysit, my business could expand tenfold. I know it's possible. How do I do it?

[Michael Hayworth]

Finding good contractors is difficult, but exceedingly important. Several things you've said indicate you're on the right track, though.

First, some background. I run a remodeling company with 10 full-time crews. 7 are dedicated to client work, 2 to my own investment properties, and 1 floats back and forth. We no longer take work for other investors. Why not? To try to summarize what's really a lengthy answer: investors are often difficult clients. Many want top quality work, done fast, and they want it at Craigslist handyman prices. Many have also gotten themselves dazzled by a wholesaler who overestimated the ARV and underestimated the reno costs. When I explain to them that, no, the comps he used were lakefront properties and yours isn't, and it's really gonna sell for more like $215, not $240, and the reno you budgeted $30K for is really gonna cost more like $50K, and that's if we don't find anything weird while the project is underway....well, somehow that ends up being the contractor's fault.

Business is so good for good contractors right now that it just makes more sense to focus on higher-dollar retail work.

The contractor you're looking for is most likely going to look something like this:

• Good technically, but maybe not a ton of business or marketing experience. Working for investors and getting repeat business makes great sense for this kind of contractor, because he may not be interested in doing the kind of marketing it takes to be really successful working for homeowners.
• His English may be somewhat rough...but it needs to be good enough that you don't have a language barrier separating you.
• He may be newer in the business - recently out on his own, after working for someone else for awhile.
• He honestly may not have all his processes and procedures worked out, so you may have to be more understanding of that.
• But he can show you good quality work, and multiple references that will attest he's not going to take your money and run. OR, if he's really new and doesn't have as many references, but gives you a good vibe otherwise, give him a small project like a bathroom, and then another, and another, rather than giving him an entire house right away.

You indicated you're willing to pay a premium for a good contractor. That tells me you're a step ahead of the guys I see on several of my local investor boards, who are always posting about needing an "investor friendly" contractor who's available tomorrow but works really cheap. The contractor needs to be reasonably priced - it needs to be a win-win, but if he doesn't make money, he'll be out of business soon. 

To find them:

• Investor networking groups.
• References from other investors (this is iffy....many won't share their good subs, because they don't want them tied up on other people's projects).
• Craigslist. This has been my best source of sub crews when I need them. Just realize that you will have to sift through a LOT of chaff to get to the wheat. I usually find these guys by posting a job with limited scope - drywall and paint in a house, a bathroom remodel, something like that, and then see about expanding the relationship once they do good work. I'm willing to give a deposit, but I keep it reasonable for them to pay materials, and then do staged payments as work progresses. 

Overall, it's just a process of realizing that there are a lot of crappy contractors out there (and, as I mentioned above, a lot of crappy clients, too). If you're going to be one of the good clients, you'll eventually find good crews to work with, but you may have to go thru several to get there. 

I've started 7 successful businesses in my life. Starting a business with investment properties is still starting a business - it takes time to get everything right. You should look at this as a building process. Your first few houses that you do are your startup phase. You'll find the people you want to work with, and that'll take time. You'll also refine your internal processes. By the 2nd or 3rd year, you should be ready to really push the accelerator to the floor.

Good luck!