How Do You Build Your Team of Contractors

Question

How do you build your team of contractors for a rehab job? Do you guys prefer to hire everybody individually or do you prefer to just hire a general contractor so that you don’t have the headache. I’m curious to know some of your preferences and what you’ve learned along the way. It would really help me out!

Greg Dickerson · Answer

@Asia Taylor the best way to automate and scale the business is to hire contractors that can handle the entire project turn key including supplying all materials etc. Your time is best spent finding deals, raising money and getting properties sold.

Some of the best ways to find contractors is to talk to architects, designers, engineers, realtors, other investors, Facebook groups, supply houses and other contractors.

Also check MLS for flip properties and new construction specs for sale.

Make sure to get references of 3 or more current clients with work in process, 3 or more recent past clients, and visit some active job sites to see how they look. You can tell a lot about a contractor by how clean and organized the site is and the quality of the subs as well. You also want to talk to the subs to make sure they always get paid on time and ask what they think of the builder.

Make sure to check license status and for complaints with the state board and get proof of insurance sent to you directly from their insurance company with you as named insured.

You are the leader so it’s your job to give everyone what they need to be successful. The leader sets the pace of the pack.

When it comes to managing contractors you need to understand they are a vital part of the team. You need to be easy to work with, be respectful, establish a clearly defined detailed scope of work, lay out clear expectations of what you want done and when and hold them accountable to the goals. This is how you set the contractor up for success which helps them be more profitable and avoid issues.

This approach will put you on the top of their list.

After several projects you should be able to build a database of costs so you can set and control the budget. You tell the contractor what you are willing to pay. Be fair and reasonable.

You need stay ahead of them on the cashflow. Do not pay in advance for work not complete. A good contractor will not need a deposit to get going if you pay them upon completion of each phase.

Marc Winter · Answer

is the property local to your home or is this a long-distance deal? If it's long distance get a GC or property manager to help you

if it's local to you and you don't have much experience and rehabbing, one of the best tricks I ever learned was to go to the local supply houses for electric, plumbing, mechanicals, roofing etc. Aspen counter guys who is busy, who is dependable, you get the idea chat them up.

then you'll be acting as your own GC and you will be supervising on a continuous basis. If you have the time to do that you learn a lot and that would be a great way to go. If not you got to get a GC

Will Barnard · Answer

It may be easier and more hands off, but typically more expensive and when you are new, you don’t learn as much in this format. You need to decide how you want your business to run today and in the future. You need to learn the ropes and in my opinion, the best way to learn is hands on training by doing. Hiring each sub on your first or second job will help teach you the costs of each task, the time it should take and the order in which it should be done.

Once you are scaling your business and have that background, you will be in a much better knowledgable position to make future GC hiring decisions and perhaps still sub a few items out individually to save costs. When you are starting out, it is all about gaining knowledge and experience. You don’t really get that by hiring a GC for everything from the start and all the way through.

Amanda Kessler · Answer

I have a company that does it all. It's so much easier hiring a general contractor than finding specific companies to do everything.

Greg Dickerson · Answer

Good contractors will have no issues showing you current projects.

You protect yourself by knowing the business which means knowing what things cost and what it takes to get the job done, having a very clear detailed scope of work and solid contracts reviewed by your attorney.

Marc Winter · Answer

@Asia Taylor, as I said,  go to the local supply houses for electric, plumbing, mechanicals, roofing etc.

Not Lowes.  As a LAST RESORT try Home Depot at about 6 am.  See who's out buying contractor materials.

Asia Taylor · Answer

@Marc Winter that's a really good idea Marc! Did you find that these people are pretty good? Any problems you run into out of this situation? I need to find some good places to go, because Lowes is usually full of a bunch of rookie DIYs like me. Lol

Asia Taylor · Answer

@Greg Dickerson Greg thank you so much for your detailed response! Beyond helpful ! I will definitely check references. Will a contractor usually tell you the location of his/her current job? They might not want me stopping in lol

Also, my biggest concern is, how do you really know if a contractor is cheating you? For example, you talk to a contractor, give them your full scope of work, they give you a price, you negotiate and they start working. Let's say budget is $20k. Then a week into they have a 10 things "wrong" with the property that needs fixed urgently and will cost you more since they didn't account for it in the initial price. What do you do at that point? Obviously there's no way everything will go smoothly, and surprises will happen but what do you do to minimize situations like this?

How Do You Build Your Team of Contractors

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