When Should You Reach Out to a Contractor?

Question

Hello all,

I'm a new(er) investor looking at tackling more renovation projects in the near future. Right now, I'm working on setting up some systems to manage projects effectively, as I do work full-time. I view it as setting up the foundation before jumping in. I do have one rental and pretty much followed the "just do it" mindset that many swear by, with that property. It did end up working out, as it's now a great income producer.

However, I had no systems in place to work effectively with contractors, which I'm trying to remedy this time around. I'm really wondering when in the process I should begin reaching out to contractors for bids on project SOW? Not really HOW I should be working with contractors, but more when to bring them into the process. With most solid properties going in a matter of days (or hours), it doesn't seem feasible to try and get 3-5 different contractors through the property for a bid before even making an offer. Even once in contract, is it really reasonable to get multiple contractors through when dealing with the contract timelines? I would love to start reaching out to contractors now, but without having a project on the table, I can't imagine anyone is going to take me very seriously. And I wouldn't blame them.

It seems to me that it comes down to being able to at least have enough knowledge of what you're looking at yourself to know you're not buying something with terrible, deal-breaking, hidden issues. Buy the property, then bring in contractors for as many bids as your heart's desire.

Am I off base with this thought? You may be thinking "why not reach out to the contractors you worked with previously?" That whole "just jump in" thought led to me making some pretty inexperienced, poor decisions in the contractors I hired. I'm really looking to start fresh, equipped with a more thorough plan. Any input or suggestions are certainly appreciated!

Will Barnard · Answer

You have answered your own question right here. You need enough knowledge to estimate the repairs yourself, then, once under contract, use your inspection contingency to get your hard bids in. It is not viable to have contractors come out and bid on every house you look at, that is a waste of their time.

Mikael Winkler · Answer

@Jim Goebel that's a great idea, as far as asking another investor to assist with the initial walk through. I'd imagine that probably also has the added benefit of getting a more accurate second opinion, as that investor isn't likely to over inflate things just to get a bigger bid, as some contractors might. Thank you for the input!

Mikael Winkler · Answer

@Will Barnard thank you for your thoughts, it really is appreciated. That's the basic thing I've been struggling with. The thought of if the work I'm currently doing is valuable prep work or just me subconsciously busying myself with things because I'm scared to pull the trigger. I believe it is the former because I know what the latter feels like.

Will Barnard · Answer

Building your team BEFORE you start making offers is always a good idea in my book. Forming said relationship with a reputable contractor is a good step forward. Getting to know them, how they work, perhaps visit a few of their job sites and ask for their price points on other jobs just to get you an idea of costs could be very valuable moving forward.

Mikael Winkler · Answer

@Will Barnard that's a good point. I can always bake that time to get contractors through into the contract. What are you're thoughts on reaching out to contractors to build some sort of initial relationship prior to finding a project? More or less getting a feel for how they operate, not necessarily asking them to come out to a property. Perhaps asking some general questions on previous projects, viewing some of their current projects, etc. I would also think their responsiveness to you when you don't have a project on the table may be a good indication of whether you'd want to work with them when you do.

Jim Goebel · Answer

@Mikael Winkler

What's worked well for us is to get another INVESTOR (not contractor) that you trust and like, and bring them in for a 'go / no go' kind of inspection prior to closing (after under contract). They will have a better view / perspective on costs to make that decision. Past that point, once you're working on it, yes, just bring in your contractors. Break down your scope of work/ project in to tons of sub projects and take a nibble of that contractor apple before eating the whole (often rotten) thing.

We paid our guy $100 for that informal inspection and it was a wonderful arrangement and it's a good friendship, as well.

When Should You Reach Out to a Contractor?

When Should You Reach Out to a Contractor?

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