South Florida (and Miami especially) are notorious for shoddy general contractors. When I first started, I made many rookies mistakes and trusting contractors who at the end over-promised and under-delivered. Contractors know instantly if you are not experienced and will leverage that into trying to charge you as much as possible. There a very few excellent contractors that work with high integrity, professionalism and ethics (especially in Miami) and there are even fewer that understand the investor friendly dynamics needed for real estate investment projects.
After being tired of working with underperforming contractors, I decided to bring the general contracting licensing and requirements in-house for my real estate acquisitions company so that I could be in direct control of the workflow, expenses, deadlines and the high quality expectations I choose to maintain. I also offer my services now to investors in Miami Dade and Broward County since I have a team of salaried workers and wanted to end the negative experiences both investors and people in general have in regards to contractors.
Using a general contractor who has an investment mentality and your best interests in mind, there are strategies that you learn and employ over the years to save yourself and your clients money, instead of trying to milk them for every penny. As both an investor and now the principle of a construction firm, adding value wherever possible is how you will succeed, and establishing great relationships with your clients with high quality work and investor insight will keep them coming over and over again.
Here is an example of how I try to add value as an investor and general contracting / rehab services to my clients:
The before and after photo below was for one of own projects for a simple bathroom renovation. The property in questions was by no means a very high end property, but the bathrooms was from the 50's and was an eyesore. I had a half glass fixed shower door fabricated and installed, then had the entire bathroom primed, coated and painted with a high end specialized latex paint for ceramic tile.
It only takes a few hours to apply and 24 hours to cure and completely changed the look of the bathroom for a fraction of the cost, with extremely fast turnaround time. Whereas any other general contractor would charge $3,000+ in labor to completely gut and re-model. Keep in mind that the paint must be professionally primed, prepped, and applied or else the paint would chip and the finishing would look like bad.
Here's the outcome:
I employ this strategy for multifamily properties as well that have many doors in order to raise rents to achieve market rate rental prices.
Doing structured payment plans as work progresses in phases is fine and allow clients to pay me that method. It ensure they are comfortable with the scope of work and keeps us incentivized. No shame in admitting that.
At the end of the day, using an investor friendly general contractor or partner with an experienced rehabber with an excellent and demonstrable. Being able to source and acquire investment properties, investment management, and contracting experience is the trifecta. Real estate investing at the end of the day is a business and costs must be managed and analyzed every step of the way.
