10 Tips on How to Hire a Contractor for your House Flipon January 21, 2016 5:50 pm under Real Estate Investment Tips
Not big on DIY? Thats ok!
A reliable contractor can do the difficult work for you. Even if you are handy you may need a licensed professional for some renovations. Their skills and experience will result in a higher quality finished product — if they are qualified for the job. Take the time to build a strong house flipping team.
Want to know how to hire a contractor that will be best for the job? Follow these guidelines as you screen potential candidates:
Get References from People You Trust
A recommendation from a friend in the business, a colleague, or a neighbor is one of the best sources for finding reputable and trust-worthy contractors. People you already know will be honest with you and give you an accurate account of their experience. You may even be able to see the contractors work at a friend’s house before moving forward.
Have the Contractor Provide References
If you dont have any overlap socially, ask the contractor for a list of references who are not related to or affiliated with him. Make sure you get at least 3-5 so you know you are getting legitimate testimonials and ask for before and after photos.
Obtain 3 Bids
Ask each contractor that you speak with the same questions. The lowest bid will not always save you the most money and the most expensive bid does not guarantee royal treatment. Because of the fixed costs of materials and labor, a stunningly low bid can be a red flag. Go with the contractor and bid that is the most economical and makes sense to you.
Compare Apples to Apples
It is best to make sure written bids cover the same line items. If one contractor added additional items or left certain items off of the list it can be hard to compare each contractors price quote evenly. Create your own itemized spreadsheet and put each contractor’s bid on it to make the comparison easier.
Check to Make Sure They Are Licensed & Insured
Ask for proof and then check with your state’s contractors licensing board for verification. There are many contractors that are operating their businesses without the proper licensing and insurance requirements including workman’s compensation insurance. This step will serve to filter the unqualified so you know that you are working with a reputable contractor. Its a little more work for you, but absolutely necessary before you hire a contractor.
Treat the Bid Appointment Like a Job Interview
This is your opportunity to evaluate the overall professionalism of the contractor. If they show up 30 minutes late, it may be a sign that they do not manage their time well. Are they rude on the phone when you call? Maybe they will not be the easiest to communicate with during the project. Ask specific questions to see how they answer and make sure they are addressing your concerns. Trust your gut feeling and if someone makes you feel uncomfortable, its advisable to move on to the next one.
Know the Time Frame and Parameters of the Bid
It is important to find out the specifics about when the project will start, how many days per week will they be working, and how they expect to be paid. Make sure that you are both on the same page regarding price, terms, and time schedule of the job. Include a monetary penalty in the contract if the work is not done on time (ex: $50-$100 off the final payment amount for each day past the agreed upon completion date). Contractors who have worked on flips should understand the importance of finishing the work on time.
Understand How the Payment Schedule Works
When it comes to money, make sure you that both you and the contractor agree to the terms and that you have them in writing. Find out what happens in the case that a new part is needed or if you provide your own materials. It is best not to pay upfront for work that is not yet completed.
Make Sure the Contractor Can Do the Job
As simple as this sounds, there are still many people who hire a contractor that did a great job on a friends house, only to find out that the project was in a different area of expertise. For example, make sure that the contractor who did the plumbing and electrical job for your friend knows how to properly install doors and windows if that is what you are hiring them for. Unsure of what projects your property requires?Learn how to choose the best renovations for your resale project.
Check if a Permit is Required
Many contractors will assure you that a permit is not needed for a certain project. This can be a warning sign and is certainly something that is worth double-checking. Check with your local building department to find out for yourself if a permit is required for the scope of work you are hiring them for. It helps to do the extra research and familiarize yourself with the permit requirements in your area.
Do not rush into any project. Fully or partially renovating a house to flip can be an exciting and emotional time, but you want to make sure and remain patient. Do your due diligence first. Research and planning will be just as important as motivation when it comes to your success learning how to start flipping houses. These tips are a great start to figuring out how to hire a contractor and will put you in the best place for success on your house flip!