Everything You Need To Know To Find, Manage and Keep Great Contractors On Your Team

If you want to have a championship winning team in sports, every member of the team has to be skilled in his position, be a dependable teammate and work well with the other members of that team. Real estate investing is no different. If you want to scale your real estate business, finish flips faster or make property management much less stressful, it’s important that you have skilled, dependable contractors on your team as well.

In times like these, where there are many more jobs to do than there are workers to do them, finding, managing and keeping a reliable crew of team members can be a huge challenge.

Luckily, there are things you can do to make all of those steps a little bit easier. Read on and find out how to find the best contractors, how to know if they are the right fit for your team, important questions you need to ask them, how to get accurate job quotes from them and how to pay them the right way. The best part is: following these best practices can help set you apart from every other investor who is looking for a contractor to hire and help you build a reputation as someone great contractors want to work with again and again.

Quick Note: When we say “Contractors”, we mean General Contractors and subcontractors like plumbers, electricians and handymen too. Each one plays an important role on your team.

How To Find Great Contractors

We all know you can find contractors by jumping online and searching for electricians, plumbers, handymen, etc. in your area. You’ll get a list of businesses, their phone numbers, and if you’re lucky, you might even get a few customer reviews. You may be able to weed out a few bad apples by reading the online comments, but can you really make a well thought out decision with such little information?

You need more than just a few reviews in order to make an important business decision like this. But where else can you find the information you need? Here are a few options that have proven to be great resources:

Meet Ups

Are you the only person who invests in real estate in your town? Chances are there are at least a few other individuals in your area who own rental property, flip houses, wholesale property, etc. There’s also a good chance some of those individuals are already meeting regularly to talk about the real estate business and help each other solve any problems they may be facing as real estate investors or business owners. These real estate “meet ups” are a fantastic way to network with other investors, to learn and share knowledge with your local real estate community.

Attend a meeting. Talk to other investors and see which contractors other investors in your area recommend. You can ask questions and get more information from a person making a recommendation than you can get from a few comments written online.

Ask Suppliers

Material supplies are another resource you can tap into to find out who the best contractors are for your team. The folks at the paint store know who the most sought after painters in the area are. The plumbing supply company knows who takes their time to do a job right and who cuts corners to make a quick buck. Consulting with suppliers can be a valuable practice as you’re on the recruiting trail putting your all-star team together.

Drive For Contractors

Driving for contractors is a play on the common real estate idea of driving for dollars. When driving for dollars, you drive around looking for properties that look vacant, “need some love” or show any other signs that the property is distressed. It’s a very effective and inexpensive way to locate properties for your next project.

Driving for contractors is very similar. Instead of looking for distressed properties, though, you’re on the lookout for work trucks, construction crews and job sites. If you need an HVAC repair person on your team and you see one while you’re walking in your neighborhood or out for a drive, stop and speak with them. You may have just found the exact person you’re looking for.

How To Know If A Contractor Is Right For Your Team

Investor Friendly

There are some contractors who prefer to work with homeowners and others who prefer to work with investors. If you’re looking for someone to work with you on your real estate investing team, you’ll be looking for an investor friendly contractor.

Contractors who work with investors understand the projects you’re working on are part of your business activities. The materials used in a homeowner’s residence may be different from the materials used in a rental property. Timelines and budgets are often tighter on an investment project when compared with a project at a homeowner’s residence as well. The project at the residence often wont have lenders and other investors to worry about keeping happy. There probably won't be return on investment targets to hit or other investment metrics to consider when doing a project at a homeowner’s residence. You want your contractors to think about the projects the same way you do so you can be sure you’re working towards a common goal.

Ask Follow Up Questions When You Get A Referral

When you need to hire someone for a job, it’s very common to ask family, friends and other trusted people you’re connected to if they know anyone who you can call. Your personal network can be an excellent referral source when looking for contractors.

In addition to getting the names and phone numbers for the referrals, it’s a good idea to probe a little deeper and find out some specific details about the person’s work habits, their communication style and any other details that may be important to you. Your neighbor may know a heating and air serviceman who does amazing work but he never knew when the guy would show up. If your projects have strict deadlines, this may not work for you.

Visit Job Site

We’re all familiar with the old saying, “Seeing is believing”. That is a phrase you’ll certainly want to keep in mind when you’re looking to hire individuals for your team. You can learn a lot about a contractor from what your referral sources say about him or her, but it’s also wise to gather some first-hand information about a potential hire, whenever possible.

One of the best ways to see how someone really works is to go meet with them at one of their active job sites. Up to this point you’ve probably only spoken with the person by phone or met with them in-person briefly, if at all. If they’re on your shortlist to hire, you can tell them you’d like to meet up for a quick chat. If they’re working on a job at the time, you can offer to meet them at the site so it’s convenient for them.

While you’re on site with them, you can see the quality of the work they do, if the materials they’re using are similar to the materials you’ll use for your job, how clean the job site is, how organized they appear to be and so much more. If you don’t like what you see, you can address that issue directly with the contractor before you hire them or avoid hiring them altogether.

Important Questions To Ask Before Hiring

Are you licensed?

A contractor or subcontractor obtains a license from the state or other governing body to show that they have a certain level of knowledge in their trade or field and to show that they’ve met and currently adhere to specific industry standards for safety, quality and business practices. Acquiring a license can be costly and time consuming. If a contractor has taken the time and spent the money to obtain a license, it’s a good sign that he’s committed to his trade or business and won’t act in a way that would put his business in jeopardy.

A contractor must also be licensed in order to pull the required permits for a job. If the contractor is not licensed and isn’t able to pull the required permits, your entire project could be at risk. Your property value could be negatively impacted if your project doesn’t comply with local statues and building ordinances in your area. You could even have your homeowners insurance policy canceled if a claim results from the work of an unlicensed contractor.

Are you insured?

Licensed contractors are usually required to carry general liability insurance and workers’ compensation insurance in order to maintain their license. If everything goes right on a project, these insurance policies probably won’t mean that much to you. If things go wrong, however, having these policies in place could be a life saver.

If the contractor or one of his workers is hurt on the job site, you, the homeowner can be held responsible for the injury. You could be forced to pay the injured person’s medical bills or even be sued. Hiring a contractor who is properly insured can prevent all of this.

How long have you been running your own business?

Asking this question this way lets you know how much professional experience a contractor has. He may have started working with his parents in the business when he was just a kid. That is good information to know and may mean he’s very skilled in his trade.

Having several years of experience in a trade is different from being in business for in that industry for several years. Running a successful business year after year means that the contractor has been able to keep his clients satisfied over the years and has also been at least adequately successful in managing project timelines, budgets and other workers.

How many projects do you have going on right now?

If the person you’re potentially going to hire has no other jobs going on at the moment, that could potentially be a bad sign. Unless you happen to catch them when they’ve just finished a job, you should wonder why they aren’t currently working.

You also don’t want to hear that they have a large number of jobs going on, unless you know they have the crews to handle the work. If they do have several other projects going on, yours could get pushed to the back burner; causing delays that cost you money in additional holding costs. If they have a lot of other jobs going on at the moment, you should also ask them how they plan to fit your job in with all the others.

Will you be using subcontractors on this project?

Find out if the person you’re planning to hire will do the work on your project themselves or if they will have other workers or subcontractors working on the job. The last thing you want is to have done all the preliminary work of finding a great contractor, vetting them and building a relationship with them, only to find out the person you’ve been doing all that with isn’t even going to be working on your project. If there will be other workers on the job besides the person you’ve vetted, you should ask if they are all properly licensed and insured.

Do You Have A Contract You Prefer To Use?

Even if you trust this contractor you’re hiring and can’t imagine why you would ever need to have a contract in place to work with them - you should still have a contract in place before you work with them. You can ask if the contractor has a standard contract they prefer to use or you can use your own.

Any contract you use should be reviewed by a lawyer to be sure it offers the protection you think it does. In the contract, you can spell out the project’s timelines, payment schedules, payment amounts, who buys materials and if there are any penalties for not completing the project on time and any other details of the project you want to define.

How To Get Useful Quotes

Once you’ve done all the legwork to get a contractor on your team, it’s time to put them in the game. At this stage in the process, you’re ready to move on to getting quotes for the actual jobs you’re working on.

You can come up with a fairly accurate budget for your project by getting specific pricing information from the contractors you’re considering. Find out how the person you want to hire prices their jobs: price per square foot, price per item, priced per hour or priced per

completed job. Then find out how much they charge per square foot, per item, per hour or per job for the work you want done. If they won’t give you the exact price, offer a range of prices based on your historical price data and see if the person’s price falls within your acceptable range. Use the pricing information you’ve obtained and the specs of the project to calculate a very accurate budget for the project.

You’ll finalize the budget when the contractor actually walks the property with you and gives you his estimate of the job costs. If the estimate and your budget are very different, you have pricing details from your previous conversation with them to reference.

How To Pay Your Team

How and when you pay your contractors should be spelled out in the contract you’ve signed with them. There’s no right or wrong form of payment to use and no right or wrong payment schedule to follow.

You can pay in cash, check or use an electronic form of payment. Whichever method you choose, be sure to record the payment properly in your accounting system and include the required documentation for the purchase.

When coming up with a payment schedule, you can use progress payments as an incentive to keep workers coming back to work with you until the job is done. Making progress payments means you release payment to the contractor only after you’ve confirmed that he has hit each predetermined milestone towards completing the project.

Quick Note: The work at the end of each job tends to go more slowly than it went at the beginning. The end of the project will likely include a lot of detailed work, touch ups and other aspects of the job many contractors would avoid if they could. Save the bulk of your payment until the end of the project to avoid having a contractor not show up to finish the job because he’s already gotten enough money from you on this job and receiving the last $100 he’s owed isn’t worth it to make him come do that tedious work.

Be A Great Teammate

The tips and advice given in this article are good ideas to use as a guide when building your team. You want to be firm in your policies but also flexible enough to attract and retain good team members. Understand the people you’re working with. Talk to them and try to find as many win-win situations as possible.

Just like investors spread the word to other investors about contractors they’ve worked with, contractors spread the word to other contractors about investors they’ve worked with. You want to make sure your reputation as an investor is stellar - so you can find, manage and retain that championship team.