Before undergoing a renovation, whether it is for your primary residence or an investment property, finding the right contractor is so important! We have all heard stories about contractors running off with money for materials, with no materials to show and the contractor gone without a trace. Or the story your friend told where their house underwent major renovations and 2 weeks later, their entire second story bathroom caved in and the contractor could not be reached. In case you haven’t already made this decisions, I am telling you right now that you do not want to be this person! Trust me, I’ve been there, and my coaching focuses on ensuring you do not make the same mistakes I did!
The first thing you want to look into and learn about when checking on a potential contractor is their reputation. Do you know anyone who has hired them? What did they say about their work? Their reliability? Their communication? Their value? Their punctuality? The more details you can get about their experience, the better! Having a friend or family member that can vouch for a contractor they have personally used is amazing, but that’s not enough! You need to look to see what other people say about the contractor. Check their reviews. Look on their Facebook page, yelp, Angie’s List, Google Business and find out what their clients are saying about them. You will quickly notice trends, I promise!
Now that you have some confidence in their skills and competence from your investigation, it’s time to get on the phone and start interviewing!
Before getting out there and conducting interviews, let me alleviate your anxiety! A good contractor understands how important your property and project are and knows that you will have lots of questions. If he/she won’t answer your questions: they are not your contractor! Run away!
If they don’t show up for your appointment or interview, do NOT give them a second chance. If they are 30 minutes late, they better have a great reason. If it’s acceptable to them to be late or not show up before you hire them, you can bet that this behavior will be consistent or even worse after you hire them.
When you meet a contractor, take note of their appearance and, if possible, the state of their vehicle. This can tell a lot about a person’s organization and attention to detail just from these two things. If there are fast food bags, empty water bottles, paperwork and trash scattered everywhere, you can bet that this is how your house is going to look after you hire them.
When you first meet them, don’t hesitate to shoot the breeze a little bit. It’s nice to know about their family, their priorities and what they like to do. Only spend a few minutes doing this though, as you want to be respectful of their time. Good contractors are typically very busy! Once you have broken the ice, get right into the questions.
- How many people work for your company and how is your company structured? This will tell you how deep their organization is, which can be a good indication of how long they’ve been around and how established they are. It can also tell you what type of support they have. Having administrative personnel who help manage project schedules and billing, assistant managers, and other support will likely make it easier for you to get in touch with the company when you need to, without having to worry about an individual being a single point of failure.
- Who will be doing the work? Are you sub-contracting anything out, or will your organic team be able to cover the entire project? Ideally, the contractor can do the entire project with just his team. This allows the general contract to have more control over the timeline and the budget. If he has to sub-contract specific parts of the project out, he cannot control that plumber or that painters schedule. Regardless, you need to make sure that each person conducting work is trained, licensed, if applicable, and insured.
- Are you insured? This includes General Liability and Worker’s Compensation. There is only one right answer to this question! If they say yes- ask to see a copy of their policy.
- Has your company ever been sued? Has anyone filed a lawsuit against you? A yes answer is not a show stopper, but you’ll want to dig a little deeper to know what the suit was about, how it turned out, and how this contractor handled or responded to it.
- Has your company ever had a serious accident that caused injuries or hospitalization? Again, it is okay if the answer is yes, accidents happen. What is important is how the contractor dealt with it and what they are continuing to do to ensure it doesn’t happen again.
- Have you ever sued a client or filed a mechanics lien against the property? Still not a show stopper, but you need to figure out the details. At the very least it will give you an indication of their transparency and character. If you feel that they aren’t being honest about this or previous lawsuits, check the public record!
- Do you agree to sign lien releases before I pay you? This needs to be yes. If your contractor does notwant to sign a lien release to be paid, for any reason at all, their intentions are probably not where they should be.
- Have you ever declared bankruptcy or operated a company under a different name? If they say yes, you will need to do a little more research to ensure they are not going to go bankrupt again. You also need to check on the other company as there is probably a reason that company is not still in operation.
In doing this research and conducting interviews, it is not enough that they ‘pass the test.’ You need to think hard about two things: are they a good person? And can you work with them? Once you get the above out of the way and have a good idea of the contractor’s reputation and experience, you can start to figure out scheduling, timelines, communication, and organizational structure.
- Who can you go to when the project is way behind schedule? This is where your contractor lets you know how you can hold him or her accountable.
- Who will be at my house and when? You need to ensure that no one is allowed access to your house if they have not had their background checked by the company. Additionally, you want to ensure that there are only contractors working when you give them express permission and within the boundaries that you lay out.
- What will our contract look like? A lot of contractors don’t even use contracts (believe it or not!) so its important to have this conversation now. I always draft the contract I use and ensure that everyone signs before work begins or money is exchanged. Not every contractor will be okay with this, but I highly encourage you to have a lawyer review any contract before you sign it. If it is written by your contractor, it is to protect him or her, but not necessarily you.
- How and when do you like to be paid? If you do not know this contractor, do NOT give them a lot of money up front! 25 or 50% is not reasonable, no matter what they say. A good contractor has enough in reserve to cover themselves to get started, but occasionally will need money for some materials. If this is the case, you can order the materials and have them delivered directly to you. This way, you have what you paid for. If your contractor has a problem with that, they can purchase the materials on their own and you can pay once the work is done, or you can find another contractor.
This is not an all-encompassing list and you can ask plenty more questions, but this will get the conversation started. Ensuring that they are qualified, have the support they need, and have a good reputation will help you sleep better at night. If you need any help through this process, connect with us at BC Global and we will point you in the right direction! Through all of this, hopefully you’ll have determined that you can work and communicate with this person.
If you’re about to take on a four month renovation and deal with this individual regularly, it is critical that you can work together. And if they are a genuine and honest person, the chances of them completely screwing you over are significantly reduced.
At the end of the day (or project), you want this contractor to have respected your property, been open and honest, treated you fairly, and completed the job within budget, on time, and to a reasonable standard.
For assistance with your real estate journey, don’t hesitate to connect with us.
Written By: Erin Helle, Owner & Founder BC Global Investments, LLC
Erin is originally from Buffalo, NY and served as an U.S. Army Engineer for 14 years. After leaving active duty, she embarked on a career as a Real Estate Investor. She is now a proud Army wife and mom to two beautiful little girls. Erin built a real estate portfolio valued at over $2M that cash flows over $6,000 per month within her first year as an investor! She coaches and teaches others in real estate investing @ BC Global Investments.