How many of us have heard some version of the following story?
"My Aunt Bernice got taken for a ride by this contractor she hired last year. She hired him because he quoted her a great price, but the whole situation ended up being a nightmare. He was never on time, the work was shoddy, and he went WAAAAAY over-budget."
What about this one?
"Yeah, my friend Derrick totally got scammed by some fly-by-night 'contractor.' He answered an ad on Craigslist because the guy sounded legit and only charged 10% up front. The guy took the money and ran. Derrick hasn't heard from him since."
"Just because they showed up to collect the money is no guarantee that they'll show up to do the work... and if they do... I can't pay for it!"
Okay, fine. The last one was a quote by Tom Hanks's character in The Money Pit. I just wanted to see if you were paying attention.
The point is that most of us are familiar with the stereotype of the shady contractor, and we want to avoid working with one. Since a good contractor is a valuable member of your real estate investment team, it's important for you to know how to manage this relationship. That's why I'm here today with a few tips to help make working with contractors less stressful for both parties and more profitable for you. I think we have had a little experience over the past 10 years hiring contractors and these tips may help you out!
1. Shop Around
Don't just get one or two quotes. This is especially true if you're a new real estate investor. Ask around to see who has a good reputation. Find out who is experienced with rehabbing rental properties. And remember to shop for value. The best may be too expensive and the cheapest may not be any good; find the right combination of price and expertise for your budget. I have been telling everyone for a long time that everything is on sale right now. Now just the housing. Even the materials and the labor are on discount in many markets. There are a lot of companies and even more laborers who NEED work. So be patient and find the right one.
2. Communicate What You Want
Knowing what you want and making it clear to your contractor is vital to the success of your project. Be specific so he or she can give you accurate estimates of how much it's going to cost and how long it's going to take. Remember, the communication does not stop after you have hired the contractor. In fact, this is when the communication has to pick up. We call it inspecting what you expect and if you have not communicated what you expect, then your inspections are going to go bad! Make sure you are clear, make sure you are direct and make sure you are respectful. The rest of the equation is up to the contractor.
3. Let Them Do Their Job (Not Just Yours)
Don't breathe down their necks. If you've done your due diligence in hiring a good one, let them do their job. Breathing down their neck constantly is going to annoy them and possibly slow down the process. When you read back across all three, remember that we are some of the most demanding and detail oriented owners and we grew to be this way. Even though we are meticulous, that does not mean that we are constantly on the contractor every minute of every day. There is a time and a place to review work and discuss questions and even offer advice. Obviously, if you see something that is not right or really bothers you, the time and place becomes right then. Beyond a major catastrophe brewing, stick to the allotted time to review the work and talk to the contractor.
And remember: just like you have other responsibilities, so do they. If they're good, they probably have other projects, as well. Get regular updates, but don't be underfoot. If you're not satisfied with their work, don't hire them again. If you are, you don't want to chase them away.
Do you have any interesting stories -- good, bad, or ugly -- about working with contractors? Tell me about them in the comments!