Dealing with a terrible contractor can be one of the most challenging aspects of real estate investing. However, there are good ones and finding a great contractor can make a world of difference. I’m going to share with you how to find the best contractors, and give you tips on how to work with them in a way that benefits you both.
If You Want the Best, You Need to be the Best
The first step to finding a good contractor is being the right customer. Because great contractors are in the minority, they can select who they work with. They don’t have to put up with frustrating customers and they want jobs that fit their skillset. If you want the best, you need to be the best.
4 Ways You Can Be the Best and Attract the Best Contractors:
1. Know the Job
There are different types of contractors and they have their own set of skills. You need to know what the job entails so you can find the appropriate contractor for the job. Otherwise, you either have someone not qualified or someone who’s overqualified for the job.
A simple example is with plumbing. A clog in a drainpipe doesn’t need a plumber licenced for big commercial jobs. You could have someone who isn’t even a licensed plumber clear the drain. Then again, if you need to put in a new plumbing system you need a specialized licensed plumber.
This can be tricky to navigate if you’re a beginner in real estate investing. As a mentor I teach others, equipping them to make good decisions so that they get great deals and hire the best contractors.
What are Great Contractors?
Great is relative to the task. A great contractor is fitting the right company to the job and finding someone who’s good at what they do. I prefer working with smaller companies where the owner is on the site and personally overseeing the project. The key for you is knowing your job. This ensures you hire the right company for that project.
It’s fine if you know the problem, but don’t know the solution. Solving the problem can be their job. At least you know what the problem is because contractors don’t want to deal with chaos and confusion. They want to work with clear, concise people that have their act together.
2. Clear Communication
One of the most important tips in hiring a good contractor is communicating expectations clearly. You need to make your expectations clear from the beginning until the very end of the job and when there are changes, you need to be clear on what those are so that there is no confusion. Nobody likes to work with a boss that is confused, because then they don’t know what a good job looks like.
Great contractors want to complete the job correctly and they take pride in their work. You need to clearly communicate what needs to be accomplished so that they can meet your expectations or exceed them.
Take responsibility when you make a mistake or miscommunicate. When you tell them to do something that ends up looking stupid or isn’t right, apologize and take responsibility. When you do that, they’ll reciprocate and take responsibility when they drop the ball. Don’t blame them for your mistakes. Sometimes I buy the wrong materials. I still make those mistakes, but I take responsibility and offer to pay a little more for the extra work they end up doing.
If contractors think you’re going to be a person who is going to change their mind three times and complain all the time they will price a job higher.
Give Your Best and You Will Get the Best
This is all about being a good manager and a good businessperson. It’s also about being a good customer which means being clear in your communications. Great people want to work with other great people. Give your best and you will get the best from the best people. If you don’t do this right, you might get the first job with that great contractor, but you’ll never get a second one.
3. Fair Pricing
You need to be clear and fair with pricing. This is a relationship and it must be beneficial for both of you. Contractors need to be profitable for a couple reasons. First, it’s vital to our economy. Secondly, if a job isn’t profitable, they’re not going to work with you anymore. Also, it’s difficult to take advantage of a contractor because they have ways of getting you back. In the end they will make their profit. So instead of playing games, be fair with the pricing.
I tell contractors I’m getting several bids, but that I’m not simply taking the lowest priced one. I’m going to take the best contractor for the job. I have a great video Why Profit is Good and Why That Matters to You if you want to learn more on this topic.
Pricing is Not Always Correlated with Quality
Be aware that the lowest price doesn’t necessarily mean the lowest quality if you’re working with great ones. I had a recent $36,000 concrete job. I was searching for a new contractor and the one that I preferred; the one that had the best reviews, best reputation and that concrete suppliers recommended, gave me the lowest bid. I was thrilled and he was hired.
However, you do need to be skeptical if their price is significantly lower than the other bids. What you’re looking for in three bids is for all of them to be within 5 to 15% of each other. If somebody is drastically low, then there could be an issue there. To verify the quality of their work you can check out some of their other jobs and talk to previous customers.
Pricing Changes Based on the Economy
If the economy is in a downturn, they’ll drop their price dramatically just to get the job, even if they’re great. If things are booming and they have lots of work, they raise the price on a new job because it has to be a more profitable than the job they have lined up.
4. Fast Pay Makes for Good Friends
When you pay quickly, you build a good reputation, creating opportunities to work with all kinds of great contractors.
Tips for paying contractors:
- Don’t hire a contractor you can’t pay. Don’t buy the property if you don’t have enough money to pay the contractors necessary to get the job done right.
- When you do get the invoice, pay it immediately. Structure your contracts to make sure you’re paying at the right time of the job, but when you do get the invoice, pay quickly.
- Pay cash, or by check or wire. Contractors appreciate the extra 3%, so avoiding paying with credit cards. I do use credit cards when buying from suppliers, like Home Depot, but not when paying contractors.
I have found that because I always pay the invoice the day it is sent, I have built a reputation of being great to work with. My contractors are quick to recommend other great contractors to me and likewise, to recommend me to them. When you pay fast, you make contractors happy.
5 Tips for Finding Great Contractors
As I have said before, you need to get a least three bids for a job, but how do you find the great contractors? Here are 5 tips of where to look to connect with a great contractor:
1. Angie’s List and HomeAdvisor:
The reviews on Angie’s List and HomeAdvisor are helpful. Sometimes a contractor will have bad reviews, but the problems were more the customers than the contractor. They changed their mind or didn’t communicate clearly the expectations.
Not all great contractors are on these lists. There are some out there that are just too busy to mess with marketing. But it’s a good place to start especially when dealing with specific trades like electrician, plumber, HVAC, and roofing.
2. Recommendations from Other Great Contractors:
Birds of a feather flock together, and great contractors know other great contractors. They have worked together and know the way they operate, the way they deal with their employees, the speed at which they work, and how they deal with other great contractors.
If you are contacting contractors on Angie’s List and they are booked up, you can ask for a recommendation from them. Communicate clearly what the job is and ask if they know anyone suitable for the job.
3. Recommendations from Suppliers:
Another way to find great contractors is getting recommendations from suppliers like Sherwin-Williams, Home Depot or Lowe’s. I’ve recommended that people hang out at the contractor services desk at for a day and talk to every contractor that comes in. You can also ask the employees who they liked the most. This can be a great place to get names.
4. Poaching from Other Job Sites:
You could drive around an area that is getting a lot of rehab work. Look for any houses that have work going on and go talk to the contractor or workers at the site. The best time to go is on Friday at about 5pm. If they’re still on the job site at that time, they’re already better than most. Most lazy contractors knock off around 1pm, but the good ones are still there finishing stuff up.
Another little tip for when you’re poaching job sites is to send a woman to go say hello. They will be more open with a woman than a man. If you walk up as a dude, they’re going to be a little bit more standoffish.
5. Recommendations from Real Estate Professionals:
Real estate agents are a better source for recommendations than investors because they may not be as tied to the outcome. Investors usually don’t want to share their good people. The problem with this is it can be the blind leading the blind. Sometimes people think they have a good person on their hands and they really don’t.
Review: How to Find Great Contractors
Hopefully one of the main points you’ve learned is that finding great contractors starts with you being great yourself.
- Know Your Job
- Communicate Clearly
- Price Fairly
- Pay Quickly
Then you can attract the kind of people that are going to do the best job and that you really want to work with. Even if you’re working with a great contractor, you still want to follow the rules in my video 7 Things You Should Never Say to a Contractor.