The Beginner’s Guide to Finding a Fix and Flip Contractor
When it comes to flipping houses, many investors focus on buying and selling properties and forget about the importance of the grunt work in between, which is renovating the house. Although this may not seem as exciting as other parts of the house flipping process, these renovations are critical to ensuring you make a profit on your fix and flip. One of the hardest parts of flipping a house is finding an excellent fix and flip contractor to work with.
Hiring a contractor comes with many risks. Contractors can be expensive, slow to complete their work, or may not live up to their promises. Ensuring that your property is repaired correctly and in a timely manner is key to a successful flip. Therefore, you want to find a contractor who will provide detailed and accurate bids, communicate effectively, and deliver on their agreements. If you’re wondering how to find a great contractor, we’re here to help!
In this article, you will learn:
- How to find a great contractor
- How to interview a fix and flip contractor
- How to oversee your house flipping contractors
- The difference between hiring a contractor as an investor versus as a homeowner
- The difference between hiring a general contractor and subcontractors
- Why you probably need a contractor for renovations
How do I find a contractor?
Ask for recommendations
The first step to finding an excellent contractor is typically to ask around for recommendations. Reach out to your family members, friends, and even co-workers to see if they’ve used any great contractors before. This is one of the best ways to verify if a contractor will be good to work with, because you can get an unbiased review of their past work. You may also be surprised by how many people you know have used contractors before!
However, just because you’ve been recommended a promising contractor doesn’t mean you should automatically trust them. Regardless of who your contractor is, you should always check up on them and oversee their work throughout the renovation process to make sure they are following through on their side of the agreement.
Find contractors online
Although finding a contractor online can be risky, as they may be misrepresenting their abilities on the Internet and it can be hard to separate the good contractors from the bad ones, there are many websites that can help you in your search. Craigslist can help you find affordable options, though there will be many contractors to choose between, as posting an ad on Craigslist is completely free. You can also search for contractors on Facebook, both in the marketplace section offering their services or within real estate Facebook groups. Facebook provides a good way to get more information on contractors before hiring them, as you can usually find reviews or pictures of past work on their page. Additionally, sites like Thumbtack and HomeAdvisor are a good way to look for contractors. Angi (formerly known as Angie’s List) is another great option, mainly because contractors must pay a fee to be listed on the site, which often means the quality of options is slightly higher than on many free sites.
You can often meet contractors on your own simply by visiting large box stores right when they open, as contractors will often get to the store first thing in the morning to buy all their supplies. Buying materials shows that they have at least one project on the go, which is a promising sign. If you know people that work at box stores, you can also ask them for recommendations, as they will likely know some local contractors that you can contact (though they’re technically not supposed to give out names).
Contractor locator services
Finally, Home Depot has contractor services available all over the country. These services are more expensive than most local contractors but can be trusted to provide a standard quality of work. There are also a few private companies that provide national or regional contracting services, though they will typically only work with you if you can offer them multiple jobs. If you are struggling to find a trustworthy contractor on your own, contractor locator services are a good way to take some of the pressure off your shoulders and get rid of the guesswork involved.
How do I interview a contractor?
Once you’ve found a potential contractor, whether through recommendations or online postings, you should interview them before making any official decisions. The first thing you want to do is get a resume of some sort, so that you have proof of their abilities and what sort of projects they have successfully completed. If you have too many options, this is a good step to narrow down potential contractors.
Next, if a contractor’s work looks promising, talk to them on the phone to get an idea of their rates, how large their crew is, and what their timeframe is for most jobs. This will help you make sure they actually know what they’re doing and can also tell you if they have the time currently to take on your job.
Finally, if the phone conversation goes well, you can meet up with them for lunch or at the office to see if you still get along with them in person. Once you have verified that they know what they’re talking about and seem like someone you can work with, meet with them at a job site and have them give you a bid for the work you need done. It’s usually a good idea to get multiple bids, particularly if you’re new to hiring contractors, so that you don’t get ripped off. These bids will help you make your final decision, as they can give you a sense of not only the rates and timeframe needed, but also the professionalism of the contractor.
How do I oversee a fix and flip contractor?
No matter how great your contractor seems to be, it’s always important to oversee their work and make sure it is being completed up to your standards. Many real estate investors have horror stories about contactors letting them down and ruining their timeline on a project, sometimes even with contractors they had successfully worked with before.
The key to making sure your contractor does a good job is lots of oversight and communication. Walk through the job site with your contractor so they know exactly what you want done. Get a written bid at the beginning of a job, as well as a written estimate of when the work will be completed. This is much easier to follow up on than any verbal agreement. Stay in constant communication with your contractor and visit the job site often to see the progress for yourself. If there are any changes to the bid, the contractor should be discussing them with you. Help pick out colors and materials to stay involved with the process.
Importantly, try to avoid paying for the work up front whenever possible. You never want to pay more than 25% of the cost before the job has been completed, to motivate the contractor to do good work and keep them from slacking off or even vanishing. Sometimes you can get around paying a contractor up front by offering to purchase the materials for them, so that they don’t need a deposit. Finally, when the project is done, do a final walkthrough with the contractor so they can show you their work and you can make sure everything is completed to your standards before you pay in full.
What’s the difference between hiring a contractor as an investor versus as a homeowner?
The main difference between how real estate investors and typical homeowners work with contractors is the price that contractors charge. Most people won’t need to hire the most expensive contractor on the market to complete their job; however, homeowners often get charged more because they’re not as aware of how much projects should cost. An investor will make sure they are getting a good deal, whereas most homeowners will simply pay the price given to them by the contractor.
Although contractors can make more money working with homeowners, there are still other reasons why some would prefer to work with investors. House flipping contractors can count on a consistent flow of work from investors, particularly if they do a good job. Rather than worrying about where their next job will come from, they can stay busy with constant jobs from one source. Furthermore, it’s usually easier to work on a vacant home than one where homeowners are currently living, as they don’t need to worry about sticking to a work schedule as much.
Should I hire general contractors or subcontractors?
General contractors will do everything and take care of all the work needed on a property, whereas subcontractors will focus on one specific part of the job (such as electrical, plumbing, foundation, flooring, landscaping, etc.). Hiring subcontractors is more work for you, because you have to find and vet multiple contractors at once, but can also be cheaper and more efficient than hiring a general contractor. General contractors have so much work to do that they usually charge more and may move slower, whereas subcontractors are specialized and work fast, so you can have multiple tasks completed at once by different subcontractors.
If you are just starting out, it may be difficult to successfully find many subcontractors and create more trouble than it’s worth. For beginners, a general fix and flip contractor is a great option, whereas more accomplished investors will likely want to consider reducing their costs by hiring subcontractors once they have more experience and contacts.
Can I do the work myself to save money on a contractor?
Many beginner investors like the idea of doing the rehab work themselves to try to save money, rather than hiring a contractor to do the work for them. While this can work well if you have experience flipping and renovating houses, most investors will regret this decision. Flipping houses takes a lot of time, hard manual labor, and materials, particularly if you don’t entirely know what you’re doing. If you aren’t an efficient worker and take too long on the renovations, you may actually lose money by doing the work yourself. If you’re concerned about the price of hiring a contractor, check out our guide to fix and flip loans, which can also be used to pay for construction and renovations.
Finding and hiring a good fix and flip contractor is a key part of making sure your properties are successfully renovated. Above all, the most important part of hiring a contractor is getting a written bid and overseeing their work to make sure they are meeting your standards. Make sure to always communicate with your contractors and visit the job site regularly to keep tabs on their progress.
Looking to learn more about flipping houses in Florida? Check out our guide to the best places to fix and flip a property in Florida.
Jack Roberts has spent the last 5 years in the Private Money Lending world helping real estate investors secure financing for their non-owner occupied real estate investments. When he’s not thinking about real estate, Adam is an avid Jazz music fan and fisherman.