One of the most popular and challenging real estate investment strategies is property flipping. If you have been following along with this blog or read our book the Flip Side of Flipping, then you know that the Wolff Couple approach property flipping a little differently. We love Pretty Houses — houses that only need minor repairs to make you big profits! However, like traditional rehabbers, we work with contractors to get the job done. In today’s post, we’re bringing you six insider secrets on working with contractors from one of our favorite contractors, Ted! Watch this week’s featured Wolff Bites video to hear it from Ted himself, read on for all his great tips, and sign up for a real estate seminar near you to learn more about Pretty House deals!
[uxi_video id=”KbBgCPGQYfs” size=”” type=”youtube” ratio=”16by9″ center=”true” related=”true”]
Do Your Research
Learn as much as you can about your contractor before you officially hire them. Make sure they are licensed and insured — the information should be publicly available in one form or another. Hiring an unlicensed, uninsured contractor is a good way to find yourself in trouble and with an empty wallet. You should also ask them for referrals of people they have worked with in the past.
Check Their References
Once you have a list of referrals from the contractor, follow up. The people that contractor has worked with before will be able to confirm if the contractor is reputable, trustworthy, and realistic. If you have the opportunity, walk through some of the contractor’s other projects. A current work site can give you an idea of what to expect and a firsthand view of their safety protocols, while a finished project can show you the quality of their work.
Ask All Questions Up Front
Ask your contractor all the questions you have before you enter an agreement. Nothing about the project should be a mystery. Gather as much information as you can and don’t let them gloss over anything. You should walk into this professional relationship with your eyes wide open.
Get It in Writing
Sign a contract before any work has started. You should outline every step of the project in writing so everyone’s expectations are clear. That includes anticipated start and end dates, the materials and products the contractor will use, their proof of insurance, and so on. Once the project has started, you should also record any changes the team makes to the original plan. It’s not that you don’t trust your contractor, it’s simply a way to ensure your project’s success and the satisfaction of everyone involved.
Make A Payment Plan
Don’t pay the contractor the entire sum for the project at the beginning. You should withhold at least 25 percent – 50 percent is better – until the project is over. You also have the option of setting up a payment plan. One possibility, for example, is paying the contractor a small sum after each small project is completed. Withholding some of the money gives you some recourse if anything goes wrong — you don’t want to give them the final payment and then have to hunt them down to finish the work.
Find the Goldilocks Bid
You should get quotes from several contractors so you can compare their rates and the work they are offering to do. The highest bid is probably overpriced and the lowest bid probably means that contractor will probably cut corners. Find a bid somewhere in the middle that ensures quality and an affordable price. With multiple bids to consider, you can also compare the items listed on each bid and ask each contractor why they included or ignored the items that they did.
Ready to tackle your first rehab project? Hiring a licensed contractor you trust is an important step to success. Remember to check their qualifications and references, create a clear and detailed contract, and implement a payment plan to help ensure everything goes smoothly. For more tips on how to find success in property flipping, look for an upcoming post on how the Wolff Couple tackles a rehab project of their own. You can also subscribe to the Wolff Couple’s YouTube channel and sign up for our next real estate workshop. We have property investment advice that can help you achieve your dreams and make you thousands of dollars! Get started today!
[gravityform id=”6″ title=”true” description=”false”]