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Investor Insights Blog|How to Find an “Investor-Friendly” Contractor
Real Estate
The following was written by guest blogger Nick Baur, Founder of the South Side Investment Club.
When I’m seeking a general contractor (GC) for real estate projects, I typically begin by contacting other investors to see if they know of any good contractors that need work.
Most investors, no matter how well you know them, will not give you their ‘go-to’ guys. They don’t want you keeping them busy or getting them used to higher pay or whatever other differences there may be.
If I am keeping a general contractor busy and we have a good working relationship, I don’t want to share them either. The same goes for my realtors and the rest of my power team. This isn’t being selfish, it’s being smart.
Having said that, this works if those investors do know a GC that has done work for them but, they cannot keep busy.
Sometimes investors get stuck with too many properties on the market and hesitate to buy more, at which point their contractors will be looking for work. The investor will want to help that GC by referring them to other good investors.
Another great way to find a good contractor that knows how investors work is to keep your eyes open, look for rehabs in progress as you drive neighborhoods.
When you see a pile or construction debris in the front yard, it’s a good sign some serious rehabbing is taking place. Ask to speak with the boss and ask if the house is an investment property. Pay attention to the quality of work, below is a list of questions that might help you decide if this is a contractor you would like to do business with.
You get the idea. I don’t know how many times I’ve stopped at job sites to meet a contractor and because of some of the things I just mentioned, I will throw the contractor’s card away on the way out the door.
It is usually easier to find someone who has done work for another investor. This is mainly because they will likely understand that you are not looking for regular homeowner prices.
Nick Baur, founder of the South Side Investment Club
Another good source of contractors is your local Home Depot.
Go to the contractor desk (pro desk) and ask them for referrals. Tell them you are looking for a handyman or contractor that can do everything.
Contractors that are there regularly develop friendships with the people that work at the pro desk. It’s a good way to find the more friendly contractors.
Ask for contractors who have a long-standing account history. You want a contractor that is either doing the work or hiring subs directly beneath them to do the work with their direct supervision.
The ad should be simple, short, direct and have a call to action, i.e.;
“Seasoned Real Estate Investor with several properties needing full Rehab. In search of General Contractors with fair pricing, quality work, clean job sites, licensed and insured and who work directly with their crews. Contact me directly for additional details. Ready to hire!”
Something along those lines will grab the GC’s attention. Once they call you, you will need to phone screen them.
Related: Don’t Overlook This Potentially Big Rental Property Mistake
It is usually easier to find someone who has done work for another investor. This is mainly because they will likely understand that you are not looking for regular homeowner prices.
You bring them the benefit of more jobs which means more work and more money! You help them by providing a way for them to avoid having to constantly find more work and compete for jobs.
Ask if they’ve done any work for anyone else that is flipping houses or is a real estate investor. If they have, ask how many jobs they’ve done and over what period of time.
Ask for names and phone numbers that are willing to provide a reference regarding their work. Find out what they liked about working with an investor and if they’d like to work for other house flippers.
If they have worked for an investor that flips homes, ask if they have before and after pictures of the property(ies) they could share with you? Ask about the rehab budget for the property and if they would be able to share the scope of work? Explain that you ask this of all new potential GCs.
The insurance piece is a big deal especially when working with hard money lenders. They will want to confirm that your contractor is insured since they will have a large financial interest and want to secure that interest not only through a lien position on title but also protecting their investment.
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Over the past 20 years, Nick Baur, a St. Louis native, has had a passion for real estate. He has been a party to thousands of real estate transactions and generated over 25,000 leads in his real estate businesses. He is the owner of Real Estate Rehab and the founder/CEO of the South Side Investment Club and SSIC Inner Circle, the coaching and mentoring arm of the South Side Investment Club. He is active in St. Louis real estate investing through Real Estate Rehab but truly enjoys teaching others the ins-and-outs of how to use real estate to build a lifestyle and the long-term wealth that they deserve.
Nick Baur is not an employee of Equity Trust Company. Opinions or ideas expressed are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and their affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.
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