How To Hire Contractors WITHOUT Getting Ripped Off!

In today’s blog I will talk about how you can hire contractors without getting ripped off. I say this all the time, the number one person who will screw you is your contractor. It won’t be your realtor, mortgage broker, accountant, or lawyer. It will probably be your contractor.It is so easy for them to rip us off on these properties.

To give you a back story about me, I am a contractor by trade. I did my apprenticeship as a contractor, I has my own business renovating properties strictly for real estate investors BEFORE I became a realtor and investor.

So I know a lot about this topic and I know what to look for when searching for contractors, as I used to be one and work around them on a daily basis. So here are some tips for you to look out for when searching for contractors.

USE YOUR GUT

To back up a little bit. Before you find one always ask local real estate investors in your area who they are using. The last resort is to look on your own through Kijiji or somewhere. Once you find one and meet them, have them quote on your property. When they are there quoting, use your gut! Its very good at seeing certain signs and picking up ques. You’ll know when something is fishy if you listen and follow your gut. Most of us don’t do this at all!

If you get screwed by a contractor and look back, you’ll immediately know that there was something off about that person but you chose to ignore it. This used to happen to me too. I would sometimes ignore my gut and because I felt the contractor was nice in person or was being honest, even when all the ques were alarmingly present.
Now that I have some of the best contractors on my team, I didn’t get that feeling from my gut at all! I have two amazing crews that work for me all year long on all my properties, and they do great work!

GET REFERRALS

The second thing you would want to do is get referrals from other real estate investors, realtors, and specially property managers. If you have a good connection with a good property manager, ask them for their contractors or who they know. I myself have asked my property manager for a cleaning guys/girl, carpenters, plumbers, electricians! They always have somebody! Why? Because this is all they do. They take care of their clients properties and they need these connections to do a good job.

GET QUOTES ON YOUR JOB LABOR ONLY

I buy all of the materials. I get the materials dropped off at the property. What a lot of contractors would do (and they would get pissed off for me saying this) is that they would buy the supplies from their manufacturers directly.

They would buy it for $1.25 per square foot, and would up-charge you $1.50 on top of the labor cost. That way you are paying a lot more than you should. This is why pay them for labor only! I buy the supplies directly, the kitchen, the paint, the trim, etc, and have it delivered at the property. It’s so easy! I order everything online at the price I like and get it shipped directly. This method will keep them honest. How? When they quote on a job including the over-priced material for $25000, you’ll probably believe them and pay the whole amount. But if you already have the material you will be able to calculate the labor per hour cost. This will bring your cost down significantly!

DO NOT PAY UPFRONT
This is something you should always keep in mind! Remember we are only getting a labor quote! A lot of contractors will want a payment upfront because they “have to buy some material” to get the job started. They will usually ask for 25% upfront to start the job.

Luckily since you buy the material directly they SHOULD NOT be given any payment upfront. They get paid as the project goes on. This is all done through a payment schedule.

So I personally pay my contractors 25% AFTER 2 weeks of work. It’s no different than being an employee in a company and getting paid bi-weekly after you put in the hours. That is standard. That is how it works out there, and that is how it will work in here as well. So pay them 25% of the amount once they finish 25% of the work. Similarly 50% of the amount once they finish 50% of the work, and so on. Once the property is complete and all cleaned you give them the final check.

CONCLUSION

This is how you can protect yourself when it comes to contractors. If you follow these steps, it will be rare to get screwed over. It can still happen but you will at least minimize the likelihood.

#RealEstate #investing #contractors

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