Question from Reader:
Can you share with us the process or strategies you have used to find, select and build a team of good contractors and repair teams?
First off I wanted to thank the readers for their questions as I am always one idea away from writers block.
Like all things in this business it will take work and you will likely have to go through a couple of teams before you find a good match. To steal a fairy tale saying “You will have to kiss a lot of frogs to find the prince”. You shouldn’t worry about going through several teams as this is your business, your asset and your financial future.
That said I have a couple of ideas or suggestions on how can you increase your chances of success.
First ask for referrals from your network, REI Group, other investors. If you have no other contacts simply ask the agents involved in the transaction for referrals and then just keep asking.
Second always meet the prospective contractor or handyman at the job site. Walk the job with them, get ideas and written estimates. Also always be upfront with them, if you are getting multiple bids tell them you are. Make sure you ask for timelines on the estimates and not only dollar amounts. Time is just as important as money in many cases.
Third in the beginning instead of looking for someone to take on the whole project look to get bids on parts of the jobs. By doing piece meal you may end up paying a little more but you will be able to see additional teams at work and thus be more informed when you have the second job. This approach allows you to get a since for the various teams and at worst only enlist their help on a portion of the work thus lowering risk. Again with this approach you will likely pay a little more and you may need to balance timelines as the general contractor yourself but in the beginning it is about finding that team you can count on going forward as much as it is about this one job. Thus by farming the work out piece meal you are kissing more frogs (to play on an earlier theme).
Never – Never pay up front!!! If you are working with a team that doesn’t have the working capital to front load the work I would seriously think about moving on. If they can’t budget money who is to say they will not try and take a little extra or take from Paul to pay Peter. That said I will admit I have one handyman team that does my fence work that is real cheap and very fast but they can’t buy the material. So I just call up Home Depot and place an order for the material and pay for it myself. The handyman picks it up and boom, I have a great fence in less than 48 hours. We did this first on a little 20 foot section and have since done it 10-15 times and it works fine. I get a fence for about 50% of what others charge and all I have to do pay for the materials which I would have paid for anyway.
Stay on top of the teams and their work. I remember one team I vetted years ago did great work on the first 3-4 properties we did and then something went sideways on the fifth remodel. Timelines got longer and days went by without any work being done. I found out they took on another job that was more profitable and my property became second choice. Needless to say they did not get a sixth property from me. I want my repair teams to work with others but when we have an agreement I expect them to comply.
Lastly if time permits drop by the job site unexpectedly to see what is going on as you never know what you might find or for that matter learn. If the team is doing good work for you I would bring them a pizza and some cold water as a nice thank you. Something else I also recommend is dropping by the site after hours to see how the leave the property. Is it secure? Are materials secure? Is it clean or at least organized in piles of trash? Are there any safety issues that should be addressed? These extra checks allow you to learn more and more about the teams so you can either move on to the next one or look to hire them again.
This might sound like a lot of work and it is. However, it is vital if you plan to ramp acquisitions and have more time to looking for deals.
In the end we focus on finding deals and securing capital and we let our repairs teams tackle what they are good at.
Good Investing
