6 Fantastic Tips In Managing Contractors

Posted on: May 7, 2011

Categories: Fix, Ideas

Author: lbuen

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Managing Contractors Image by USACEpublicaffairs via Flickr

The buy-fix-sell or rent out real estate investing strategy often fetches heftier returns than flipping because it entails a lot more work. This includes dealing with contractors who will be renovating your property. The profitability of your investment property partly depends on how the contractors execute their job since you will be spending a considerable sum of money for the project and because the quality of their work will dictate how much asking price or rental you can command from buyers or renters. That is why if you are new in this strategy, it is essential that you establish a good working relationship with some of them so that in your next rehab projects you know who to turn to. Of course, you would want to choose the competent and professional ones, those who are reliable and would not take you for a ride because you are inexperienced. Try to make your rehabbing debut a great one, follow these tips on how to screen the right contractor.

1. Require candidate contractors to fill up application forms.

Some contractors may laugh at this but seeing candidates make the additional effort of filling out an application form will help you measure how intent they are in getting involved in the project. If they do not take your application requirement seriously, it could be an indication of a lack of commitment and that they could be sloppy in their work or fail to show up during work.

2. Ask for references and consult them.

Most likely, contractors bidding for your project may already furnish a list of references for your perusal. Call them and get a glimpse of how contractors deliver their job from their experience by asking specific questions about the quality of the contractor’s work. Be alert on reports about a habit of playing hooky because hiring this kind of contractor can delay the completion of the project and drag profitability down.

3. Stop by one of their project locations.

You can confirm the quality of their work further by visiting one of their project sites. With your own two eyes you can witness the quality of their work and how tidy they are in their work stations. Naturally, you need to secure the permission to make the visit.

4. Put all agreements in writing. Always!

Do not think that the rehab project you have is small-time and asking for written bids is too formal for your case. You or the contractor may forget or misinterpret your verbal agreement so to ensure full understanding of what you have agreed on and avoid any disagreement later, a written document will straighten things out.

5. Opt for contractors with License and insurance.

As the property owner, you cannot pass the buck to someone else should a fire or freaky accident occur. So make sure that the contractor you hire is truly insured and licensed. Verify that they have provided you the correct coverage details and that their insurance is valid on the dates of the project.

6. Pay in full only after the project has been completed and back jobs have been addressed.

Some newbies may fall for this: paying the contractor a substantial amount, after which the contractor does not report to finish the project. Ugh! this can bleed you dry! To protect you from this unfortunate scenario, phase your payments over a number of installments. For example, if they finish half of the job, agree to pay them, say, 25% of their agreed fee. When they finish 3/4th of the job, pay another agreed sum of money, and so on. Of course, you have to release money to buy materials. Do not forget to ask for receipts for their purchases. Expect to receive requests to make advance payments, but if you make an agreement early on that this should not be the case, then you have just saved yourself from the headache of facing a fully paid absentee contractor and an unfinished project. If you do not take this measure, you may end up paying double for the same project and delay renting out or selling the property. This means delayed profit and possibly additional expenses.

These tips do not necessarily imply that contractors lack work ethic because many are great and professional to work with. We offer these tips to help manage expectations and nip potential headaches in the bud before they complicate. By following these measures, you see to it that you start and end your dealings with your contractor on good footing. and that you can hire them again for a new project.

 6 Fantastic Tips In Managing Contractors
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