I think, for many people the idea of fix and flipping a house for profit is not only exciting from a profit potential but also because people believe they have the talent or know the talent to make it happen. The myriad of TV shows makes it look so easy from design to construction. One of the biggest miscalculations that new fix and flip investors make is relying too much on themselves and friends and family to execute.
You might have a friend or family member that has a knack for design or laying tile, but their focus will not be on your bottom line or ROI (return on investment). In our DIY society, what is thought to be cheaper than using a professional often costs more. New investors don’t have the experience to understand that the extra time it takes them to do a project can cost more money and time than using a professional who can come in and bang it out.
Back in 2007-2008, when we were at the bottom of the market and distressed properties were in abundance, there was a little more flexibility to make mistakes and take extra time. But this market is different. There are fewer distressed properties on the market and buyers are once again more discerning.
So, if there is one vendor you are going to hire for your fix and flip project, who should it be? Easy, a general contractor.
How do you find the right home remodeling contractor? Here are a few steps I’ve used over the years. Remember the end goal is to find someone that will be a team member going forward that you can trust and depend on. Many times, if you do a couple of projects with one contractor that go well, you might even find you have developed a partner.
Finding and Vetting a Home Remodeling Contractor:
- Referral is always best
- Use the National Association of Remodeling and Industry (NARI) website
- Check neighborhoods to see what jobs are being done (Contractors usually have signs on their projects)
- Do a phone interview first with all the contractors you have identified – ask questions like:
- What size projects have you done and prefer?
- Are you willing to provide financial references?
- Are you willing to provide a list of previous clients?
- How many projects do you do at one time?
- Now narrow your field down to three or four contractors
- Do background checks
- Call referrals if possible to view past or current jobs
- Meet at the site to review plans and the project so they can give you a proper bid
- Review the written bids – ask the following questions:
- How do you handle change orders?
- How do you handle payment?
- What would be your estimated start and end date?
Once you have found the right contractor for the job and finalized the contract the schedule should be provided. It is now your responsibility to hold the contractor to the terms. It’s a little like parenting – if you give them too much leeway they may get out of control.
Diana D. Hill – email@example.com