While all investment team members are important, the one most key to actually helping you estimate the costs for rehab — and then actually complete it — is your General Contractor (GC). Your GC plays an integral role in your ability to accurately analyze the profitability of a flip, and your ability to actually get the flip completed on-schedule, on-budget, and with utmost quality. So, when searching for a good GC, be prepared to do a little bit of work…
Let’s review what a good GC can do for you:
- First, a good GC can help you accurately estimate the cost to rehab any particular property. The GC will walk-through the property with you before you purchase it, and based on your “scope of work,” will be able to give you a good ballpark estimate of the costs to complete the rehab;
- A good GC is generally skilled in many areas of real estate construction, often including carpentry, electrical, plumbing, roofing, etc. So, when it comes to estimating and completing those types of tasks on your rehab, a GC is invaluable;
- In the areas where he is not an expert, a GC often has a team of sub-contractors he works with who can provide estimates for your rehab and can complete those areas where they specialize;
- Your GC will often supervise the day-to-day efforts of your rehab, freeing you up to spend time on other aspects of the project or even to be out looking for more great deals
So, how do you go about finding a good GC?
Here are a few thoughts:
- First, ask other investors in your area for recommendations. This should be the first place you go whenever you’re looking for a new team member;
- Secondly, if you’ve found or know any other great sub-contractors, ask them which GCs they’ve worked with in the past who they’d recommend; good sub-contractors like to work with good GCs, so they often have strong opinions on who’s good and who’s not.
- Hang out at your local Home Depot or Lowe’s, especially early in the morning. Good contractors are buying materials at 6am so they can be on the job by 7am. Start handing out cards and making friends at your local hardware store.
- If necessary, look for (or post) ads on Craigslist or other websites where you can find local talent. While this is the most hit-or-miss method (you’ll certainly get a lot of response, but not all of it will be quality), it’s a way to start if you have no other good options.
Once you find a bunch of potential GCs, it’s important to do some screening. Here is the list of questions I recommend you ask every potential contractor you might work with:
- Are you licensed and Bonded? (I wouldn’t consider a GC was wasn’t!)
- Will you sign an Independent Contractor Agreement? (I don’t want contractor employees at this point)
- Do you create Statements of Work and Detailed Specifications as part of your bids? (Contracts are important!)
- Where are you located? (If I need someone on short notice, I don’t want someone who has to drive 60 minutes)
- What types of projects would you be qualified to do and interested in doing? Purely cosmetic? Basic Remodeling? Major Rehab? Structural? (You want the right person for the right job!)
- Do you know how to pull permits? (I’m won’t be doing that myself)
- Do you hire subs? (Saves me the effort of finding all the workers myself and allow me to get a smaller number of bids)
- What contracting areas are you qualified to perform work or hire subs? Plumbing, Electrical, Roofing, Carpentry, Exterior, Landscaping, etc? (Jack of all trades is good for a GC)
- What contracting areas would you be able to estimate material and labor costs for houses I’m considering purchasing? Plumbing, Electrical, Roofing, Carpentry, Exterior, Landscaping, etc? (I don’t want to have to bring more than one guy out to get an estimate)
- If you got one of my projects, what part of the work will you be doing yourself vs sub-contracting out?(The more he does himself, the fewer people I’ll likely be paying for)
- Have you ever done any rehabs for investors? (i.e,. do you understand my business needs?)
- How much notice would you generally need to schedule a walk-through of a property I’m considering purchasing to give a rehab estimate? (Shorter is better)
- How much would you charge to provide pre-purchase estimates on rehab costs? (I’m happy to pay, but I want to see what they thing they’re worth)
- Would you be able to provide references upon request? (I will check them before giving them a job)