Many people are nervous about the whole experience of working with trades or contractors because they’ve heard one to many horror stories of contractors running away with a huge sum of money and no work to show for it or they’ve been burned by sub-par work or extended timelines they weren’t ready for.
Good news – all of this can be avoided.
Over the years we have dealt with many trades and contractors while managing our properties and various renovations. Doing proper due diligence and understanding the scope of work you’re looking to get done can go a long way.
We wouldn’t be where we are today if we didn’t work with a stellar team of contractors and trades people. As a real estate investor you will always be maintaining these relationships so you might as well enjoy the process!
Here are some tips on things we ask or do to effectively manage our relationships with contractors and how to select good ones!
Tip #1 - Have plans
Whether you’re doing a full gut or just having a front pathway put in you need to have your plans written down so it’s very clear on what’s expected. Obviously, the level of detail will vary on the type of drawing you should have, and you don’t always need an architect or engineer to do it but don’t rely on a contractor to just “know what you want”.
Tip #2 - Go with your gut
Whenever you meet someone new you always get a gut feel – go with that! We always lean towards working with trades or businesses that are professional and communicate effectively!
Are they showing up for meetings on time?
Do they provide written estimates?
Do they make suggestions to do things more efficiently or give new ideas?
Do you trust their expertise?
Tip #3 - Do proper due diligence
Look past the marketing, check references of actual work done.
Tip #4 - Know how they work
Do they use licensed trades? How do they manage sub-contracting work?
Tip #5 - Always get Permits
Do they know what type of work requires a permit? Are they pulling permits themselves? (This is just to keep you in the good books with your town or city, remember pulling permits does not guarantee that the work will be done properly!)
Tip #6 - Check-in
You need to check in on your project (or have someone else do it) to make sure work is happening as expected (it’s much harder to make changes when everything is done).
Tip #7 - There are no dumb questions
If something looks strange it probably is. Ask about it. Then ask somebody else that knows about construction.
Tip #8 - Always follow-up
Always follow-up discussions with an email to document any decisions made or changes.
Tip #9 - Stay in your lane
Don’t get in the way. If they’re doing something they don’t need your help. You are the customer, so your job is to inspect and approve the work.
Tip #10 - Change is inevitable
Ask upfront how they handle change requests.
Tip #11 - Always have a contingency
Any extra work like waterproofing or fixing a foundation is not a cost your contractor should eat, it is something unexpected so budget for these things. Good rule of thumb is to budget a 10-15% contingency on any project.
Tip #12 - Money matters
Agree on a payment schedule and pay on time when the work is done.
We don’t work with companies that demand a huge amount upfront. Not because we can’t or don’t want to pay but if they can’t handle getting some of the material or starting the work with a minimal down payment it always leads to problems with quality and cutting corners down the line. You want to work with businesses that are established and financially stable.
Tip #13 - Karma will get you
Be good to the workers. Coffee and food go along way. Remember they are not the boss making the big bucks they are just doing their job!
Tip #14 - Everyone needs to make a little money in the end
And finally, don’t demand unreasonable things from your contractor. Work with them and be fair. They have to make money as well!