How To Work With Contractors Virtually
As of today, we contracted a couple in Kentucky, New York, Kansas, Ohio, several others. So I think we’re up to 12 or maybe 14 states that we’re actively doing deals in. I’m currently not just wholesaling these, but I’m also renovating them and keeping them as rentals and the numbers are good, we will actually flip them. So a question I get a lot is how am I finding these contractors? How do I trust them? How do I vet them out? Where do I find them? What do I say?
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Well, here’s the answer to all of this. Usually, I can find them through my network, I have a pretty substantial network in the real estate investing business. And so within Facebook, in the groups in Facebook, I usually can jump in there and for asking for referrals, I also do the same thing on Instagram. And so that’s where I start. And usually what will happen in these groups is people will start handing over referrals. So what I will do is I’ll actually now by the way, I don’t do this anymore, because I actually have a real business. But Casey, my manager walks you reach out to them and ask them about their business. How many homes are they currently remodeling? What is typically the size of home? They do? How many years have they been doing it? Are they licensed or not. And just to get a, you know, gauge of how professional these guys are. Because right now, it is so hard to find contractors. And on top of that people are saying they’re contractors, but they’re not licensed. You really want to make sure you’re working with a licensed contractor. And here’s the hurdle there. Most people will tell you well, they’re more expensive, and that is correct. But you’re likely getting the job done better, because they’re not just some random dude off the street, who does know how to put up sheet rock or knows how to paint, you’re actually working with someone who’s licensed and has something to risk if something goes wrong. So you really want to make sure of that. Now, if you just need to paint your house, can you find someone to just paint your house? Yes. But if you’re looking to take down walls, or remodel a whole kitchen and do things with the electrical and do things with the AC, I would highly, highly, highly, highly suggest make sure the contractors are licensed. So I start with my social media network that usually will drive in three to five people that I can call or specifically Casey can call to vet out again, I want to make sure how long have you been doing this? Are you licensed? What typically is a remodel project? Do you do set out the subcontractors Are they all work for you? Typically what are you seeing as a full blown rehab?
The cost of it? What are you seeing price per square foot the cost of the remodel project? Those type of basic questions just to feel them out, then I actually have them go view the home and give us an itemized bid on what exactly what they would do to the home and exactly how much it costs per item to the point of the item cost $100. And his labor costs $50. I want to know labor versus materials. And once I have all five or so of those, then I start to do a little deeper dive in asking questions. So I will call them and then go into the point of Hey, I see here you charged me $2,000 for paint. And I got a quote from another guy that charged me 1500 Why is why yours $500 more, and then I’ll kind of start to play against each other. Now what I’m not doing I’ll tell you what I’m not doing is I’m not just choosing the cheapest bid. I really want to have good feeling of these individuals. So I want to make sure that they do what I asked them to do. So oftentimes when I have these contractors lock the properties if I don’t already, I will ask them to take a video and I’ll ask them to give me pictures on top of it. I want them to do these things because I know they are listening and quite honestly, being a contractor is just a task based job meaning if I say remodel this whole thing, give me the breakdown and start moving. So from That point usually out of the five, there’s going to be two that I probably would choose. And then at that point, I want to make sure you know the price points are about the same. Now from that point I create an agreement that I have and I share with my students that they have to sign off on it say shows the bid the breakdown of the bid, the time that the work needs to be done by it also gives lien waivers after the payment has been done that they have to sign a lien waiver also tells them they will be bonused or they will have a per diem. As long as they finish the job on time or earlier, they get bonus if they are late on the job, and they need an extra five days, 10 days, 15 days, then they actually have a per diem all of that is laid out in my agreement that I have the contractor sign that I give to my students if you’re interested in being a student, and you’re here on YouTube, go ahead and say I’m interested and I’ll have someone from my team reach out to you. So all of that is done here. And then we just go and how I typically pays I will break it up to 50% upfront 25 in the middle and then 25 at the end of a walkthrough to make sure that the home was done well completed in all the blue tape items which I call you know the little things like paint being a little sporadic or maybe a door handle not being on the door those are blue tape items so they can finish it off completely. Once those are all met than the last 25% is given to them. Now someone may be arguing maybe break it up into four payments, I can understand that point because you don’t want a contractor to walk away with let’s just say $20,000 on a $40,000 rehab I get that however based around the process that I just painted for you, I have not had a contractor just take my money and run and I’ve done hundreds and hundreds of remodels in my career. And so that is the system that I run now when they get really good things like this pop up which is actually my contractor that I am using to remodel my Tulsa rental property he actually knew of a homeowner that needed to sell but needed to sell quick and in sell cash he actually put us together with that homeowner and now we’re getting another deal which is super cool because he’s getting the job for that property as well as the one that I already have him working on so he was incentivized to put two and two together so he can keep good work now from that point what I would highly encourages keep these guys busy It is very hard to find good contractors right now not like it’s ever terribly easy but right now especially all the contractors are working like crazy everyone has them working everyone’s making money everyone’s loving it I just bought a personal home and the contractor I’m working with is incredible but the prices are outrageous a cause of labor and because everyone’s now charging higher prices or I’m sorry a because of materials be because everyone’s charging more now there’s no way around it right they realize that they are the gold right now contractors are the gold everyone’s making money so they’re gonna make more money. So you need to keep these guys busy if they’re on your team and things like I just mentioned about you know, asking them if they know of any other properties that we could buy could be a great referral source for you to buy more properties. Alright guys, that is all for this episode. Hopefully that helped. Again, if you’re listening to this on Spotify or iTunes, get to YouTube right now. Go subscribe and if you like this video you should be because it’s a pretty awesome video. Make sure you’re subscribed and I’ll see you guys on the next podcast. Peace.