If you cannot be on the project each day to check on things, then you should not try and be your own contractor. —Robert Metcalfe

There’s no easy answer for how you should pick either a general or group of sub contractors for your project. In my experience, if you have the time to be a general contractor and sit on site it’s relatively easy to get a tile guy and an electric guy and a roofer etc. for a reasonable price.  You get them from the usual places, friends, family, craigslist, yellow pages (does anyone still actually use that) and so on. 

[Editor’s note: Get caught up with Tim Kosen’s real life real estate investing project —a rehab down in Argile, Texas.]

For various trade jobs, it’s easy to compare apples to apples and fire someone who doesn’t produce.  Oh, that’s another thing, get used to firing people who don’t do their job quickly and competently.  You will hear the same excuses from bad contractors as you do from bad tenants.  The dog ate my hammer, the wife left me, my truck broke down (again) are just a few to be ready for.  There might be a reason why you got the guy you did for 30% less than the next one.  But paying a 30% premium doesn’t guarantee you will get a quality job either. 

That brings us to one side note from last week, there’s nothing wrong and few things nobler than providing employment directly.  You help them out by providing a paycheck, and they help you by hopefully working hard.  But, whenever you hire a salaried employee in construction, always find out why they aren’t currently employed.  This isn’t 2009 anymore.  People that are already motivated to have a job and work hard can find work.  So why are they willing to work for you?  Circumstances vary, but this is a big caveat. 
That brings us to hiring a general contractor.  This can actually be harder than finding a good renovation deal in the first place.  And, a bad one can turn a profitable project into a real headache or a money loser.  It’s amazing, when you hit on a good project; things often sort of come together.  It’s the money losing projects that are the biggest struggles. 
If you know someone in the business, or maybe a real estate wholesaling company that turns a lot of inventory that’s probably the best place to get recommendations.  You want someone who knows your business and isn’t scared of it.  Maybe you want a contractor who turns a few of his own houses.  These guys will understand what needs to be done and what doesn’t.  The problem is, they’re also really hard to find because they’re busy and your competition doesn’t always like sharing who they used for the work. 

Interestingly, friends and family are generally really bad places to get recommendations for materials and contractors.  They’re accustomed to paying retail prices for their room addition or bathroom remodel.  For example, I don’t want to pay $10.00 a foot to lay hardwood when $3-5.00 will do just fine.  Your mother in law likes shopping at Lowes because it’s prettier on the inside than Home Depot (it’s also more expensive for general construction material, but sometimes has better deals on nice fixtures).   Is mom-in-law more likely to go to the place with the fancy showroom or are you going to find her walking around a granite slab yard where the owner barely speaks English?  Even when one rock is quite literally the same as another, a fancy store front can really make a price difference. 

Do your homework. When I start any project, I provide a new general contractor with a very detailed scope of work.  I talk about material and fixture selection.  What goes what stays.  Basically, I renovate every room on paper first then hand the paper to the contractor so they know what they’re supposed to do.  If you can’t do this, you will be unknowingly comparing apples to oranges when it comes to dealing with a contractor. Maybe one guy was 10K more, but he included all the “that wasn’t in my estimate” items from the other guy.  Getting a guy with honesty and experience is key, and often more important than price.  Then, hold them to the scope of work and timeline.  If they can’t handle it, they need to go.

If you don’t know how to put together a scope of work like that for your project hire someone like me.  I’ll fly out for $1000 a day + costs (and only need two days), write one up for you and you can use it to shop around.  Think that’s expensive? Try not doing it once or twice.  That’s where the real money is made or lost.

BOTTOM LINE

The more homework you do before you buy, the more money you will make when you go to sell.