Real Estate Investors: How Do You Find the Right General Contractor?

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Selecting a general contractor is one of the most significant decisions a real estate investor must make at the beginning phase of the majority of all projects. A reliable contractor can save you time, money and offer you much-needed peace of mind in what is oftentimes a stressful and deadline-driven industry. You may be wondering if a solid general contractor is so critical, why doesn’t every single investor have direct access to one? Just as with every other field, great contractors whose skillset and mentality mesh with your investment strategy can prove challenging to find. You may end up going through multiple before you finally run into one that is the perfect fit.

The experts at Alpha Funding Partners have leveraged their collective decades of experience working with both successful investors and contractors to provide the following advice to help you find the right contractor for your next investment property.

Thoroughly Vet Candidates

Contractors that are interested in sustaining and building their businesses almost always place a lot of emphasis on ensuring their clients are fully satisfied with their work—which means that one of the best approaches to finding a reliable contractor who delivers results is via referrals. Reach out to friends or fellow investors to find out which contractors they’ve collaborated with in the past and can vouch for their reputation and deliverables.
Another great resource to tap into for soliciting potential contractors are real estate investment clubs in your locality, who often take it upon themselves to compile vetted directories of recommended contractors. Keep an eye out for ones with verifiable track records of completing projects on time and within any budgetary constraints. Having the opportunity to view the finished product of a prospective contractor can be useful to help you conceptualize what skills they bring to the table, so it may be a productive exercise to make an effort to visit properties they have worked on in the past.

Interview Prospects

General contractors are tasked with the management of essentially all details of your investment project—to include hiring and monitoring highly-skilled subcontractors like plumbers and electricians and ensuring that their work is up to par so that your project stays on track both in terms of time and expenses. That’s no small matter! You want to be sure you know that a candidate is capable of executing the investment plan. To that end, here are some questions to pose to prospective general contractors:

  • Are you licensed and insured?
    Contractors who cut regulatory corners by performing work outside legal bounds and is either unwilling or unable to attain the requisite licensure and insurance is most likely not the type of individual you want to entrust your investment in.
  • Have you completed comparable projects?
    Just like no two investment properties are the same, every general contractor has a different set of skills and experience. Even if you know from trusted sources that the contractor has successfully pulled off other rehabs, a different type of property could create issues.
  • What’s the ideal workflow for this project?
    Good contractors often utilize a detailed workflow diagram to complete a project efficiently. Although you shouldn’t try to micromanage, you at least want to find out if the contractor has the ability to develop and carry out a viable plan to optimize you budget and complete the work as fast as possible.
  • How will your bid be itemized?
    Itemized bids have pros and cons, typically because some investors request an exhaustive breakdown of every single expense down to every single nail and 2×4 they will use. Be realistic and expect a contractor to provide an overall price for the project and be able to categorize it by room along with a detailed overview of what materials will be used—not necessarily how much each item will cost individually.

Execute the Contract

After you’ve narrowed down the general contractor you are going to go with, the next step is ensuring your project is legally protected. The contractor will furnish a contractual agreement detailing both parties’ obligations. Pay particular attention to the following clauses to mitigate any issues down the road:

  • Detailed scope of work and anticipated completion date
  • Breach of contract remedies
  • How change orders will be handled
  • Overview of warranties and guarantees
  • Preventing subcontractor liens
  • Force Majeure
  • Damages and liability

Learning the ropes of real estate investing—to include choosing and working with general contractors—takes experience. The team at Alpha Funding Partners has assisted countless investors in saving invaluable time and money by providing key insights and advice at all phases of the investment project lifecycle. Our approach is straightforward and effective: we base our lending on transparency efficiency. Contact us today to learn more about how we can take care of all your funding needs.

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