Contractors have a history of over charging for materials and labor leading to new investors losing tens of thousands of dollars. Contractors are important team members of every real estate investors business team, however good contractors who will be on time and provide quality work can be challenging to find. Ask local investors and agents for references on general contractors. Get a minimum of 3 bids from each contractor you are interested in hiring to verify they are licensed, professional and will provide quality work at a reasonable price.
Agreement forms
The best way to minimize confusion on labor costs or specific renovations on a rental property are agreement forms. A contractor agreement form consists of the specific project, total labor cost and deadlines the project is expected to be completed. Get a minimum of three bids from contractors capable of completing your specific project. Once you have chosen a contractor or company put the details in a agreement form. What are the labor cost for the entire project? How long will the project take to renovate? What does the ideal finished product look like? Document the details of the project to make the renovation process less stressful and minimize risk of losing money.
Payment schedules
Contractors generally prefer to be paid before starting the project. Do not make the mistake of paying the full amount upfront. Many experienced investors have made the mistake of paying upfront and being left with a unfinished project. Avoid the stress through consistent payment schedules. Physically go to your local home depot or lowes and purchase the materials needed for the project. Pay 25% upfront, 25% half way through and the remaining 50% of the labor costs when the project is completely finished and you are satisfied with the end result.
Communication
Communication is the most important skill every real estate investor must have during the process of building a strong team of real estate experts. Take full responsibility for the highs and lows of your real estate business. The investor is the captain of the team. You must manage your real estate team. Verify that each member is performing at a high level for you and are consistently doing everything you need from them to run you real estate portfolio. The core of your real estate team includes an agent, mortgage broker and property management company. Additional team members include your certified public accountant, attorney, insurance agent, inspector and partners.
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