Finding a General Contractor

I’m confident that I’m pretty close to purchasing my first house, and as such, it’s time that I really buckle down and finishing building the team that is going to help make me successful. So far, I’ve built part of that team — I have my CPA, one great real estate agent, two property inspectors that I trust, and a wholesaler who is tremendously knowledgeable about the rehab business and who is helping me navigate my first deals. But, I still have a long way to go. Once I find my first house, I’m going to have to ensure that I have a plan to take title and protect it — so I will need to find a real estate attorney very soon. I’m also going to need a good insurance agent and great title attorney for when I buy properties that might have title issues.

But, first and foremost, I need to start building my contractor team. While I will certainly need contractors to actually do the rehab work, there’s actually a shorter-term need that’s much more pressing. Now that I’m looking at houses, I need to be able estimate the cost of rehab prior to making offers on the property (if I don’t know how much it will cost to fix up, I don’t know how much I can afford to pay for the house). While I’ll probably get pretty good at estimating this sort of stuff after my first couple rehabs, I’m going to need some serious help until then.

To help with the estimation of rehab costs, the recommendation I’ve gotten from other investors is to find a strong General Contractor (GC) to do a walk-through of the property with me and provide me a ballpark estimate what it will cost to rehab. For those that aren’t familiar, a GC is generally skilled in many areas of real estate construction, often including carpentry, electrical, plumbing, roofing, etc. And even where he is not an expert, a GC often has the basic skills to understand the scope of the work that would need to be done and an estimate of the cost. Even better, GC’s often work closely with specialty contractors (electricians, plumbers, roofers, etc), and can call in these specialists when needed.

Obviously, having a GC do a pre-purchase walk-through to provide a rehab estimate won’t yield a perfect result, as the walk-through won’t generate detailed specifications or define the specific materials; not to mention, if the GC who does the walk-through isn’t the same GC who ends up doing the work, there could be differences in prices there as well. But, the goal of having a GC do a walk-through is to generate a high-level estimate (without a few thousand dollars) to help nail down how much can be offered for the property. Also, doing a walk-through with a GC can help identify issues that otherwise might not be recognized until after the offer is accepted and an inspector is called in.

So, knowing that I need to start building relationships with at least a couple GCs, I posted a request online looking for GCs to contact me. I included details about my business and the needs I had, so that only those who could likely help me would reply. Surprisingly, I got several dozen emails and phone calls within 24 hours after the posting! In anticipation of getting a large response, I prepared a set of questions for each of the GCs that responded, so that I could narrow down the field and decide which ones I wanted to meet with.

Here is the list of questions I used:

1. Are you licensed and Bonded? (I wouldn’t consider a GC was wasn’t!)
2. Will you sign an Independent Contractor Agreement? (I don’t want contractor employees at this point)
3. Do you create Statements of Work and Detailed Specifications as part of your bids? (Contracts are important!)
4. Where are you located? (If I need someone on short notice, I don’t want someone who has to drive 60 minutes)
5. What types of projects would you be qualified to do and interested in doing? Purely cosmetic? Basic Remodeling? Major Rehab? Structural? (You want the right person for the right job!)
6. Do you know how to pull permits? (I’m won’t be doing that myself)
7. Do you hire subs? (Saves me the effort of finding all the workers myself and allow me to get a smaller number of bids)
8. What contracting areas are you qualified to perform work or hire subs? Plumbing, Electrical, Roofing, Carpentry, Exterior, Landscaping, etc? (Jack of all trades is good for a GC)
9. What contracting areas would you be able to estimate material and labor costs for houses I’m considering purchasing? Plumbing, Electrical, Roofing, Carpentry, Exterior, Landscaping, etc? (I don’t want to have to bring more than one guy out to get an estimate)
10. If you got one of my projects, what part of the work will you be doing yourself vs sub-contracting out?(The more he does himself, the fewer people I’ll likely be paying for)
11. Have you ever done any rehabs for investors? (i.e,. do you understand my business needs?)
12. How much notice would you generally need to schedule a walk-through of a property I’m considering purchasing to give a rehab estimate? (Shorter is better)
13. How much would you charge to provide pre-purchase estimates on rehab costs? (I’m happy to pay, but I want to see what they thing they’re worth)
14. Would you be able to provide references upon request? (I will check them before giving them a job)

After asking those questions of each of the GCs that contacted me, I was able to narrow the field down to a few that I think I’d work well with. I even had the opportunity to bring one of them out to a house I was looking at this weekend to get an estimate. More on that in a future post…