How to Find a Contractor Who Works FAST & Scopes Properties FOR You

## Building Trust with Contractors: A Guide for First-Time Renovators ### Introduction Renovating a property can be a daunting task, especially for those new to the process. One of the most critical aspects of a successful renovation is building trust with your contractor. In this post, we will address common concerns, provide actionable insights, and offer tips on how to establish a strong, trustworthy relationship with your contractor. ## Understanding Your Needs and Expectations Before you start, it's essential to define your end goal. Are you renovating to increase the resale value of your home, or is this a long-term investment for your family? Knowing your objectives helps you communicate more effectively with your contractor and ensures you're both on the same page[5]. ### Asking the Right Questions When interacting with potential contractors, being genuinely curious about their approach and capabilities can go a long way. Spend time listening and asking thoughtful questions: - Who will be your main point of contact? - What is your ideal timeline? - Do you have a strict budget or financing constraints? - What are you looking for in a contractor? These questions help you understand the contractor's process and build a foundation for trust[3]. ## Evaluating Contractors: What to Look For ### References and Portfolios A reputable contractor should have no problem providing references and showcasing their previous work. Request to see before and after images of their projects and read testimonials from past clients. A professional portfolio can reassure you of the contractor's quality and style[1][5]. ### Licensing and Permits Ensure your contractor is up-to-date on all necessary licenses and permits. This not only builds trust but also protects you from potential legal issues. Smart customers will ask for these, so having them ready demonstrates your contractor's professionalism[1]. ### Transparency and Communication Transparency is key in any contractor-client relationship. Your contractor should be open about the project's scope, timeline, and budget. Regular updates and clear communication can prevent misunderstandings and build trust. If any challenges arise, your contractor should be willing to discuss them openly and promptly[3]. ## The Importance of a Detailed Contract A well-drafted contract is crucial for outlining expectations, timelines, and payment plans. It should be easy to understand and include phases of the project, payment schedules, and any bonuses or penalties for meeting or missing deadlines. This contract serves as a legal agreement that holds both parties accountable[1][5]. ### Example Contract Structure - **Scope of Work**: Clearly define all the work to be done. - **Phases**: Break down the project into manageable phases (e.g., phase one, phase two). - **Payment Schedule**: Specify when payments will be made, often tied to the completion of each phase. - **Bonuses and Penalties**: Include incentives for finishing ahead of schedule and penalties for delays to keep the project on track[5]. ## Managing Renovation Delays ### Regular Checkpoints If your renovation is not progressing as planned, it's essential to have regular checkpoints with your contractor. Meet at the job site, review the scope of work, and clearly outline what has been done and what remains. This ensures both parties are on the same page and helps in managing expectations[5]. ### Holding Payments Withholding the final payment until the job is complete can be a powerful motivator. However, ensure this is done in a way that is fair and agreed upon in the contract. Avoiding misunderstandings by having a clear, signed contract can prevent legal disputes[5]. ## Building Relationships with Contractors ### Credibility Through Action To build trust with contractors, especially if you're new to renovations, it's important to demonstrate your credibility. Have them bid on properties you have under contract, which shows you're serious about the project and willing to move forward. Being honest and transparent about the bid process also helps in building trust[5]. ### Paying for Bids Paying a contractor for their time to provide a detailed bid can be beneficial. It shows that you value their time and expertise, and you're more likely to get a thorough and timely bid. This approach can also filter out less professional contractors who may not be willing to invest their time without compensation[5]. ## Conclusion Building trust with a contractor is a multifaceted process that involves clear communication, transparency, and mutual respect. By asking the right questions, evaluating contractors based on their credentials and past work, and having a detailed contract, you can ensure a successful renovation. Remember, regular checkpoints and fair payment practices are crucial in maintaining a positive and productive relationship. --- ### Visuals and Engagement To make this content more engaging and visually appealing, consider the following: - **High-Quality Images**: Include before and after photos of renovation projects to illustrate the contractor's work. - **Infographics**: Use infographics to break down the contract structure, phases of the project, and payment schedules. - **Videos Script: is it crazy to pay a contractor just to, walk properties with you How can you, build trust with a contractor if you're, doing your first renovation And what can, you do if your contractor's working so, slow and it's costing you money every, day Today I'm answering all these, questions and, more Hi everyone I'm Henry Washington, guest hosting the Bigger Pockets YouTube, channel today in place of Dave Meyer, I've flipped a lot of houses and I've, renovated a ton of rental properties So, a large part of my business relies on, finding contractors I can trust and, structuring my deals with them so we're, both working towards the same goals a, rehab that's completed on budget and as, fast as possible with a high quality of, work I know a lot of new investors, struggle with this part of the real, estate business So in this video I'm, going to answer a few of the most common, contractor questions I see in the Bigger, Pockets forums Hopefully this will help, you see that the game-changing, renovation you've been avoiding might, actually be easier to manage than you, think Our first question is about, walking properties with a contractor But, first I want to let you know that, today's show is sponsored by Reimply If, you're in real estate like I am and you, don't want to lose deals juggling, multiple tools that's where Reimply, comes in A true all-in-one CRM designed, for real estate investors just like us, With Reimply you can connect with, motivated sellers through calls texts, emails or direct mail Plus enjoy free, skip tracing cash buyer searches, customizable websites and automated drip, campaigns that turn cold leads into, successful deals Head over to, reimply.com/biggerpockets now to start, your free trial and get 50% off your, first month Once again that's, rei.com/biggerpockets All right back to, the show Our first question about, contractors comes from a Bigger Pockets, forum member named Joseph And he wrote, "I'm new to fix and flip investing, Should I be paying a contractor to walk, properties with me before I make an, offer or should I get the property under, contract first and then get bids I don't, want to waste time or money bringing, contractors to properties I might not, even buy but I also don't want to go, into a deal blind and underestimate, rehab costs How do experienced investors, handle this?" This is a good question A, lot of people have this question And so, first I'll say the political answer is, it depends It depends on what your, strategy is on how you're making these, offers So in other words if you are, doing a strategy where you're making, lots of offers on onmarket deals that, may have been sitting on the market for, a while and so maybe you're just making, offers at you know 30 40 50% off of what, they're listed at then you shouldn't be, looking at any of these before you make, an offer is really what you're trying to, do is make offers well under what's, being asked to try to land a good deal, and then if someone counters your offer, or accepts your offer then you get out, there and you look at the property with, a contractor and walk it and get an, accurate rehab bid But if you are just, making onesie offers meaning you've got, it narrowed down to a few properties, that you're interested in and you're, only making offers on those few, properties then really I would say it's, up to you The cool part about making, offers on the market is you're going to, have an inspection period And in that, inspection period you can go in and, really hone your numbers And so I think, it is okay to have a ballpark on what, you think your rehab might cost based on, the pictures or the information that, you've received from the agent And then, if you get an offer accepted you can, walk it with a contractor And I think, that that's a safer way to go in not, wasting a contractor's time because now, you have that conversation with the, contractor to say "Hey I've got this, under contract I need to walk it and, make sure that the bid that I think is, the actual bid that we will need." And, that's not going to hurt your, credibility much with the contractor I, think if you are walking properties with, contractors before you have them under, contract if you do that too many times, it could damage your relationship with, that contractor if you don't have a, history of closing or doing deals before, And so I would say the best thing to do, is to figure out a way to estimate your, rehab cost And you don't need to be, perfect You just need to be in the, ballpark So maybe you use a cost per, square foot method We've talked about, methods like this on the channel before, but maybe use a range of you know 15 to, 20 or $25 for a light remodel You know, uh 20 to 30 $35 for a mid-tier remodel, and maybe $35 to 55 or more for a total, rehab like a gut renovation And, obviously those numbers need to change, depending on your market but you can use, a sliding scale like that to help you, get in the ballpark and make your offer, And then if your offer is accepted or, counter then you can get in there with, contractors And you'll have a whole lot, more credibility when you say "Hey I've, got this under contract I need an, accurate bid for the renovation." The, other part of the question is says "Do, you have go-to contractors who will walk, properties for free in exchange for, future work or do you pay them upfront, for your time?" Some people will be able, to get contractors to walk jobs for free, And they'll typically do that because, they understand that if they write you a, bid they're in contention for getting, that bid awarded to them for the job Now, if you just have a contractor do this, over and over again and not ever award, them a job then uh it's going to be hard, to get them to want to continue to do, these for free Most contractors I find, are willing to walk jobs for free in, order to give you a bid But like I said, there's going to be a limit on how much, they would be willing to do that I have, also worked with contractors who wanted, me to pay them for their time and for a, bid I would say this is probably an, unpopular opinion but I like the idea of, paying a contractor for their time to, give you a bid Cuz think about what that, means That means you're dealing with a, contractor who a values their time And, because you've paid them for their time, and paid them to give you a bid you're, now probably going to get a much more, detailed bid and get it in a timely, manner A lot of the difficulties I found, with contractors uh in these beginning, stages is you may get them to show up, and walk a property but sometimes you're, chasing them for weeks or sometimes even, a month for them to turn around and get, you a bid because it's all work they're, doing for free When you pay somebody for, their time what you're what they're, telling you is "My time is valuable I, want to give you an accurate bid and I, want to give you a bid in a timely, manner In exchange for that I want you, to pay me for that time If you're gonna, give somebody a job maybe it's a $40, $50,000 renovation Like who would you, rather award your $50,000 renovation to, the guy who showed up walked the, property didn't take a ton of pictures, and then gives you a generic bid after a, couple of weeks Or the guy who charged, you for his time showed up took detailed, notes detailed pictures turned around an, accurate bid for you in a few days so, that you can make a better decision, about buying that property or not Every, time I've paid for a bid and then used, that contractor I've had a good, experience And so I don't think there's, a problem with paying for bids So the, the answer to this question is is you, can do both but I wouldn't shy away from, paying a contractor for their time, especially if they're asking you to pay, for their time cuz that shows a lot of, professionalism to me So another, question to think about is how can you, build relationships with contractors, before you have renovation experience, And that is a tough thing to do Most, good contractors are busy And so if, you're going to get some of their time, you want to make sure that you are uh a, credible resource to them So part of the, ways you can do that is by having them, bid properties you have under contract, It's hard to get a contractor to bid a, hypothetical job So a lot of the times, what investors want to do is they want, to talk to certain contractors before, they really get a deal to understand, what a rehab might cost But when you're, speaking in hypotheticals it's hard for, a contractor to give you anything, accurate and they don't know you from, Adam so they don't know if you're, actually going to do the things that, you're saying you're going to do So they, may struggle to want to give you the, time of day in order to do that But when, you have a deal under contract you have, something tangible that they can go bid, That always helps build credibility, because now they're bidding an actual, job You've already proven that you're, willing to go out make offers and get, things under contract You've proven that, you're trying to do a deal And then, being as honest and transparent about, the bid process as possible is always, good Like I tell a contractor if I'm, getting multiple bids So I might have, them come bid a job and I might tell, them about the job and say "Hey look I'm, I'm getting about two or three bids on, this and then I'm going to make a, decision cuz what that does is it, creates some sense of urgency and it, creates some sense of competition You, want them to give you the best bid that, they can if they want the job I found, that if I have contractors who know that, I'm getting multiple bids they're either, going to give me a good bid and compete, for the job or they're not going to, compete for the job cuz they don't want, to And if they don't want to that means, they're either too busy to want to, compete for jobs And if they're too busy, then I may not want to give them the job, anyway because I don't want them having, to split a bunch of time to get my job, done So creating that sense of urgency, and competition will sometimes help kind, of shine a light on who the contractor, is that you should go with before you, even get a bid So that was our first, question or questions Our second, question is one related It's about what, to do when you already have a contractor, but your renovation isn't going, according to plan For the record this, will happen to you It happens to every, real estate investor So this question, comes from Elizabeth in Carlsbad, California She posted "We are in the end, stages of our first flip Our contractor, has been insanely slow with minimal, progress from week to week We should be, listed at this point but we have at, least another 2 weeks of work left We, live an hour and a half away from the, property so I can't be there every day, micromanaging the contractor I visited, the site today and it was more of the, same So I immediately reached out to the, GC with photos asking how they can claim, we will be done in a week when they, clearly aren't close We have a small, payment left on the contract which I am, withholding until completion Any, recommendations to light a fire under, them to finish the job So this is a, situation that you probably will find, yourself in I find myself in this, situation from time to time as well This, is why it's very important to have a, good contract between you and your, contractor And that contract needs to, outline what work is going to be done, how much that work is going to cost when, you will pay them for that work and how, long it's supposed to take to do that, work All of these things should be, spelled out in the contract And when you, have a signed contract by both parties, it then gives you something that you can, do when these situations come up because, now you can hold them legally, accountable to what they agreed to do If, there's no contract in place you, technically don't have any legal way to, hold them accountable to anything, because you guys never agreed to, anything upfront you really put yourself, in a difficult position because now all, you can do is what you're doing which is, withholding some payment in order to get, them to want to show up and do the work, faster The problem with that is since, there is no contract there's nothing, stopping the contractor from saying, "Well I'm going to put a lean against, this property since you're not paying me, for work that I feel like has been done, already." And it's really just your word, against theirs And it's very easy in, almost every state for a contractor to, just put a contractor's lean against, your property And now you can't sell, that property until that lean is cleared, up So you can really be in a tough spot, like this if you don't have a contract, So I know that doesn't help this person, in this situation because they're, already at a certain point but I'm, saying this for everybody else listening, so that you understand why it's so, important to have a signed contract with, you and your contractor They don't have, to be super detailed but the more, detailed the better What I like to do in, these situations is I take the scope of, work So when you're going to bid a job, you should have a scope of work The, scope of work should just say "This is, all the work that we want to do on this, project." And then we like to break that, scope of work down into phases Typically, three phases could be more depending on, how extensive your job is But you break, it down into phase one phase two phase, three phase four Right What you do is, most contractors typically need some, money to get started to go buy materials, So either you can give them a percentage, of the money to go buy materials or you, can buy the materials yourself at first, and then give them the materials to get, started And typically the way my, contracts work is they say this is phase, one I'm giving you x amount of money to, get started You will not receive another, payment until phase one is complete And, then we have a date set to when that, phase one is supposed to be complete by, After they complete phase one they tell, me I'll go walk the job We'll literally, cross off every item If every item is, done and done to the satisfaction then, we pay them for phase one and then they, can use that money to start phase two, And then we repeat that process until, the job is finished We don't give them, the final payment until everything is, done and signed off on So that's, typically the way I found that has the, most success when you're renovating a, property and you need to track what's, going on For Elizabeth here what I would, recommend is what you're doing If, there's any money to be paid left you, have to hold that money out until they, finish the job And what I would do is I, would go to the job meet the contractor, at the job and say "Hey let's just do a, checkpoint of where we're at and let's, see what you have done." So I would take, your scope of work and I would show up, and I would literally say "Okay these, are all the things that have been done, These are all the things that are not, done yet." You're saying you're going to, be done in a week So you're very clear, between you and the contractor on what, exact amount of work is left and you are, very clear with the contractor about how, much money is left to pay for that work, Cuz what you want to understand is are, we going to meet the budget If you've, only got $5,000 left but there's 15,000, worth of work left You don't want the, contractor coming back at the end of the, job and saying "Well I need an extra 10, grand." So you want to have that come to, Jesus meeting now where you list out, everything that has been done and you, list out everything that is left and we, all clearly understand how much money is, left and we're saying all right I will, not be paying you until all of this work, is done and you are telling me that, we'll be able to finish this work within, the allotted budget that's left because, you don't just want to leave it up for, grabs like it has been and then then, come back at the end of the project and, say well we went over we need more money, and then now they're putting a lean on, your property cuz you don't want give, them more money So get everything down, on paper and get clear about what's left, and how much money is left and how long, it's going to take Now don't do it, through emails Meet the GC there Have, him walk it with you You guys both want, to be seeing the same things Take the, same notes and then sign off on that at, the end if everybody agrees on the, remaining timeline and how much money is, left And that way you at least have, something that you can hold them, accountable to if they don't get that, done in the amount of time A sub, question here is is it better to offer a, bonus than increase your hold time I, don't know if it's better to offer a, bonus than increase your whole time but, I think you should have bonuses and, penalties in your contract And if you, can get a contractor to agree to the, bonuses and the penalties that's good I, don't think you can have penalties, without bonuses I don't think you'll get, a contractor to sign off on a contract, that has penalties if they don't finish, on time or on budget without having some, bonuses if they finish ahead of time So, I do like the idea of saying "Hey this, is the baseline This is the budget This, is the timeline." And what we like to do, is I like to break it down to them cuz, contractors don't understand what a, property costs you every day that it, goes over So I like to break it down and, say "All right what I'm paying per month, on this property for every day I hold, this property it costs me a 100 bucks, 200 bucks 500 bucks whatever that number, is right?" And so I would say for every, day beyond the scope timeline you will, have to be deducted or you will have to, pay a penalty of and it would typically, cover my hold costs for that time frame, But if you finish the job ahead of time, or ahead of schedule we're willing to, pay you a bonus of that amount So that, way if they finish early you add up the, days they finish early they get a bonus, for that If they finish late they're, covering your holding costs That's, typically a good way for you to have, bonuses and penalties built in because, if they have incentive to get done, faster and they know they can get done, faster this will help them prioritize, your job Because if they're working, multiple jobs but they have some, flexibility on the time frame of the, other jobs they're more inclined to, shift resources to your jobs to finish, your job faster because they're, financially inclined to get paid sooner, All right so hopefully these contractor, tips will help you manage your jobs, better faster and on budget and protect, yourself as you're doing these, renovations Before we go a reminder that, these questions came from our investors, in the Biggerpockets forums So if you, have real estate questions of your own, you can go to, biggerpockets.com/forums and get advice, from more than 3 million members totally, for free Thanks so much for watching, today and if you found this video, helpful please make sure you're, subscribed to the channel I'm Henry, Washington Dave Meyer will be back soon, with another show