10 Qs To Help You Hire An Awesome GC

contractor When you’re flipping a property, who do you most need to have your back?

If you said your general contractor – pat yourself on the back!

But how do you find the perfect contractor to join your team?

Hey Moguls, Cody Sperber here. Of all rehabber nightmare stories, the worst involve hiring and working with general contractors (GCs). So much is riding on the GC; so much is at stake.

So today I’ve got loads of useful info about general contractors and 10 questions that will help you avoid GC nightmares of your own.

Ready?

Let’s get started…

The Cost

How does hiring the wrong GC end up costing you more?

Well, 2 ways…

First, in this business, time is money, and the longer a job takes, the less profit will be made.

Second, if the job isn’t done the way you want it the first time, it will need to be redone—costing more time and money.

But hiring the wrong GC is a common problem with beginner real estate investors.

Why is that?

The Allure of a Deal

Beginning investors are usually strapped for cash and looking for a deal to get the property ready to sell (or rent). They wind up hiring their brother-in-law’s second cousin who is said to be a good handyman, just starting out.

Red flags should be flapping in the breeze at this point! Um, scratch that, red flags should be blowing around all crazy letting you know not to go that route.

No matter how great the temptation—don’t give in. Just don’t.

Even when you get a bona fide contractor who’s been in the business for years, things can still go wrong. Just think about how much more wrong they can go when you hire a novice.

I can tell you from experience that a good general contractor makes flipping a house fun and profitable, while a bad GC makes you want to quit real estate and go get a job… well, anywhere else.

What to Look for

Your general contractor should be licensed, bonded, and insured.

The contractor’s company should not have any complaints against it with the registrar of contractors. (Invest the time to contact the registrar and check for complaints.)

newguy The GC must be financially solvent. In other words, they should not be desperate to earn your business. They should be willing to work with the pay schedule you set up—one that allows you to maintain control over the money and pay only after the work is done and you’ve inspected it.

Finding a good general contractor can be confusing because there are so many options out there. And it’s even more difficult when you make it your goal to find a great GC you can work with for years.

Expect a challenge; remember that a GC’s job, by nature, is at odds with an investor’s business goals.

Questions to Ask

So, you’ve found a GC who seems like he/she might be the perfect fit. Make sure to ask these 10 key questions when you interview the GC:

Do you have a standard crew that you work with?
Are you licensed and bonded? Have you ever been sued by a client?
Do you give hard bids? How fast can you bid out a property for me?
Are you okay with a time-based performance payment structure?
Will you secure the property for me for a flat fee? (Changing out locks, boarding up windows, etc.)
Do you carry general liability insurance?
Do you carry workers’ compensation insurance?
Will you pull all the required building permits?
Who will be in charge of the job?
Will you provide written references?

Final Important Points

Pay Schedule

Make it clear that you will never ever pay up front. You will purchase materials up front as long as the GC will provide a receipt. Set up a disbursement plan such as a third, a third, and then a final third – paying only as the work is completed and meets your standards.

Check In

Randomly show up on the job site totally unannounced to verify progress and immediately fire any GC who is not doing what was agreed upon or isn’t trustworthy. Be ready to fire ‘em if you sense that they might be stealing materials, money or your valuable time.

Your Goal

Remember, your goal as an investor is to have a performance contract in place and set expectations very early on in the relationship. Only then will you move forward with a winning work relationship.

Whatcha Think?

Got other thoughts about scoring a great GC? Share with us in the comments section below.

1. Meet – Set up a meeting with a few GCs in your area, even if you don’t have a property to flip right now. Think ahead and network so you’re ready down the road.

2. Verify – Even if your instincts tell you the GC is a good guy, check references and talk to the registrar of contractors.

3. Don’t Make Rushed Decisions – Under a tight timeline? Remember that hiring the wrong GC will cost you more time and money. If something doesn’t check out or you have concerns about a GC, walk away and keep looking.