In my conversation with Taylor Takacs, who is a fix-and-flipper that raises private money to fund his deals, he provide his Best Ever advice, which are 4 ways to better your odds and chances of hiring a good contractor.
Taylor stressed the importance of building good relationships with contractors. However, before you are able to build solid relationships, you have to find solid contractors first! Taylor has gone through plenty of bad contractors. He actually believes that is was necessary. He had to work his way through the bad contractors before getting to the good ones.
Fortunately, Taylor discovered 4 tips that he continues to use in order to sort through “good” and “bad” contractors. These tips can help in avoiding some of the mistakes, and resulting headaches, that Taylor has faced through his organic sorting process.
Tip #1 – Contractor Referrals
The best way that Taylor has found to avoid bad contractors is to ask for referrals from other serious investors. For example, if Taylor was in need of a roofing specialist, he would simply go to his local REIA meeting and ask around: “Who do you use as a roofer.”
Some of the investors may be hesitant to give up their contractors. However, most of them will be more than happy to provide you with a referral of whom they use. More than likely, if the contractor is doing work for a full-time, active investor, they will work out for you as well.
Tip #2 – Avoid Down Payments to Contractors
Until Taylor sees a new contractor perform a few jobs, he never provides any sort of down payment. Not even if they have come referred.
Taylor is not paranoid. Based on past experiences, when working with a contractor for the first time, there is a possibility that they take the down payment and disappear. Once they are gone, it is very difficult to track them down and get them back to complete the job. Therefore, he will hold out payment until the fully or partial completion of the job. He will only provide down payments to the contractors that have proven that they are trustworthy and reliable.
Tip #3 – Background Checks on Contractors
Another way that Taylor avoids bad contractors is to perform background checks. If a contractor’s background check shows that he was arrested 3 times in the past year, he is probably not the guy to hire for the job. However, if the background check shows that he has a few citations dating a few years, but not recently, that doesn’t necessarily count him out. Ultimately, the choice is up to the investor and their personal comfort zone.
Tip #4 – Ask Contractor For Recommendations
When Taylor is down to a few potential candidates that he is considering, he will ask them for recommendations. He wants the contact information of other investors that they have done work for in the past. If a contractor provides him with 3 investors, and all three give raving reviews, more than like, they are a solid contractor. However, if they are hesitant to provide referrals, say that they don’t usually work with investors, or say that they don’t have referrals at the moment because of any number of excuses, that is always a red flag.
Note: Following these 4 tips are not guaranteeing that you will never deal with a bad contractor again. But, they will greatly increase your chances of hiring a good contractor, as well as put yourself in the best position to achieve success. And in real estate investing, that is all we are after!
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.