How to Flip and Grow Rich With Your Contractor
Contractors and flipping houses.
Like bacon and eggs...
Like peanut butter and jelly...
Like pizza and beer...
Like a lit match and gasoline...
Yes, it's not always harmonious using contractors when you're trying to flip and grow rich.
Timelines get extended, promises get broken, tempers flare and before you know it, you're the one managing the flip and managing all the subcontractors.
Flip and grow rich?
To GC or Not to GC...THAT Is The Flip and Grow Rich Question
Hiring a general contractor for all your house flipping projects is the best possible way to go when you're house flipping...but only if you can make it work. If you do, they will become an enormously helpful member of your house flipping team when you are first learning how to flip houses.
I mean, wouldn't it be nice to hire one contractor to do all the work, one contractor to pay, one contractor to do everything in all your projects?
It sure would!
Simple, clean, easy on you. It's the lazy man's way to fix and flip houses.
Unfortunately what I've found in my area is that it's extremely difficult to find that ideal contractor that can work within the house flipping budgets we set.
Sometimes, when you do find a general contractor capable of handling your projects you may find that their prices are just too high to make your numbers work.
In my experience, the really good general contractors use the same subcontractors over and over and their prices tend to be higher because they don't "bid out" each job they do. They've found their stable of reliable subs and stick to them.
When Finding a General Contractor, Flexibility is Key
Remember that a general contractor tacks on an extra 10-30% over what his subcontractors charge him. In doing so, this oftentimes brings their prices way out of your budget you've set.
If you can find a general contractor who is open to working with your system and can explain your goals, then you might be able to get them to modify their approach to working with you.
How flexible they will be on this largely depends on how busy they are. If they are hungry for work, then they'll consider it. If they are overloaded with work, then chances are slim they'll be this flexible.
If they are receptive then they will get multiple estimates from the subs and maybe their guys will adjust their pricing for your projects and allowing the general contractor to mark up their prices a little for managing them. They have every right to make money on them but it's just a matter of negotiating the right terms so they are happy and you are happy. You want to create a win /win situation.
This could be the best way to accomplish the rehab process but it may take some serious networking and several meetings with different general contractors to make it work.
How Do You Find Good Contractors to Flip and Grow Rich With?
There are several ways to find good contractors and below are just a few ideas.
1. Word of Mouth
Referrals is probably the best way to go. Just ask people you know what general contractors they've used and if they were happy with the price and service they received. Probably the most important question to ask is if they finished on time and did they stay within the budget they quoted.
As mentioned before, networking is the secret to success in real estate investing and definitely when house flipping as well.
Go to networking groups and consider joining a few. BNI (Business Networking International), Chambers of Commerce, NARI (National Association of the Remodeling Industry), Craig's List, Service Magic and many more.
3. Local Builders Shows
When a local home or builders how comes close to your town, go.
Talk to contractors and leave your business card. As a follow-up, set up meetings to discuss your house flipping business plan with them.
Sometimes when you start fresh like this, you can find people who are willing to work with you and are flexible in how they approach each job.
Plus, if a general contractor is at a builders show, chances are pretty good he's hungry for work. You want this.
4. Get Business Cards On The Job
What you'll also find is that once you start a project and the word gets out that you are a house flipping pro, you'll get drive by visits from contractors who'll stop by to give you quotes and leave their business cards.
Although at this point in the house flip, you probably already have your crew hired but it's always good to have a backup plan in case you do need to fire. It certainly doesn't hurt to get a quote from any contractor who pops in to compare prices.
Chances are slim that you won't physically be there when these kinds of contractors drop in and if they leave a card with one of your crew, more than likely the card will never get to you. To prevent this from happening, make sure you have your business' yard signs up so they can call you directly.
All in all, getting a good contractor on your house flipping team will really help you to flip and grow rich. Leveraging their know how and building a solid relationship are some of the biggest keys to success when flipping houses. And if you follow these tips, you'll be sure to find and keep a few good ones.
I like driving areas that I buy in and looking for other rehabs that are being worked on. You can find good contractors this way and see how they keep their job sites and the work they do. You also see how many people they have working on the job. Don’t want that one slow guy trying to do everything by himself.
Good Point Danny. I have 3-4 different contractors that I work with but still find myself doing some of those similar points you mention. I have made that mistake with the smaller contractor in the beginning on a larger rehab & though he did a great job it just took too long. I now keep him on the smaller projects.
Thanks for your comments.
I have been asking different RE Investors how many flips a year they are doing & when they think or if they are bringing a project manager in house as an employee. It is something I have been considering as by next year we will be rehabbing anywhere from 15-20 houses?
Any feedback is appreciated.
Hey Mike – nice post. Seems you’ve been working the rehab circuit long enough to know what you’re doing! Keep up the good work, I look forward to reading more.
Thanks Seth – yes, been doing it a while to know what I’m doing, but always learning new strategies all the time. Never stops! Thanks for commenting. Mike