During the rehab portion of a fix and flip, investors will need to locate a contractor they can trust. Someone who they know is reliable, experienced, and capable of completing the job on time and within budget. However, it can be very difficult vetting through potential contractors and determining who to hire and who to pass over. Here are 15 important questions investors should ask contractors when interviewing them for a fix and flip project.
1. How long have you been in business?
Naturally, you’ll want someone who is experienced in this field and has dealt with numerous construction projects throughout their career. Not only will an experienced contractor be more equipped to handle issues that may arise during the course of the rehab, but they’ll also have built a team of reliable workers, subcontractors, and suppliers that they can hire for the job.
2. What experience have you had with this type of project?
Just because a contractor is experienced doesn’t mean they are experienced in your type of job. Each investor will need different things done on their fix and flip. Gutting a house down to the studs is a lot different than just replacing kitchen cabinets or installing flooring.
3. Are you licensed?
A license indicates your contractor has been certified in their field thereby protects you from having any issue with the city or state about the legality and quality of the work. Don’t be afraid to ask for proof of this certification, and double check that it hasn’t expired. Licensing protects you as the investor in case something goes wrong on the project. If you are unsure what your state’s requirements are for licensing, check out this handy list of contractor licensing requirements by state.
4. Do you have insurance for both you and your workers?
This is another big Must-Have when hiring a contractor. Don’t just find out if they have insurance but determine what kind of insurance they have and how much it covers. There is always a risk of injury associated with renovations being done, so ensuring your contractor has both liability insurance and workers’ compensation will protect both you, your property, and any workers on the jobsite.
5. Do you offer a warranty?
A warranty is a good thing for investors to have in the event something breaks once the job is completed and the contractor needs to come back out and fix it. Typically, you won’t be able to get this on all the items on the project, but understand the expectations upfront. A warranty is a written guarantee made by the contractor and should outline exactly what they will cover and how long it is effective until.
6. Can you provide a list of references?
This one is essential, but may be forgotten when busy investors are looking to get a job started and completed quickly. However, due diligence prior to signing on that dotted line can make all the difference. A great contractor will have plenty of references to vouch for their performance. See how this contractor and his team performed, did they finish all work on time and within budget, and was the final product acceptable?
7. Will you use subcontractors?
Unless your general contractor operates a massive company, the odds are they will be subcontracting out a lot of the more specialized work that needs to be done such as roofing, plumbing, and electrical. And of course, make sure that who they are hiring as subcontractors is both reputable and has the necessary licensing, insurance, and coverage.
8. How many other jobs are you working on at the moment?
A busy contractor may indicate they are doing well with their business, but you don’t want a contractor who is spread too thin between jobs and loses focus and attention on the needs of your own rehab. Fixing and flipping needs to be done quickly, so figuring out your contractor’s schedule and how much time he will be spending at each jobsite will give you a good idea of whether or not he can complete your renovations on time.
9. Will you be on-site daily or a project manager?
Similar to how busy your contractor is with other projects, you’ll want to know just how often they’ll be the ones on site overseeing the work. Sometimes, contractors will hire a project manager when they are unable to be there, so it is important for you to know who will be in charge and what their credentials are.
10. How do you handle payments?
Typically you will give a certain amount as a down payment to begin the job, but you’ll want to work out with your contractor just how much and how often they plan on billing you for their services throughout the course of the work. If they are demanding full payment up front, you should look elsewhere for a new contractor. It is common for a contractor to request 10-20% and a larger portion on direct materials.
11. Are you willing to sign a contract?
A contract protects both you and your contractor because it outlines exactly what will be done for the project, how long it should take, and an estimated cost for all completed work. In most cases this shouldn’t be an issue, but if your contractor doesn’t seem to want to sign something that will be legally binding, then there may be a problem.
12. How can I best get in touch with you for updates?
You’ll want a contractor who is responsive when you try and contact them. You don’t want someone who doesn’t answer their phone for days or cannot be reached when something goes wrong. Find out how often they check in and give you updates on how the rehab is going and what is the best way to communicate with them: phone, text, or email.
13. Have you had any legal disputes from previous jobs?
A yes answer to this question doesn’t have to mean don’t hire the contractor, but it is important to know when doing that background check whether they have had any legal issues with previous clients. If so, what did these issues involve and were they resolved? The Better Business Bureau, Yelp, Angie’s List, and Homeadvisors are great resources to check for any disputes your contractor previously had.
14. How do you organize and clean up the job site at the end of each day?
This may not sound like something crucial to interviewing a potential contractor, but it is still an important question to ask. Good contractors will make sure a job site is neat and clean at the end of a busy workday. You don’t want stray supplies like nails, tools, wooden boards, or paint cans strewn across your property. This can indicate the level of professionalism of the contractor you are considering hiring.
15. What is your estimated time of completion and cost?
For any fix and flipper, these two answers are the most important. You’ll want to make sure your contractor can complete the job quickly and within budget and have specific deadlines within the agreement. You can provide incentives to complete the work within a certain time frame. A contractor who gives you a bid too expensive or a timeframe that’s too long may not be the right person for the job.
Once you’ve found the contractor you are happy with, now you’ll need a private lender you can equally count on. Start your application today with LendingOne, a national lender for fix-n-flip and rental loans, and get the financing you need for your next investment project.