Tips for How to Hire a General Contractor
The professional way to manage contractors during a renovation is to hire a qualified General Contractor to oversee the project. The ideal General Contractor will be able to put a plan on paper with an estimate of time, materials, and labor needed to complete the makeover. Time is money. Taking the time to find and hire the best General Contractor can mean the difference between profit or loss for the project.
A skilled General Contractor will understand that any subcontractors hired are his to manage. He will understand he must stay on budget or he must pay penalties for incorrect, incomplete, substandard, or late aspects of the project.
To make sure the General Contractor is professional the investor must:
- Prepare a list of the most reputable General Contractors within 10 miles of the project.
- Make sure the General Contractor has experience with fix and flips or rental renovation projects.
- Prepare an outline of the renovations being considered and amount budgeted.
- Schedule time to meet with each prospective General Contractor to discuss the project in detail.
- Give the prospective General Contractor a chance to ask questions or voice concerns about the project.
- Ask for references, proof of insurance, for a tentative proposal in writing, give a date for the written estimate to be submitted.
After meeting with at least three General Contractors the investor should:
- Review the estimates and proposals of the General Contractors to prepare a list of questions.
- Follow up with their list of references as well as referrals from other contractors in the area.
- Talk to local codes inspectors for suggestions of contractors that have the best record for quality work.
- Choose the best proposal / estimate and meet with the General Contractor to cover:
- All relevant points to be contained in the contract
- Make sure business license, insurance papers, and permits needed are a part of the contract.
- Get a list of all subcontractors and vendors expected to be involved with the project
- Make sure there are no lawsuits or liens against anyone on the list.
- Set rules for contractor draws and percentage to be held until work is finished and accepted.
- Set penalties for failure to complete the project fully and on time.
- Seek legal counsel, if needed
- Make sure the investor and General Contractor completely agree on all points of the project.
- Sign the agreement documentation.
- Set a date for the work to begin and expected duration of the project.
Even though the investor has awarded the project to the General Contractor, the investor should carefully monitor the project in increments. Ultimately it is up to the investor to ensure the venture is running smoothly. The investor should resist the urge to try to micromanage the project, but be easily reachable for any problems that may arise.
No one can predict the future. Factoring in a reasonable amount of time and monetary cushion for uncontrollable actions such as weather should be a part of the budget. Visit a qualified Account Representative at LendingOne today to discuss capital needed to make your project a reality.
For even more great tips, tricks, and techniques for dealing with contractors, download our FREE eBook
A Real Estate Investor’s Guide to Managing Contractors from Start to Finish