How to Avoid Bad Contractors

Take it from someone who has been around the real estate investing game for a while, bad contractors can absolutely kill a deal. I remember hiring a general contractor on my very first real estate investment project, who ended up doing a terrible job, and cost my partner and I about $10,000.

Since one of the goals of this website is to help you to stay away from the pitfalls that I have experienced, allow me to give you a few pointers, a system if you will, on how to choose a good contractor.

Rely on Referrals from Real Estate Professionals

The easiest way to ensure a contractor is good is to ask others that have done substantial real estate repairs, and know the market. I know this might sound kind of like a “duh” type comment, but it really is powerful.

The question is, who should you ask?

There are two kinds of people that are going to know the right contractors, realtors and investors. And it is easier to contact a realtor than it is to contact an investor. So start there, pick a couple of the best real estate agencies in the area, and ask to talk to the head broker. Take them out to lunch or dinner, tell them what you plan to do, and ask them straight up about contractors. You get 2 really great things out of doing this, you get to know a prominent broker that can help you with deals in the future, and you acquire sound advice on local contractors.

Other investors are a great source of information as well, and an easy way to get a hold of them is to find the local real estate clubs. Search online, check the local paper, or ask the broker you just took out for a meal about these clubs, and where they meet. These are excellent places to network, and find information and help. USE THEM!

Start Your Contractors Off Small

Ask them to do some small things for you on your own house, and see what kind of a job they do. See how they preferred to be paid. Ask them some of these questions:

  • Are they timely?
  • Do they clean up after they finish?
  • In general, how did you feel about them working for you?
  • Were they trustworthy, or did you feel you had to watch them the whole time?

Small jobs that are just a couple hundred bucks are a great way to find out who is really on their game, and who isn’t. And once you have a contractor or two that you like, then you can ask them about other fields of work, and who you should go with, e.g. like a plumber who does a good job for you can probably recommend a good electrician for you as well.

Provide Your Contractors with Incentives

Take some time to talk with your contractors, and find out what they like. If they are all about money, perhaps you can offer a bonus to them if they finish early. More than likely, the contractor is going to want future business, so tell them you are a real estate investor, and are looking for solid relationships that can contract with you on a regular basis.

If a contractor sees you as a rational business person, and not a sniveling, complaining home owner who can never be satisfied, chances are greater that they’ll do the best job they can.

Basically, just find out what they like, and offer it to them.

Giving people what they want almost always works to your advantage in the long run.

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