Today’s REI Classroom Lesson

Ron Carlson covers more areas that you need to be aware of when finding the right general contractor. There’s red flags that you need to look out for.

REI Classroom Summary

The last thing you need is an absent general contractor who doesn’t answer his phone. Figuring out how well they communicate before the project starts can give you an idea of how they’ll communicate during the project.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Ron: Hey, my name’s Ron Carlson. I’m with Renovation Gurus. I’m a general contractor, and today I’ll be hosting the REI Classroom. This is part two of “the things to be careful of when you’re hiring a contractor.”

Mike: This show is sponsored by passiverental.com.

Ron: So, piggybacking from my prior discussion, I’m just going to go right into it. Most final cleans on a bid do not include window

, so when you see a final clean, if your contractor cleans at all, you want to be sure what that final clean includes. Sometimes it includes the inside of the windows. Sometimes it does not include the exterior of the windows. You want to be sure is that, is it just a sweep/mop or is it a full hardcore, they’re going to get a bunch of people in there taking off all the paint on spots that they missed? When you see a final clean on a bid, you just want to be sure what that final clean entails.
Contractors that do not return your phone calls, be very, very careful of this. They’ll say, “Oh, I’m so busy. I was walking a house, I ran into this situation, I . . . whatever.” It doesn’t matter their excuse. It’s okay if they don’t answer your call right away, but it’s not okay for them not to return it and by return it, I mean probably by the end of the business or worst case, tomorrow, sometime tomorrow, the following business day. If they flat out just don’t return your phone call, you’re going to get that same type of customer service while you’re in the middle of the rehab, and it’s going to be really, really frustrating to you.
And then contractors that have a lot of personal problems, we find that sometimes we hire a contractor, and they’re doing awesome for us and then all of a sudden, we realize that they’ve started having a drinking problem or that they’re having problems with their wife or their son or with their landlord, or maybe somebody got deported. That’s kind of funny, but it happens. If they start to have personal problems, they’re going to start showing up late. They’re going to start going home early. They’re going to start taking two-hour lunch breaks to go on and file some paperwork that they need to file or to talk to their landlord or to meet somebody somewhere, and that’s going to affect your rehab.
I’m not saying that if somebody has a personal problem that you need to fire them. Just be careful once their personal problems start to overtake their work, that you’re very cautious of that, and you might want to start looking for another contractor at that time. Now, this contractor that has personal problems, they may be good for you in another six months. Let them get through their personal problems and come back to them, but don’t keep giving them so much work you’re going to over flood them, and they’re going to not perform the way that you want them to perform.
Be careful of contractors who “knows a guy.” If they know a guy, say, “Oh, I think my neighbor is a painter,” or “I think my cousin’s brother’s girlfriend used to do interior design,” whatever it is, if they know a guy or they think they know a guy, be very careful of that, because that probably means that they’ve never hired that person and they never hired that person directly, so you don’t want to be the “Oh, I used them the first time ever” to hope that they know what they’re doing. You want to hire a contractor that has been used by your contractor, by your general contractor repetitively and has performed flawlessly, or you’re going to find yourself being a guinea pig for somebody’s science project, not if they can paint the interior of your house or not.
Be careful of contractors who are getting back into contracting. If they’re getting back into contracting, why did they get out of contracting in the first place? It’s probably because they are not a good contractor. That’s just the bottom line. Good contractors have references. They have referrals. They are busy constantly. I know a couple guys, they’re booked out right now . . . they’re booked out 90 days. They’re booked out 120 days. You can’t even get in with them, and for them to work on your rehab for three months. That’s a great contractor, because they’re getting constant referrals. They’re getting constant repeat business, but the contractor who was in it five years ago or used to work with their dad ten years ago or whatever, they’re probably not high-quality. They’re probably not good customer service, and that’s why they’re out of the business currently.
Be careful of contractors who’s really slow right now. It’s kind of the same thing. If they’re really slow right now, it’s because they don’t have references or referrals, and they’re probably doing a really, really bad job. Contractors that are good will be busy forever and referrals and people will keep coming back to them. Contractors that are not good will be slow, and that’s how you’ll know if they’re a good or bad contractor or not.
Be careful of contractors who do not have a written contract. You need everything you do in writing and you need it line specific. It needs to be so detailed that if, for some reason that you ever had to go to court, which I hope that you don’t have to, it needs to be so detailed that you know exactly what was on there. For example, on a kitchen, I’ve seen a lot of contracts say “Kitchen – $5000.00.” Well, that’s not how you want your contract written. You want your contract to be written something like this: Kitchen: garbage disposal, drain lines, counter top, backsplash, upper cabinets, lower cabinets, hardware, tile, grout. You want every single line item to be laid out, what color it’s going to be, what size it’s going to be, and then the price of what each line item is going to be.
Don’t let your contractor group your whole entire rehab into one line item, because they’re lazy. You’ll find that you have a conflict later on when you go to square up with them, and you’ll find that you have a conflict on price where you thought the backsplash was included in the kitchen and you find out later that the backsplash is not included in your kitchen, so be very careful to get a written contract, all change orders. If you discuss it and you’re going to pay that person and you’re going to hold them responsible, then you need everything written in a contract with high, high, high detail.
This is Part Two of “Be Careful with Contractors.” My name is Ron Carlson. I’m with Renovation Gurus. If you would like to contact me for any reason, you can feel free to call me or text me on my cell phone, 817-566-4346, and you can check us out at renovationgurus.com. Enjoy your day.

Mike: Passiverental.com is your source for turnkey done for you rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash-flowing, professionally-managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today, and get started by visiting passiverental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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Ron Carlson
Wholesaling house after house gave enough capital to start flipping houses. For a short time he worked alongside a few hedge fund companies. Started a real estate brokerage firm, started a construction company, started owner financing houses. He spends a lot of his time speaking at local REI groups, and time leading his team of acquisition agents