Today’s REI Classroom Lesson

Ron Carlson shares with us the different types of contractors that are out there and what work they’re best at. From handymen to “Chuck in an Truck”s to general contractors, it’s important to consider the capacity and quality of work that they’ll be able to do.

REI Classroom Summary

You should know their specialty, if they have a team, and how busy they are so that you don’t hire the wrong person.

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 is Ron Carlson. I’m with Renovation Gurus. And today, I will be the host of REI Classroom. I’m going to talk you about something that’s kind of dear to me. I’m a contractor and I want you to know what kind of contractor you’re working with.

Mike: This REI Classroom real estate lesson is sponsored by FlipNerd Investor Coaching, your blueprint to investing success.

Ron: Because there are a lot of times where we go, we hire somebody, but we don’t actually know what they’re capable of. Essentially, I have broken it down into three different categories. The first category being, I guess, in my opinion, the lower of the contractors and then it goes up in quality, it goes up in warranty work, that type of stuff. So first you have a day laborer, a handyman. This is the person that you should probably be the most cautious with. A lot of times, they will want to get paid every single day. And they’re going to want to get paid in cash. They have a truck, to have some tools. In my opinion, it’s been that a lot of these guys think that they can build a whole entire house, but in reality, they can’t even build a birdhouse.

I want to go over a couple of things when working with them. There’s a time and a place to hire all the contractors that I’m talking to you about, but you want to be careful and you want to be able to identify who you’re working with because your outcome of your rehab is going to be highly dependent on whom you work with. So be cautious with most handymen, most day laborers. Like I said, they’ll tell you that they can do a whole lot, but they might not be able to. They really need to be managed. They need to be managed well. And you almost need to micromanage these types of contractors.

You have to give them really good directions every single day, a lot of times, they are not able to think for themselves. Not that they are not good at their craft, but if you don’t tell them, “Hey, I want this wall built today, sheetrock today, this tile put in today. I want you to demo this bathroom,” then they will literally stand around and wait for directions. And you’ll be paying them an hourly wage or you’ll be paying them their handyman wage, pay them at the end of the day and then nothing will get done and you as a client will end up losing money because you didn’t give them good directions.

Handymen and day laborers are normally good for really small jobs. Leaky faucets, a little bit of sheetrock, a little bit of framing. Don’t put these guys on a full rehab because they typically don’t have the manpower, the internal power, the admin power, and the time to do the work in a good quality manner.

Second on the list is the guy that I call the “Chuck in a truck.” Chuck in a truck, he is the guy that specializes in one thing. He typically owns a truck or a van or something with his logo or name on it. Some guys, like the AC guys, some plumbers, they might run a clean canvas, what I call a clean canvas as far as their vehicle because they subcontract for a lot of other contractors and they don’t necessarily want to be flying a flag.

They typically have a business card, where handyman is the guy that says, “Hey, my business card is to come in the mail.” I’m sure you’ve met that person. I’m just letting you know how to identify the people that you’re working with. Chuck in a truck, he typically has a few helpers, has a few employees. He’s not typically a one-man show, though he could be. He might have a brick and mortar, he might work out of his house. He’s typically easy to find, easily accessible. He’s going to return your phone calls.

He has company insurance. This is one big difference between a handyman, a day laborer and Chuck in a truck. When I say Chuck in a truck, I’m talking your specialty guys, your foundation guys, your pool guys, your landscaping guys, people that specialize in framing or one specific trade and then you, as the general contractor, you will be general contracting, hiring all these people to do work for you, but they’re all specialty. They own their own tools. They typically own tools related to their industry. And they have a lot of experience in one field. You want to know whom you are hiring when you’re hiring Chuck in the truck. You screen them, do the references, that whole thing.

Then it bumps up another level. You go to the general contractor. The general contractors are a little bit different where they manage the day laborers and they manage Chuck in the truck for you. You pay them a fee to manage the whole entire job for you.

I have a couple of things to go over with general contractors. So general contractors are responsible for, typically, you cut them one check and they pay all their subcontractors. They give you one bid and they pay everybody else. They go off and get bids on your behalf. They are running and managing your people so you don’t have to. They typically will honor their bid where the day laborer, the handyman, they might not honor their bid at all. They typically have a warranty. This is huge. You want to hire a contractor that will warranty their work because if they do it badly, you’re going to have to hire somebody else to fix it and that person might fix it right.

They schedule subcontractors, timeframes, agendas, supplies, they should get everything coming to you. And they should deal with all the headaches so you don’t have to. A lot of people think, “Just go and call this person, and call this person and call this person.” It’s a little bit more than that. A general contractor will do the calls, the emails, make sure someone’s on time, make sure that they did the work, make sure that they get paid fairly.

So I just want to take a couple of minutes to describe to you the difference between the contractors, your day laborers and handyman, Chuck in a truck and general contractors. And it’s important for you to know whom you’re hiring so you don’t hire the wrong person. If you want more information about Renovation Gurus, you can find us at renovationgurus.com. My name is Ron Carlson and you can call me on my cell phone, 817-566-4346, or shoot an email to admin@renovationgurus.com. Have a blessed day.

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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