Every real estate investor will come up against this critical question – how do I choose a general contractor? At Builders Trust Capital, we have an in-house VP of Construction who helps our real estate investors find the best GC’s for their projects. Take a look at some of the advice we’ve been giving our successful clients for years.
Make sure they’re legitimate.
Every good contractor should care about his or her client’s feedback. So take a look online and see what reviews past clients have taken the time to share about their work. There are some fantastic ways to find this information pretty quickly.
- Check Yelp reviews
- See if they’re listed on Angi.com
- Ask in local town-based Facebook groups for recommendations
- Search for Google reviews
- Ask your lender or colleagues for recommendations
When you’re reviewing their work, be sure to look for samples and happy customers who did the same kind of work you’re looking to accomplish. Thinking about a new construction project? Don’t hire a GC that specializes in cosmetic fix and flips, find someone who’s built from the ground up before.
Ensuring the legitimacy of your contractor also means checking that they are licensed and insured in the state you’re doing work. When pulling permits for your project, you need a license to pull them under or risk major fines and stop-work orders. The best way to find out if your contractor has the proper license and insurance is to simply ask them for proof, it’s a question they should be used to answering. Each state has its own online database and here is another great resource for you to search online for verification, https://www.angi.com/angi-license-check.htm.
Interview the best candidates.
Your GC will be managing all aspects of your next project, hiring and overseeing subcontractors, checking the legitimacy of those subs like the electrician, plumber, and HVAC professionals, and ensuring you meet your budget and timeline. That’s a big deal! There are several questions you want to ask them to determine if they’re the right person for the job.
- How long have you been in business?
- Kind of work you do specialize in?
- How do you typically communicate with your clients?
- How do you handle problems when they arise on-site?
You can start this process even before you have a project ready to start. Building your team now with professionals you can trust is probably one of the most important assets to your real estate business.
Start the bidding process.
Now that you’ve got a few candidates it’s time to bid out your project. You should be aware that some GC’s give more of a round estimate that can fluctuate over time based on delays, weather, etc. While other GC’s give you a fixed price regardless of the material price fluctuations, changes in subs, etc, and they tend to cost a bit more. Always get multiple bids on your project and never go with the lowest. A bid right in the middle could be your best bet. All real estate investors need three core aspects to their project: speed, price, and quality. But, you can only have two, so consider what your top priorities are. Our advice? Don’t go with a bid cheap enough to make the “deal” work as it could end up being more expensive anyway!
Getting under contract.
Congratulations! At this point, you’ve selected your GC and now it’s time to make sure your project is protected. Your GC should supply you with a contract and if they don’t – that’s a red flag – only work with contractors who have an established contract ready for you. Here are some important aspects of the contract to look out for,
- A detailed description of the work and a projected timeline.
- Remedies for any breach of the contract.
- A detailed process for change orders.
- A list of warranties and the details.
- Disallowing liens by subcontractors.
- What happens if acts there are of God, bad weather, etc?
- Damages and liability.
A great way to mitigate or shift the risk of your project is to work with a GC who can give you a flat rate. While it may appear to be a higher bid than others, you’re saving your budget from all kinds of circumstances that can arise onsite. It’s up to you to negotiate the terms in your favor wherever possible.
We’ve helped hundreds of investors save time, money, and frustration by providing construction oversight on budget review, inspections, and contractor vetting. Collectively, our team has delivered over $120,000,000 in real estate loans. Our process is simple! We handle the entire loan process in-house, and loans are closed in as little as 10 business days. Ready to discuss your funding needs? Just contact us by phone at 856-422-3232.