Rehabbing Houses: Six Tips On How To Choose A Contractor

By: Mark Walters

Rehabbing houses is an outstanding way to increase your profits from real estate investing. When you put some work into a fixer upper, not only are you virtually guaranteed to explode your profit potential, but you also make a positive contribution to the neighborhood.

If you are an experienced do-it-yourselfer, you may be tempted to do your own rehabbing work. However, most real estate investing experts recommend hiring a contractor to manage your rehabbing project.

Choosing a competent contractor requires more than a quick walk through the yellow pages. You need to learn all you can about prospective contractors. The contractor's ability to do quality work is important, but your focus should be on finding someone you are comfortable working with.

Don't let the Better Business Bureau choose your contractor.

You may be tempted to call your local Better Business Bureau to see if they have anything on file for a prospective contractor. This might give you reason to eliminate a contractor from your list, but it won't tell you what you need to choose one. Remember, the Better Business Bureau is primarily a collector of complaints. The lack of complaints against a contractor doesn't mean the contractor is qualified.

Don't over-value experience.

It's easy to compare contractors by the years of experience they have. However, experience alone doesn't always translate directly into high-quality work. A contractor could have been doing substandard work for his entire career. Go beyond the numbers and evaluate their work.

Beware of high-pressure pricing tactics.

Both of you are professionals and there's really no need for the use of force. If you feel pressured when negotiating with a potential rehabbing contractor, don't be shy about asking him to back off. If that doesn't work, don't hesitate to look for another prospect.

Beware of big down payments.

You should be able to negotiate a reasonable down payment and a fair payment schedule. Typically, you should expect to pay no more a third of the total rehabbing cost in a down payment, with the remainder paid out as work is completed. If the contractor asks for most of the money up front, that could indicate he has a shaky financial condition.

Good communication is a must.

You and the contractor should easily find yourselves on the same page. You're going to be spending a lot of time working with each other. Being able to communicate with each other accurately and effectively will make the rehabbing project go much more smoothly.

The lowest bidder may not be your best bet.

Price should not be your only consideration for choosing a rehabbing contractor. You should decide ahead of time exactly what level of services you want done. Your goal should be value. If the contractor you feel best about has a bid that's too high, you can always ask for a lower price.

A good general contractor will make your rehabbing project go more smoothly. A smoother, more efficient rehab means more profits for you. These tips should help you find a contractor that not only is competent, but is also enjoyable to work with.

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