As an investor, you need to build a power team and key partners for specific activities. Of all the connections you can have as an investor, one of the most important connections you can have is with an amazing contractor that you trust and can rely on.
However, this can be a lot harder than it seems especially if you don’t know what you’re looking for. Asking a contractor the right questions upfront is key to vetting them thoroughly. Below is a list of questions I highly recommend you ask your contractor when interviewing them.
It is essential to present yourself in a trustworthy manner to quality contractors, as they want to know that they are working with quality people:
“Hello, my name is Brett. I’m the owner of ACE HomeBueyers and we specialize in residential real estate redevelopments and investment. A large portion of our work is done by reputable contractors.
We strive to partner with those who have a track record of quality workmanship, a reliable team of subcontractors, and a passion for quality work. Working with us as a contractor has many benefits, which we will discuss in more detail later, but for now I would like to ask you a few questions and get to know more about your business.”
Basic Information Collection
When you get to the part where you’re asking questions, try to make it conversational not like you are interrogating them.
- Company Name
- Contractor License number:
- What type of insurance do you have?
- What are your policy limits for coverage?
- When was the last time your insurance was updated?
- How long have you been in business?
- Any past claims?
- How many of your crew are in-house?
- Do you have any certifications or licenses for specific skill sets
Questions To Ask
- Have you ever worked with real estate investors that flip houses?
- What was the timeline and what kind of budget did the investor give you to work with?
- What was/were the scope of work(s)?
- What were ARVs of the houses?
- Can you give me three past addresses of completed flips from the past year?
- How do you usually go about bidding your work out?
- Are you comfortable giving written warranties for your work?
- Do you have a problem signing a lien waiver?
(When you’re new, you are going to have to rely on your contractor to help you come up with the rehab budget, check all of your math on your deals, and manage the project, so it’s very important that they know what they are talking about!)
“I’m super busy looking for new deals all the time, I really need a contractor that I can trust to keep the project on schedule and work independently.”
- How do you keep the project on budget and within the agreed upon timeline?
- What process do you have in place to make sure we are always up to date and on the same page?
(Communication is KEY. For your first couple of flips with a new contractor, you won’t be able to just let him/her run with the project. You want to find a contractor that communicates well, and has processes in place. If they don’t have this… things can get out of hand quickly!)
- How many projects do you currently have running?
- How many jobs can you handle at the same time?
- How many projects did you do in the past 12 months?
Additional Questions To Ask
Can you give me a couple of examples of times you’ve had change orders on a project and how you handled them?
How were they missed in the initial bid?
(Things get missed, things change, and new discoveries are unfortunately part of being an investor, but I always like to hear how the contractor would work with me as an investor to quickly come up with a solution).
- Are your subcontractors licensed and insured?
- Who is your plumber?
- Who is your electrician?
- Who would you use for roofing?
(The reason these questions are good to ask is because it shows if they have a solid team with a strong existing working relationship, and you can learn a lot about your contractor by asking these questions. Problems with their subcontractors will create problems for you and your project too).
Do you have any references of past investors and/or clients I can speak with and ask about their experience working with you?
(Never in my entire career have I had a contractor talk poorly about themselves, they are all going to tell you how great they are. Make sure you can speak with some credible people that have worked with them that will validate those things).
I’m looking for a contractor to build a long term relationship with so eventually I only need one or two reliable contractors for all of my projects as I continue to do more and more deals. Is that something that you value, and how would you take that into consideration for our first couple of projects?
This isn’t just about money and dangling carrots because that isn’t always a great way to start off a relationship, however, the benefit of having a long term relationship is just as beneficial to the contractor as it is for you as the investor, and they need to recognize that.
Remember, for them it means consistent steady work flow that supports their business as they grow with yours.
Make sure you find a contract that values that type of relationship and at the very least is willing to prioritize their attention to you because it takes both sides to build a successful working relationship.
Ultimately, it will take time to build that relationship, but you can tell a lot from early conversations.