Building our Entourage of Experts – Part 7- Choosing a General Contractor
If you missed the previous article – Creating your Entourage of Experts – Part 6 – Choosing an Insurance Agent
As a full-time Canadian real estate investor, we may find ourselves involved in deals for the purpose of both portfolio building, as well as short-term holds for quick money. We should involve ourselves in as many “non-conventional” deals as possible, using zero of our own money, and having zero liability in any property.
However, we will do our share conventional deals as well where we may use our own money or better yet, our joint venture partner’s money. These projects will typically be short-term holds such as a renovation, so we therefore will ultimately be dealing with a general contractor.
How do we find a general contractor?
Just like we find any other team member….through a referral basis only. Unless they have been given great referrals, I would be hesitant about using them.
When we interview these general contractors, we want to ask them if they are investors themselves. Most of them will be, as a lot of them create side businesses for themselves, buying property to fix up and flip when they are not working for other people.
We need to ask them if they can often see potential problems ahead of time instead of dealing with a particular issue at hand. There are many cases where, for example, if one part of a wall comes down, there could be another series of issues that stem from that.
We need to make sure that your general contractor is both licensed and insured for their crew, and insured for any mistakes that may happen along the way.
We must be sure that our contractor can secure all permits in time in order to be able to do the job.
The contractor must be comfortable with breaking down the costs of the job into labour and materials separately. This way, you are able to understand the time involved, the cost per hour or per square foot and the material costs.
They must be able to provide a number of references of projects they have completed. Please call these references and ask how the job went. Was it on time, on budget and were you happy with the work done.
Go see them!
Once we are comfortable with the interview go see them. Sit with them and look though the pictures they provide as a before and after or better yet, ask if there is a job you can see that they are currently working on.
Working with a general contractor can be frustrating at times. Make sure that when a general contractor projects cost and time, that they are able to put this into a contract that strictly provides the provisions if the costs overrun, or if the time goes longer than has been set out in the contract. I personally like to put in incentives instead of penalties in the contract.Sometimes, however, penalties are necessary.
Please interview your general contractor thoroughly, and good luck building your team!
Canadian Wealth Builders offers many unique, practical, “out of the box” real estate investor trainings which offers the student hands on, in the trenches style instruction to facilitate both a different mindset as well as a successful and lucrative real estate investment business. To find out more, please go to www.canadianwealthbuilders.com
For the next article in the series – Building your Entourage of Experts – Part 8 – Choosing a Property Inspector
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