One of the fastest ways to boost your real estate profits is to cut the costs required to get properties ready for sale. If you’re not careful with how you hire contractors to fix up homes, you’re likely spending a lot of money you shouldn’t be. Recent podcast guest William Bronchick, author of The Business of Flipping Homes, shared tips on working with contractors the smart, safe way, which we cover briefly in this article. For more information on working with contractors and even more strategies for boosting real estate profits, listen to the podcast below.
Protect Real Estate Profits by Getting Multiple Bids
Getting multiple bids is, without a doubt, one of the best ways to avoid getting burned by contractors. If you only get a single bid on a project, you could be paying a hugely inflated price without ever knowing. At a minimum, try to get at least 3 bids on any important real estate project. If you have an especially expensive or complicated job that needs to be done prior to selling a home, getting more than 3 bids might be a good idea.
Obviously, you shouldn’t always opt for the cheapest bid. However, price isn’t always indicative of quality when it comes to contracting, so opting for the most expensive contractor doesn’t guarantee you’ll be happy with the results. In most cases, going with a contractor who has good reviews and offers comparatively reasonable rates is a good strategy.
Avoid Surprises That Cut into Real Estate Profits
When it comes to working with investors to improve or prepare homes for resale, there are plenty of potential surprises. For instance, your contractor could be replacing damaged drywall only to discover a termite infestation. Not only will a surprise like this complicate the job, it can make it much more expensive to complete.
While you can’t always prevent these types of surprises from popping up, you can prevent them from costing you more money than they should. Always work out the details, in writing, prior to hiring a contractor. Negotiate how surprise situations will be handled in a manner that’s agreeable to both you and the contractor.
Don’t Pay in Full Until the Job’s Done in Full
Another common mistake agents and homeowners make when working with contractors is paying in full before the job is complete. There are plenty of good contractors out there who will ensure their clients are satisfied even after getting paid, but there are also plenty who won’t.
Protect yourself and prevent having to finish a job on your own by holding back a percentage of the payment. The percentage should be large enough to ensure the contractor doesn’t simply move on to the next job but not so large that most contractors won’t accept the terms of your deal. While this percentage does vary by job scale, somewhere near 20% is usually a good place to start.
While vetting contractors can be a time-consuming process, it’s worth doing if you want to increase your real estate profits. Besides, once you do find a contractor who you trust to take on most projects, you can simply rehire them as needed.
If you want to learn more about flipping homes for huge real estate profits, including additional tips on working with contractors, be sure to listen to the complete podcast interview with William Bronchick.
Pat Hiban is the author of NYT best selling book “6 steps to 7 figures – A Real Estate Professional’s Guide to Building Wealth and Creating Your Destiny”, founder of Rebus University and the host of Pat Hiban Interviews Real Estate Rockstars an Agent to Agent Real Estate Radio Podcast with Hiban Digital in Baltimore, Maryland. Follow him on Facebook or Twitter.
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