Flipping Houses Like A Pro: Building A World Class Construction Team

Whether you like it or not, construction is a huge part of being a real estate investor and house flipper.

The most fundamental real estate concept (adding value) is almost intrinsically linked to building or construction.

 

If you want to learn more about the fundamentals of real estate investing check out this video series: https://youtu.be/IaBD7H4oRd0

 

This WILL make or break your business and hiring the right contractors and subcontractors is one of the most important first steps.

I’ve made pretty much every mistake possible over the past 4 years and been through well over 100 subcontractors in different trades. (yes, the turnover rate can be atrocious!)

 

Here are a few big picture principals to never forget:

1. Do NOT hire the cheapest option!

The cheapest contractor is the cheapest for a reason. Either they can’t show up on time, aren’t legally supposed to be in the country, have a drug or alcohol dependency, or just not skilled in whatever trade they are marketing themselves in. Hiring the cheapest option WILL result in you becoming a babysitter.

At this point in my business, I’m much more interested in finding contractors that can perform their tasks with excellence and with minimal oversight. I’m willing to pay for this freedom.

Another thing to remember is even IF the work gets done but wasn’t done well and hidden problems remain you’re going to have to hire someone else to go back and fix the issues.

This adds expense and time and the cheapest option gets really pricey really fast!

 

2. Require Documentation from Your Contractors

A huge mistake I made early on is not requiring my subcontractors to supply me documentation. This includes contracts for the work being done, tax and insurance documentation, lien waivers and releases, and invoices and warranties.

Just like not hiring the cheapest option, this is a tell tale sign of the quality of person you are working with. If they aren’t ready willing and able to give you these items you’re heading for trouble!

 

3. Keep Your Contractors To Their Original Scope of Work

Another sin of hiring contractors that I committed in the past was finding a good contractor who did their one thing well and trying to give them more tasks to complete. Every time I’ve pulled a sub from one trade to the next it’s led to problems. They will always tell you they can handle more work (and are an expert in every trade) but this is simply not true. Don’t ask your framer to become a roofer, and your carpenter to lay tile.

 

4. Don’t Do Desperate Hiring

It’s crunch time and you’re ready to start working on that brand new rehab, but haven’t found a good demo crew yet. There’s the guy down the road who seems kind of ok… maybe just hire him and hope for the best??

NO!

Don’t do it. You’re asking for trouble and problems. It’s much less expensive to pay a little extra holding costs and insurance than to hire the wrong subs. Be patient, and keep shopping until you find someone you feel good about hiring (and checks the boxes that we discussed earlier in this article)

 

5. Have A Plan To Deal With Turnover

Turnover will happen in your business. Until you’re very established it will likely happen a lot. I have a few contractors that have been with me from the beginning but not many. As you begin having a stable team keep shopping for back ups and back ups for your back ups. You want to be able to quickly plug someone else in if one your contractors goes MIA for a week.

 

6. Ask For Referrals

Another thing to always do is ask the contractors who are working for you (and that you like) for referrals. Residential construction is a very close knit group. They will know each other and if you’ve been treating your subs well they should be more than happy to introduce you to their friends.

 

Not sure how to estimate a rehab project? Walk with me through one of the worst homes I EVER looked at: https://youtu.be/1oOy7Wem6-8

 

Want to know how much you really make flipping homes?? Click here: https://youtu.be/Qi_rc3XVKf0

 

These are a few important items to never forget when building out your construction team. It is difficult and time consuming at times but it does get better.

 

Realize as well that if you set up systems and “best practice” standards on the front side you’ll save yourself from working with a lot of people who aren’t interested in helping you or your company succeed.

 

Good luck and happy investing!