5 Tips to Find a Qualified Contractor for Your Investment Property
As a real estate investor, you know that freshly renovated properties attract highly qualified renters, and those properties can be rented out at a higher price point - meaning more profits in your pocket. The only issue? Contractors are in increasingly high demand, driving up costs and competition. In addition, not all are qualified to rehab an entire home on an investor’s budget, timeline, or expectations. Identifying investor-friendly contractors can be a challenge, especially in a fast-paced industry like this one. You need partners who can understand the nature of the work and meet your goals. Keep reading to discover five tips that will help you narrow down your options and find the right contractor for the job.
1. Start Local
One of the best ways to find qualified contractors is to consult with friends, family members, or colleagues who live near your investment property. It might be cities or even states away from your personal residence, and it can be challenging to make this type of hiring decision on your own -- especially from a distance. If possible, reach out to someone you know and trust and ask them who they would use on their own home. If you know other real estate investors who have purchased property in the region, they can be valuable resources, too. Most locales tend to have a handful of well-reviewed, in-demand contractors who primarily specialize in investment units, and they rely on referrals like these to stay in business.
2. Read Reviews
Studies show that 84% of people trust online reviews as much as personal recommendations, and for good reason. Customers love to talk about their experience with a product or service provider, whether the encounter was pleasant or not. Real estate investors can use this transparency to their advantage. Research potential contractors online, and take the time to learn what others are saying about their work. While each project is unique and opinions are subjective, pay attention to any themes you notice. Are clients raving about the contractor’s prompt service or professional results? Or, have many of them complained about common issues, such as a lack of communication? Many contractors will list their reviews and testimonials directly on their websites, but you can often find even more by searching for their name online and clicking any business directories you find, as well as their Google Profile.
3. Explain Your Requirements
Do you need to renovate the investment property so you can get it on the rental market while demand is hot? Is there a time-sensitive repair issue, such as a roof leak, that you must fix before you can start advertising availability? Once you’ve narrowed your list to a few reputable contractors, explain these requirements and timelines to them. If they’re used to new home building or residential remodels and haven’t worked extensively in the investment space, they might prefer a slower pace with longer turnaround times. The best fit is someone who can get the work done by your deadline without cutting corners or sacrificing quality.
4. Understand Your Budget
As a savvy real estate expert, one of the top metrics you’re always thinking about is return on investment (ROI). You want to make sure that the money you earn from your rental property will be significantly more than any amount that you sink into it. This is especially important if you plan to use the profits as passive income. Once you own the unit, it’s smart to perform ROI calculations on a rolling basis to estimate your profit margin. You don’t want the cost of the renovations to set you back significantly, especially if the changes and updates are more aesthetic in nature and don’t add actual value to the property. Compare the contractor quotes you receive to determine which ones are the most favorable, but think twice about accepting proposals that seem suspiciously low. Remember that anyone you hire to oversee work on the property should hold a valid and up-to-date contractor’s license and carry appropriate insurance coverage for their entire team. If their numbers are major outliers, this could be a red flag. One way to cut costs is to talk to the contractor about your future growth potential. If you plan to acquire multiple investment properties in the same area (or already do), they may be willing to give you a more competitive price in exchange for guaranteed work.
5. Ask to See Before and Afters
Chances are, you already had a vision in your mind of how you expect your finished property to look as soon as you bought it. If you’re a seasoned real estate investor, you may even use the same basic “formula” to renovate all of your rental properties. For instance, you might have discovered a particular type of flooring, cabinets, or fixtures you prefer. You need a contractor who can listen to your ideas and turn them into a reality. To understand the scope of work they can provide, ask to see a few recent before-and-after pictures of projects they’ve recently completed. This can give you a glimpse into what you can expect in terms of quality, expertise, and design style. It’s also a great time to gently point out any features you’d like to replicate in your own project, as well as any you want to avoid.
Fix Up Your Investment Property in Confidence
Whether you’re looking for a move-in-ready home you can start renting right away or a fixer-upper that needs a little elbow grease, it helps to have a list of qualified and reliable contractors you can trust. These five steps can help you identify contractors who are used to working with real estate investors. When you have the right partner in place, you can start turning your latest purchase into the rental property of your dreams. Before you can make this exciting move, however, you’ll need to pay for the property first -- and that’s where we come in.
Our industry-leading long-term rental loans can help you secure the financing you need for the property, whether you’re buying your first rental home or expanding your existing portfolio. To learn more about this program and the other types of lending services we offer, feel free to contact us today!