What is a General Contractor?
A solid general contractor will oversee the project from start to finish. They will accompany you on the initial walk-through of the property and help you formulate an estimate of repair costs. They will also be able to help you to identify optional improvements that will create the greatest value in the eyes of buyers.
We recommend that you use a general contractor for your first few house flips unless you have extensive construction experience. When hiring a contractor, you are looking for someone with a variety of skills.
A good general contractor should do the following:
- Understand and have experience in all areas of construction
- Create an accurate estimate of repair costs
- Motivate their teams
- Organize workflow
- Deliver on-time results
- Maintain the project on budget
- Are familiar with the local market
- Bring in other qualified experts
- Build your network
Additionally, general contractors are responsible for maintaining workflow efficiency. For this, they need to have the relevant contractors scheduled at the right time. For example, the walls can’t be painted until the electrical installation is complete. A general contractor will take care of this scheduling and workflow, so you don’t have to worry about it.
What Should General Contractors Do During a House Flip?
A reliable general contractor will participate in several parts of the house flipping process. Some tasks include:
- Managing the entire renovation project
- Consulting with you regularly on your improvement plans
- Collaborating with architects, engineers, and designers
- Creating a comprehensive overview of the scope of work and materials required
- Creating a budget and timeline for completion
- Getting all permits and schedule inspections
- Scheduling, ordering, and making payments for materials
- Managing risk and solving problems as they arise
- Adhering to the budget, schedule, and quality initially quoted
Six Steps to Hiring House Flipping Contractors
If you are unsure how to begin this process, we are here to help. Follow these six steps to ensure that you hire a great contractor and are prepared for your upcoming projects.
Step 1: Find General Contractors
Finding general contractors is surprisingly easy. You probably already know someone who can give you a good recommendation. With just a little time and follow-up, you will have someone who is professional and reliable.
The best place to find general contractors is through the recommendations of other real estate investors. If you have joined a real estate investment club, or know other local house flippers, they will be able to tell you who to use.
A recommendation of a good general contractor is like gold in house flipping. It is worthwhile to get several recommendations, as the best contractors may not have time for your project right away.
If you have one good contractor, they can recommend others. For example, if you’ve been using the same plumber for years, you can ask who they recommend. If there was a contractor that fixed your roof last year and did a great job — ask him or her.
Contractors know the business and know the reputation of other contractors. Ask for their help in building your team.
You can also search through Yelp or other online resources and read reviews. Keep in mind that those reviews may be biased either for good or bad. Most satisfied customers don’t leave reviews. People tend to leave reviews when they are either very upset or are exceptionally happy. That is why a personal recommendation is better. But if you don’t have any recommendations, online reviews can be a good place to start.
If you don't have other options, hardware stores are a good place to meet contractors. Get there early so you will see who has a good work ethic. Look for people buying lots of house flipping supplies or materials, and ask around.
Speak with the people working there and ask for their advice and recommendations. Oftentimes, the people working in hardware stores will know the local contractors and can point you in the right direction.
Step 2: Ask for References
Whoever you choose, it is a good idea to ask for references. You’ll want to call a couple of the references and ask them about their experience. A good contractor will have references that are happy to talk about the projects and jobs they did.
When you contact references, be sure to ask about payment amounts and completion of the job on time. If you are not able to get references or have doubts about the references, do a background check.
Step 3: Get Bids
There is a saying in house flipping that you should always get three bids. Be sure the bids are for the same project. Don’t compare a general contractor’s bid to a roofer’s bid.
As for the bids, you don’t automatically choose the cheapest bid. Look at the time to complete the project, the quality of the work, references of the contractors, and also your relationship with the contractor. Do you feel comfortable working with them?
Reminder: A very low bid is usually a red flag. You get what you pay for. If two contractors bid about $1,000 for a paint job and the third bids $300, beware of the low bid.
Step 4: Check Licenses and Insurance
Before you accept any bid, make sure the contractor is licensed and insured. This will include state licensure and workman’s compensation insurance. This step protects you and your house flipping business by ensuring you are working with professional contractors.
You should not compromise on the license. If a contractor has any blemish on their record, find another contractor.
Step 5: Interview Your Top Choice(s)
You should meet with each contractor you plan to hire and evaluate their overall professionalism. Were they on time? Do they have experience doing what you want? Were they able to clearly explain the steps to you and demonstrate skill?
During the interview, you can also go over the project timing, budget, and payments. You want to have a clear understanding of who will purchase materials, when payment is expected, and the timeframe of the project. A contractor who has worked on other house flips will understand the importance of timing in the overall project.
Be sure to discuss the following factors:
- Purchase of materials
- Project timing
- Overall budget
- When payment is due
- Specific details or questions you have about the house flipping project
Step 6: Sign the Contract
While your best insurance for a successful house flip is a good contractor with good recommendations, a contract is your back-up plan. You can include a penalty if the work is not done by a certain date and also a bonus for work completed on time to the desired standard.
You can ask a lawyer to draft a simple contract or ask other house flippers for a template you can use before consulting an attorney. It is worthwhile to have an attorney check the contract before signing. They will also be able to note any inconsistencies in the contractor’s license.
Sometimes contractors will have standard agreements for you to sign. This is the time in which you can amend and change the contract to fit your project, including bonuses, purchases, and payments. Again, have an attorney review the contract before signing.
The contract should include:
- Names and addresses of both parties
- Project location, including address
- The scope of the work
- Who will provide tools
- Who will provide materials
- Insurance and liability
- Late penalties
- Successful completion bonuses
- Payment terms
For the scope of the work, you can include an appendix that lists all the work in detail. Be as specific as possible. If you don’t know the full scope of the work, you can work together with the contractor to lay out this information.
With a good contractor, the contract won’t be necessary, but it is worthwhile for everyone to have a clear understanding of expectations from the beginning.
Even though the general contractor will be organizing the workflow and hiring any required subcontractors, it is good to have a general idea of the project workflow to follow up on the house flipping progress.
It is useful to know all the steps and double-check that you haven’t missed anything important in your house flip. If in doubt, ask your general contractor about any steps in the house flipping process.
There are six general stages of work that may be needed for your house flip:
Stage 1: Preparation and Security
The first stage is dedicated to getting your house flip ready. This includes:
- Finalize construction plans
- Obtain any permits or make filing with local authorities
- Secure the house by checking that all windows and doors lock
- Perform any house leveling or foundation repair
- Check for and control pests
- Get licensed professional to do plumbing and electrical pre-demo
- Perform site prep and any demolition work
- Get an engineering consultant to make structural plans
Stage 2: Construction Begins
This is the phase when the rough structure will be put into place. This includes:
- Soil grading and drainage
- Rough plumbing under house and foundation
- Framing and subfloor (under the floor)
- Repair or replace roof
- Repair or replace exterior doors
- Repair or replace house wrap and siding
- Repair or replace exterior trim
Stage 3: Repair Major House Systems
In this phase, you will ensure that all the major systems of the house are working well and don’t need to be replaced. This includes:
- HVAC (heating and air conditioning)
- Bathtubs and showers
- Exterior masonry
- Concrete work
Stage 4: Prepare for Finishes
This will include any unfinished surfaces, including:
- Unfinished wood throughout the house
- Interior doors
Stage 5: Finish Surfaces
This phase is the most dramatic transformation where you will give the house a new appearance. This includes:
- Interior and exterior paint
- Blown insulation in the attic
- Finalize HVAC, electrical, and plumbing
Stage 6: Final Touches
You are now ready for the final cosmetic touches to make the house ready for sale. This includes:
- Doorknobs and locks
- Mirrors and shower doors
- Accessories and decor
- Repair anything that wasn’t done correctly at an earlier stage
Once these steps are finished, the house needs a final deep cleaning. It is worth the extra cost to get professional deep cleaners to make the house sparkle. After all your hard work and renovation, the final clean makes an exceptional impression. You want the buyer to walk into the house and wish they could live there.
A general contractor is worth the time and money saved — and the peace of mind gained.
A general contractor will manage all aspects of your renovation project. They will ensure a smooth workflow and on-time delivery. A good general contractor will make the difference between a profitable house flip and a loss.
It is your responsibility to convey your objectives, vision, and expectations clearly to the general contractor. By working together with a clear plan and vision, your house flipping goals can be achieved.
When you reward a contractor for helping you to realize your goals, they become motivated partners for future projects. You provide them with reliable, responsible business, and they will help you to expand your house flipping opportunities.