If you want to make a return from a residential real estate investment, you’ll need to choose the right general contractor. A residential contractor will organize and execute the project. They will coordinate or provide all the labor, equipment, materials, and services required throughout construction. This means they have a significant impact on the success of the project.
To help you make the right choice, here are the essential things you need to look for in a residential general contractor:
1. Certifications
Before hiring a residential general contractor, it’s vital to ensure that they have the appropriate certifications and licenses. Many insurance policies are dependent on contractors having the appropriate documentation. It’s essential to ensure your project is fully compliant and appropriately insured. You’ll also want to check whether any complaints have been made about them to the Better Business Bureau.
2. Project Fit
Find a contractor who regularly works with real estate investors and not just homeowners. Both Build for Rent (BFR) and Single Family for Rent (SFR) housing options are popular builds for investment. Know what you’re planning and discuss it with your contractor to see if they have experience building in this type of construction.
By choosing a residential builder who has worked on similar projects in the past, you can ensure they know the steps involved and can give an accurate time and price estimate. When you work with a contractor who understands your priorities as an investor, you can be confident that they will understand your goals.
3. Past Projects
Look at the residential builder’s previous work before you consider hiring them. As well as asking about past projects, be sure to request client references and pictures or videos of finished projects. In-person tours of past projects can also be an excellent way to view the builder’s work and determine if they’re the right person to manage your build.
4. Pricing
When it comes to contractor’s pricing, it’s important to find balance. While you’ll want to ensure their pricing fits your budget, a quote that’s very low may indicate that they’re planning to cut corners or hike the price mid-build. By discussing the payment schedule and determining how much you will need to pay at each stage, you can ensure that payments are reasonably divided.
5. Schedule
Ask about specific start and end dates to make sure they align with your goals. Additionally, it’s worthwhile asking whether they’ll be working on other projects at the same time or devoting their full attention to your build. Availability is important, but also remember that a contractor who seems desperate for work may not be the right person for the job.
6. Bid Breakdown
When your contractor is providing you with a quote, don’t let them just give you an overall figure. Instead, ask them to break down their bid using blueprints and your established goals. With an exact figure for labor, materials, and equipment for each stage of the project, you can ensure their proposed pricing structure is realistic and transparent.
7. Communication
You’re going to be working with your contractor until the completion of the project, so good communication is vital. Are they responsive to your questions and concerns? Do they prioritize you as an investor? Can they answer your questions clearly? When you can communicate with your contractor easily and honestly, you’ll find it far easier to work with them throughout the process.
While residential real estate can be an excellent investment, the success of the project depends in part on the contractor you work with. By taking the time to do some research on your residential general contractor, you can have a smoother process throughout the project and a better end result.
