4 Things I Wish I knew – Part 2

A few days ago, I mentioned that I wish I had thought more like a business owner when I started flipping houses. Instead, I tried to do too much of the work myself and ended up with a second job. I finally broke from this mentality and became an Investor. I learned to LEVERAGE other people’s time to achieve my goals. Of course, I made a few mistakes along the way. This brings me to the second thing I wish I knew when I started.

Contractors must be evaluated on more than PRICE

Flipping houses is not the same as selling trinkets at Walmart. You are creating a custom product and getting an everyday low-price is not the most important factor. Just because someone is the least expensive doesn’t mean they should be the person for the job. In fact, this is often not the case.
Before price is even considered, these 3 things must be completed…

1) Verification of insurance
2) Verification of licenses (if applicable)
3) Verification of references

Do not even let someone on your property for a quote if they are not insured. A legitimate business will be able to provide you with proof of Liability and Workman’s Comp insurance. The risk of doing business with someone who doesn’t carry these policies is way too high to even consider.

Many tasks (HVAC, Electric, Plumbing) require a licensed contractor do the work in order to get permits. Additionally, these contractors are familiar with local code requirements. My friend once allowed an unlicensed plumber to do work on his house. He saved $200. After the Code Enforcement agent made him remove the cabinets and drywall to redo the work, my friend was out an additional $2000. I learned from his mistake. You should as well.

Finally, you should check references, review comments on the BBB or Angie’s List and whatever else you can do to verify that the scope of work is within the contractor’s capabilities. Just because someone can install tile, doesn’t mean they can install hardwood. Similarly, there are different levels of finish between a low-end home and a high-end home. Not everyone is capable of adjusting from one to the other.

Only after these three things are considered should you start to compare pricing.

Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals.

Erik Hitzelberger – who has written 194 posts on Part Time REI.

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