Finding Good Contractors and Vendors

I had mentioned in one of my earlier posts that I will get into the details of finding and keeping good contractors and vendors. This post is about that.

If you follow my articles you must realize that I place great emphasis on getting a good mentor. The page on getting a mentor talks about how to find one. Though this person is neither a contractor nor a vendor, you must choose them as carefully if not more carefully than you will choose any one else. This is someone you are going to trust, so take your time in choosing the right one.

When we talk about a contractor here, we are not just talking about a “General Contractor” who manages a rehab, we are talking about any person who is providing a service to you in running your business. It could be the crew that does the painting or your business banker.

When you have a mentor and you know other investors, a large part of finding good contractors can be made simple. Just get references from them and see who fits your business model the best. Regardless, you should know how to find them on your own as well.

When you start and operate a business, you should get more talkative and more attentive. If you never said a word to your neighbors now might be a good time to shake hands and starting talking. If you are shy at your place of work, at least act as though you are not. Slowly you’ll loose the act. Be respectful always. Be eager to help. Be sincere. Ask if you don’t know and challenge (respectfully) if you hear something wrong. The more you talk to people, the more you realize someone is always doing something; painting their house, putting in a new patio, opening a high interest savings account, getting a great rate on their refinance, installing a new roof from the insurance company – something. I guarantee you, within a week you’ll have a bunch of names of business owners.

If your mentor does not have a real estate license you will have to find a real estate agent to do your deals. Your agent can help you not only with the purchase of your rental home but marketing the rent ready product and expanding your network of people as well. Call or visit real estate offices near you and specifically ask for agents who work with investors. Call those agents and ask them if they invest in single family rental homes themselves. I believe that it is important to have first hand knowledge of this business to be able to give you proper, pertinent advice. It is a dynamic business and unless one owns and operates single family rentals themselves, their input will be based on second hand and possibly outdated information. If you are a new investor you need the best. To me, it is not enough to work with agents who say they work with investors. It’s necessary to work with one who owns and operates rental homes.

Ask your agent to give you their vendor list. Most realty companies will be able to produce one. In your case make sure that’s the list they have for their investor clients. I can’t stress this enough, there are vendors who work with home owners and then there are vendors who work with investors. One depends on high margins and the other on high volume. You will have a sticker shock if you work with vendors who typically don’t work with investors.

Finding vendors online: This is not my favorite route to finding vendors. Vendors who publish online and make themselves easy to find seem to want to work with retail clients, not investors. Even if you have a paid subscription to a list service that publishes ratings for contractors, their pricing is often not conducive to investing. Calling retail plumbing, electrical, HVAC or other contractors and telling them you are an investor and expect their pricing to be competitive does not work. You can’t change their business model.

Call other residential service establishments – like apartment complexes and hotels. Ask them for their vendors. It might be best to walk into an apartment complex and talk to the manager and front desk person for this information. They may have a sheet of contacts that they can easily hand you. Stop by a local builder’s model home. Some of the contractors who work for builders have the best prices.

No matter how you find your contractors, until you develop good relationships with your vendors, you should get at least 3 bids for each job. Tell them how detailed you want your bids to be. Some vendors will need a small fee to give you a very detailed bid. In that case, ask to see other detailed bids they have prepared to make sure you are going to be happy with the details. Give them a specific time frame within which you need the bids back. You are probably on your option period clock when you are doing this, so you can’t be too liberal with time. Tell them you are on a clock.

Go to Home Depot and Lowes and price the materials and labor yourself. You are probably going to find that these labor prices are geared towards home owners and not investors. That’s okay. You are just trying to get a frame of reference. Compare the labor costs of the bids you get back with those you collect from big box stores. Make sure that there’s a good enough discount on the prices you are getting from your investor-friendly vendors. On some tasks, I would expect a 50% or better discount, but that does not apply to everything. Ask your mentor what you should expect. You can even ask your mentor to help you negotiate or teach you how to amicably arrive at price and terms.

For small work, do not pay till all work is complete. For large projects work out a clear payment milestone. First payment is made only at the completion of the first milestone. Established contractors will have lines of credit with suppliers, so there’s no need to pay for materials up front.

In addition to bids you want to see prior work, so get references. Do your own search to make sure the company the contractor is operating is legitimate. If you got your contractor through references and you check out the references your contractor gives you, you have gone a long way in weeding out fraud and bad contractors. Also, listen to your gut. If you feel someone is slimy or manipulative, don’t work with them. These days I expect most contractors to have a mobile phone with email access. So it’s harder to excuse not-returned phone calls or delayed email responses.

Once you have made a decision, put everything in writing and get it signed. I should probably write a post on what a contractor document should contain.

How to Keep Good Contractors

Always keep your end of the bargain. First, clearly communicate. Follow all phone calls by email, so that nothing is missed or misunderstood. Many relationships go sour due to poor communication over minor issues. When you find good contractors, you want to keep them for the long term. Always, pay as soon as work is completed and invoice is received. Be nice to the crew at the job site. Trust that they know their job more than you do. Don’t try to steal them from your contractor.

With every new project, negotiate if the price is too high. Recommend your contractor to other people who may need them. Don’t try to hide good contacts. Thank your contractor for work done. Provide timely feedback on work and employees. Mistakes will happen. Don’t over react. Work out solutions and be reasonable if there’s actual damage.

The more jobs your contractor does for you, make an attempt to know more about them. Have casual conversations on site, about family and about other jobs. You can often find other good vendors for other needs from the ones you have already chosen. Ask your painter for an electrician, or a plumber or a tile layer. Send your contractor cards and/or small gifts during the holiday season.


About Bernie

Bernie is a distinguished technologist (Motorola heritage). He along with his wife invest in residential real estate in north and central Texas. Bernie loves to teach, both technology and real estate investing and so authors posts on this blog. You can reach Bernie at
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5 Responses to Finding Good Contractors and Vendors

  1. Pingback: Rehabbing a Single Family Home to Rent | BERCAT Real Estate

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  3. This is a great article that gives investors an idea of what to expect from vendors that work with investors. We work with a number of group investors and individuals that have a portfolio of properties in the DFW Metroplex. Our foundation repair services are gimmick free, effective, and guaranteed for life. Best of all, we provide a free estimate to investors.

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  5. Pingback: A Closer Look At the Option Period | Real Estate Investor Guide (Dallas, Fort Worth, Denton)

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