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10 Costly Mistakes to Avoid as a New Real Estate Investor A good contractor will answer the previous questions with something resembling the following: Experience: You want to look for at least three to five years of experience. Equipment: The contractor you hire should al<strong>read</strong>y have their own equipment (don’t depend on rentals). Employees: A good contractor will have enough crew members to support each job they have lined up. License: Only hire a licensed contractor. Insurance: Liability insurance and worker’s compensation are required for consideration. Use of Subcontractors: The use of subcontractors needs to be disclosed upfront. Financial Stability: Previous bankruptcies are a red flag. Referrals: They should willingly provide at least three referrals. Developing A Pitch While a contractor’s answers should align with your particular strategy and criteria, it is important to remember that they have a decision of their own to make. You need to equally portray yourself as a viable business partner. You need to address items that motivate the contractor and provide them with a reason to choose you over anyone else who may desire their services. Make it apparent that their cooperation will result in a mutually beneficial partnership. They need to know that value they are providing you will be reciprocated. Remember, they are in the business to make money. The sooner you realize this, the sooner you can move forward with this process. 44 10 Costly Mistakes to Avoid as a New Real Estate Investor
10 Costly Mistakes to Avoid as a New Real Estate Investor In order to get their attention, you will require an engaging pitch that generates interest in your property. Develop and practice a simple oneminute introductory pitch that covers the following points: Emphasize your position as a real estate investor. You are not a retail client. This informs them that you will not waste their time and that a potential partnership could prove lucrative for all parties involved. Inform them that you work with a network of investors that could serve as additional streams of income. Disclose your system and approach. Contractors will appreciate the benefits of working in your system. Remind contractors that money is not distributed until the work is complete. However, let them know that you love to pay for a job well done. Leave the contractor with an enrolling question. Let them know that working with you in the future will be mutually beneficial to each of you. The Bidding Process Assuming you have managed to compile several viable contractor options, you will need to choose one. Again, this process is as much of you choosing them as they are choosing you. To facilitate the process of hiring a contractor, make what is known as a bid packet. At the very least, this packet should include your scope of work, a quote itemization form and bidding instructions. Leave several copies of this packet at the project site and inform contractors where to get them. Once in the contractor’s hand, they will know how to get a hold of you and exactly what to do. As its name suggests, the bid packet will essentially instruct them how to go about making a bid for your project. 45 10 Costly Mistakes to Avoid as a New Real Estate Investor
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