Contractors - When You'll Need Them and How to Work With Them

Contractors, sometimes referred to as Handymen or Rehabbers, will need to be a part of your team for several different reasons.

First, once you buy a property, or if you've had a long-term tenant who is moving out, in order to get the property ready to rent, there will almost always be work that needs to be done.

If you're just taking possession of the property, how much work depends on the initial condition of the property. Sometimes you negotiated credit backs at the close of escrow to pay for these repairs or upgrades. If you've decided the house you've just purchased will be a rental, then at a minimum new tenants will expect the following:

• Clean or new carpet

• Fresh paint

• Working furnace and air conditioning depending on the area

• Leak free roof

• Mold free house

• All doors, windows and locks in working condition

• Functioning bathrooms

• Light fixtures operational

Other items are negotiable, such as which appliances are present. Obviously, the more work a property needs the lower the price you should have paid for it; conversely, the more work you put into a property, the better rents and higher quality of tenant you'll receive.

If you're getting a property ready for one tenant after another tenant moves out, depending on how good the tenant was you may have less or more work to do (hopefully your security deposit covers a good portion of it, if not all).

Bottom line, unless you want to be spending your evenings or weekends at a property fixing it up yourself, it pays to have a good contractor on your team.

If your purchase strategy was to buy, fix it up, and then flip it for a profit, getting it ready to put back on the market is a skill that if you can master, will make you a lot of money.

Every day spent rehabbing a property before you can relist it is money flowing out of your pocket. You will have carrying costs and no one living in the house paying you rent, so the quicker you can fix it up and put it back on the market, the sooner you can put your investment, plus a profit if all goes well, back into your pocket.

Dealing with an experienced rehabber is a must here. You'll need people who understand the importance of a timeline and can stick to one, as well as a budget, without giving you excuses for why this went wrong or that cost more.

If you ever work with someone who can't seem to do either, then don't hesitate to find one who can - it's not worth it to see your profit disappear because the person you hired to do the work doesn't show up, can't manage his employees or sub-contractors, or wasn't thorough enough in his initial walk-through to point out everything that needed to be done, so now there are extra expenses.

Lastly, you may need a contractor, or more likely a handyman, just to help you or your property manager with the month to month deferred maintenance or routine items that need repairing while a property has a tenant in it.

In fact, my property manager handles all of these tedious requests. I rarely know there are issues. Up to a certain dollar amount, my property manager has permission to hire whoever necessary to take care of these items.

All of the resources I've mentioned usually are a result of a referral from one of my team members. It's just too risky to hire someone off the streets or out of the yellow pages. If you must do that however, make sure they have a valid contractor's license if they're marketing themselves that way, current insurance, that they are bonded, and I always check with the Better Business Bureau to make sure there are no complaints.

One last final tip, if you are ever having any kind of major rehab work done on your property, then you should always take out a Builder's Risk Policy just to make sure if a worker gets injured on your property, that your insurance will cover the losses if the contractor's won't.