Why is it so hard to find a good home renovation contractor? To be blunt, it’s because most contractors are terrible and unreliable! As a landlord and central Texas home investor, we deal with them frequently – they don’t answer their phone, they don’t show up when they say they’re going to, they don’t do what they said, they submit costly change orders. The good news? Gems in the rough are there to be found but most homeowners have no idea how to find a great house contractor within the sea of bad ones until long after hiring them.
In this article we share our tried-and-true 8 step process to identify and pick a great contractor before you hire them. Whether you’re remodeling your own home, a rental home, or if you’re a house flipper, follow these 8 pro tips to land a top-notch home renovator.
What’s in it for you
The common signs of a bad contractor for home renovations
Tips for spotting a good remodeling contractor
Simple step-by-step guide to hire the best reno company
The business of home remodeling contractors is notorious for botched jobs, shotty work, and never-ending end dates. If you’re thinking about hiring a contractor and want to avoid getting into a jam, watch out for these common 6 home renovation contractor red flag.
We begin with a short, real-life story that happened to our homebuyers. In 2020 we bought a home in San Antonio, TX for $15,000. We then sold it for $143,000 but we lost $8,500. Why? We hired the reno contractor who sent the lowest bid. In hindsight, this corrupt contractor’s low estimate was cause for concern as it was 5-figures less than any other. Had we known then what we know now, it would have conveyed a strong message – the contractor is a scam artist (he actually was) or he didn’t have the experience to properly estimate the job. The moral of the story: if it sounds too good to be true, it probably is!
Alternatively, insanely high rehab estimates could mean that they’re mostly subbing out the job (and therefore are an unnecessary middleman), that they’re using your money to pay for another job (i.e., a Ponzi scheme), or that they’re ordering more materials than needed which leads us to the next warning signal of a bad contractor.
There are multiple schools of thought on who should buy materials. Our investors, however, are firm in us always buying the supplies. Why? The person who makes the purchase is the legal owner of the purchased items. More important, contractors who demand that they buy materials build material costs into your estimate and therefore you’re paying for something that you don’t own or have legal right to. What if the contractor walks off the job? You’re out the materials and the money that paid for them. Other reasons to avoid remodeling companies who buy supplies include overbuying materials to increase a contractor’s profit on a different project and to avoid the risk of contractors marking up material costs (note: if your contractor is buying supplies there should be a reasonable markup, about 10% of the supply cost, to offset their time and travel/delivery expenses).
Before even starting a job, dishonest home remodel contractors will request an unusually large first draw payment which can be considered anything more than 25%. Do not pay it! Frontloaded draw schedules are a red flag for a contractor who doesn’t have enough cash flow/reserves to manage your project (i.e., there in financial trouble and their problem could easily morph into your problem) or that they’re using your deposit to fund a different job. Another reason to watch out for home contractors who ask upfront for a large down payment include keeping the contractor hungry for their next payment. Frontloaded draw schedules tend to grind to a standstill due to contractors already having received the majority of payments.
Individuals who effectively run a home renovation scam largely depends on their ability to remain anonymous. This means that home remodeling scammers typically won't have a website or social media accounts. If they do have a website, it's poorly written, outdated, or has irrelevant content. For social media, good indicators of low-rated home contractors is inconsistent or no branding, very few posts, and little to no interaction with people who have posted to or commented on their account.
Well written contracts are mutually beneficial – they protect both you and the contractor should things go bad. The question then becomes: why would a home improvement company not have and even require that a contract be signed?
No accountability. Should shotty work be performed or if they don’t do what they said, nothing exists to prove what was supposed to be done.
Unfinished work and no record of the work having been agreed to and (hopefully not) paid for.
Taking payment and never performing the work but no contract to prove that the work was to be done.
The bottom line: never hire a home renovation contractor who will not sign an agreement.
You might hear, “if you sign today, you get the special low rate!” Don’t fall for it! You deserve time to review the documents that you put your name on. Contractors who pressure you to sign signals that they don’t want you to know what’s in the contract or that they don’t want you to perform due diligence on them or to have time to obtain estimates from others.
Having worked with dozens of home improvement contractors and after years of experience that has included many rehab “wins” and a few “hard knocks”, we’ve developed a proven system for finding and picking home remodeling contractors that meet expectations. We’re pleased to provide this process for free and we hope it helps you avoid hardship and heartache when dealing with your project. Follow these simple 8 steps to hire the best home renovation contractor in your area.
Think about it, if you’re searching for a needle in a haystack, you first must have a haystack. Therefore, the first step to hiring a top-notch contractor is building a list of prospective companies with their names and phone numbers. How do you find these prospects? Several ways but our 3 favorite include: (a) referrals, (b) referrals, and (c) referrals! Human nature is to do what we’ve always done but that doesn’t guarantee a successful outcome. However, if you know a contractor has shown professionalism, superior workmanship, and has been fair in the past, it’s a quality indicator for the future. As such, be in the habit of building your home contractor list by asking family and friends for referrals. Then, keep track of each referral, perhaps through a spreadsheet, and you’ll end up with your haystack.
What are other ways to find and build a home rehabber list? It’s quite beneficial to get out in the field to talk to contractors who are actively working a job. What should you ask? Who they like working with! Contractors, even the bad ones, enjoy working with quality tradesman so their answer most often leads you to reputable and quality home improvement contracting businesses.
Like any first interaction, our opinion of someone starts to form the second we begin speaking with them. So, prescreen contractors on the phone and ask questions to help uncover the things you want to know about them before hiring them. Questions to ask might include:
How long have you been a remodeling contractor?
What skill do you think you’re best at?
What tasks do you really dislike doing?
What cities do you prefer working in?
How many employees work for you (or in your company)?
In what case would we need to pull a city building permit?
If I were to hire you, when could you start on my project?
If they pass your phone screen (we recommend that you literally “listen” to your gut feeling), schedule a time for an in-person follow-up screen at your project site. Do they arrive on time, early, or are they late? Do they look professional? How do they interact with you? If after this everything looks ok, continue on to step 3.
There’s an excess of information in today’s world. But in your pursuit to find a good home remodeling contractor, too much is exactly what you need, and Google is the perfect platform. Conduct a search for their name or company name. What pops up? What can you glean from the page 1 results? Next, add to the end of your search words like “scam”, “rip off”, and “fraud”. Are there any red flags or warning signs that your prospective contractor has been in trouble or dishonest? At minimum, search terms like these will help you uncover major issues and more notably, will provide you with direction on the steps to take next.
References are outdated and easily manipulated. We know. But still ask for them! Assuming they provide you with the names and phone numbers of past clients, then do what 95% of people won’t, call the references and ask questions like: what work did they do for you? How fast did they do it? Were they professional and courteous? Did you experience any problems with them? Would you hire them again? Most important, did they get the job done on time and on budget?
Since references can be frivolous, an alternative pro tip for finding a good home remodel contractor is to instead ask for the addresses of their current jobs. Then, go look. Is the site orderly and clean? Are people on-site and actively working? Is a city permit posted? Answers to these questions will help you understand more about a contractor’s abilities, history, and ethics.
It’s good to be trusting but it’s in your best interest to verify a contractor has earned that trust and to ensure that they can lawfully do what they claim they can do for you. Therefore, ask for copies of any licenses they may hold and search the license number on city and state board websites. Also, check insurance to verify that they are adequately covered ($1,000,000 policy is common) and properly bonded. We recommend not asking for a copy of their policy but instead asking for the name and phone number of their insurance agent. It’s easy and fast enough to verify that they’re insured and thus you protected by going “straight to the horse’s mouth”.
Of the 8 pointers for selecting a highly rated home contractor, if we had to pick, we’d pick tip 6 as the most important, which is, remodeling home experts fall into the following 3 categories: (a) low price, (b) speedy completion, (c) quality of work. Of these 3, what is most important to you? Is it a remodeling contractor who offers the lowest price? Is it a home renovator who gets the job done on-schedule? Is it a contractor who performs quality craftsmanship? You must decide what contractor qualities are important to you. The good news is that you can find contractors who fit into 2 of the categories, so pick your top 2. The bad news is that through experience we’ve found that it’s basically impossible to find a contractor who fits into all 3. Again, pick 2, and consider yourself lucky if you find a home renovation company that falls into 2 of the categories.
How to hire good rehab contractor checklists don’t typically include testing them out by hiring them first for a minor job. Since we had never heard about, read about, or seen a contractor checklist, we obviously never used one during our first few years. And we got burned! To avoid this happening to you, we recommend hiring rehab companies first for 1 small task before you hire them for a much larger, much more expensive renovation. This will allow you to get a good idea of their work ethic and quality of work. It’s a small bet “today” that has the potential to payout big “tomorrow” because most contractors who pass the first 6 steps to picking a good contractor will fail at the “test run”. The bottom line: hire multiple contractors for various small jobs to weed out the bad from the good.
To be candid, in our experience the blame for most disastrous home remodeling situations falls on us, not the contractor. For example, we asked a contractor to paint a bedroom and he quoted us $200. We thought, “great”, we then hired him and 2 days later he called to say the job is done. We thought, “great”, so we paid him. Days later we finally got around to inspecting the work. What did we see? Not much! The ceiling wasn’t touched despite an obvious need, the baseboards were the bedroom’s original color (which didn’t match the new color), and there were dozens of paint splotches on the floor. We then called the contractor to ask why he didn’t paint the ceiling and baseboards and remove the paint splotches. The contractor’s response? “Well, you didn’t say I needed to paint the ceiling or baseboards and the floor was already in poor condition, so I didn’t see the need.”
If you don’t manage contractors correctly, this real-life example will happen over-and-over and therefore it’s your responsibility to ensure that your job is completed to your satisfaction. Here are pointers for managing home improvement businesses:
Require a detailed scope of work. It must clearly lay out all work so that the definition of “complete” is obvious.
Hold contractors accountable by making periodic, unannounced visits to the job.
Approve change orders only in writing. Ensure that the scope of work details the work to be completed.
Never pay a draw request until after you’ve inspected in-person or have seen photos of the work.
Negotiate a draw schedule where the final draw is 20% or more of the project’s total cost. This keeps contractors hungry to complete the renovation promptly.
Whether you’re a real estate investor like us or if you’re looking to rehab your own home, by following this 8-step process to find and hire the best home renovation company, you’ll save yourself time, stress, and hopefully a whole bunch of money. Want more residential contractor selection tips or to skip the dangerous home renovation process all together? We buy central Texas houses as-is, on your schedule, and for market price so contact Phil and Will at Good Vibes Homebuyers instead!
You might also like
Free closing costs. Free Local Move. Zero fees. Sell in 5 days. Sell and stay for 180 days. No equity? Still get $10,000 cash!
When selling a house or an apartment, alternative options are available that result in sellers selling for more. Learn what creative financing is in real estate & how to use it.
What sounds better - winning or losing? Home investors don't want you to know these 4 magic negotiation tactics because you'll kick their butt and come out a winner!
Good Vibes Homebuyers might be the perfect option for many Texas property owners needing to sell a house. Ask yourself these questions to see if our investors are right for you.