If you’ve been watching Flip or Flop, then you know that Christina and I work with some really great general contractors and that we tend to work with the same guys over and over again. That’s because, in the house flipping business, once you’ve found a great contractor, you want to hold onto that relationship and give them as much work as possible. If you take care of them, they’re going to take care of you. But if you aren’t careful, you can end up kissing a lot of frogs before you find a great contractor who can do the work you want at prices you can afford when you flip houses.
To help you avoid the painful process of hiring (and firing) less-than-amazing contractors, here are the red flags I look out for when I interview a new general contractor.
They Want the Money Upfront
First of all, every reasonable and reputable contractor I’ve ever worked with has done the work and then asked for payment. On a lot of jobs, Christina and I will go buy the materials and have them sent to the site, but we never pay for our contractors’ labor before they’ve done the job. If a contractor asks for the money upfront, he’s probably a scammer. Move on.
They Undercut the Competition—By a Lot!
Everyone loves a good deal, but if your contractor says that he can do a job for half of what everyone else estimates, there’s something wrong. Either this guy doesn’t know what he’s doing or he’s planning on doing a crappy job with subpar materials. Walk away.
They Won’t Provide License Numbers or References
When you interview a contractor, you absolutely have to ask for all appropriate licenses and for some references. If they can’t prove that they’re licensed and that all of their employees and/or subcontractors are insured when they step onto your property, you could be in trouble. You don’t want to be liable if your contractor or one of their workers gets hurt on the job site.
And you should insist on getting references, too. A lack of references won’t necessarily land you in legal or financial trouble, but it does tell you something about the contractor you’re interviewing. If they don’t have any happy clients they can refer you to, do you really want them working on your flips?
They Only Accept Cash
Cash-only contractors are almost never operating completely above board. This is evidence that either they don’t take their business seriously enough to spend the (honestly, pretty negligible) expenses to take cards and checks, or they want to avoid leaving a paper trail for some reason. Either way, you should go with a contractor who’s set up to handle multiple forms of payment.
They Get Defensive When You Ask Questions about Their Business
Finally, good contractors are used to answering questions about how they conduct their businesses and how they get the job done. They won’t have a problem with you asking about their licenses and references, and they won’t get offended when you ask for details about their job experience.
If you’re talking to a general contractor and he starts getting defensive about normal questions like these, it’s time to walk away because he’s obviously hiding something. Maybe he’s lying about his experience, or maybe he doesn’t have the licenses you need to let him work on your flips. Whatever the case, you need a better contractor.
If you look for these red flags as you interview contractors for your house flipping projects, you’ll be able to avoid the bad seeds and find the guys you’ll want to keep working with on all of your flip houses.