Conner Marketing's online newsletter for September 2018
NOTES with Jay Conner Success
SEPTEMBER 2018
How Real Estate Investors Find Reliable Contractors
I ’ve discussed this topic many times before, but today, I want to do a deep dive. Strap yourself in, because today we’re going to learn how to find a contractor and how to work with the contractors you hire, whether they are general contractors or subcontractors. Over the years, I’ve developed a strategy for finding contractors I can trust, putting the right agreements in place, and seeing that my project gets done right. The WORST Time to Start Locating a Contractor In order to identify the best time to start locating a contractor, I’m going to point out when you absolutely don’t want to be looking for a contractor: After you have closed on a house. If you have bought a house that needs rehab, renovation, or repairs, and you don’t already have good relationships with contractors in place, then that house is probably going to sit there for a while. Maybe you’ll find yourself under the pressure of having a house just sitting there, and you’ll lower your standards. Now you’ve hired the wrong contractor and have a whole new mess of problems. If you decide to not just do pretty house business, but also go into rehab, then you need to start locating and nurturing relationships with contractors now. You should already be looking for contractors at least 30 days before you think you will be closing on a deal. Where to Find a Contractor In my career, I have identified eight different places you can search to seek out a good contractor. If you do all eight, you’ll open yourself up to a large selection of contractors to choose from. 1. Local Builders’ Association Some of you may have heard me talk about this suggestion before, as it’s one of my favorites. What’s great about your local builders’ association is you don’t need to be a contractor or subcontractor yourself to visit or join the association. Anyone can join. Now, you might be the only real estate investor in a room full of contractors, plumbers, electricians, and landscapers, and that’s a good thing.
real estate investor looking for a general contractor to do business
with. Meet as many people as you can, contractors and subcontractors alike.
2. Local Real Estate Investor Association (REIA) or Monthly Meetings This one is sort of obvious once you think about it. Whether it is an REIA group or a meetup group, go to where people are meeting once a month. And when you’re there, the people you want to ask about contractors are the people who run the meeting. Chat with the president or the person in charge of education. These are the movers and shakers actually doing business. 3. Realtors WhoWorkWith Real Estate Investors Find Realtors who are listing agents for bank-owned properties. We have a realty company in our area that specializes in bank-owned property — it’s practically all they list. They see real estate investors all the time, and in all likelihood, these Realtors will know the contractors the real estate investors are working with. Networking with these Realtors is a good way to learn about reliable contractors who have experience with real estate investors. 4. Subcontractors When you are networking with plumbers, electricians, HVAC technicians, roofers, and other subcontractors, ask them about the reputations of general contractors. Subcontractors will know which general contractors are the most reliable regarding finishing jobs on time and whether or not they pay on time. 5. Home Depot Pros Desk/Lowe’s Pro Services Home Depot and Lowe’s Home Improvement both have contractor or commercial desks where you can go for recommendations on general contractors. The hardware stores will know who good contractors are because they are the ones who repeatedly buy products from their store. (As a side note, you can also go to other places that supply contractors, like lumber yards.) The reason the people at these businesses will tell you about the best general contractors is because, by hiring the contractor they recommend, you are indirectly bringing more business to their store when that contractor needs more supplies.
When you attend meetings, which are usually just once a month, and you are networking, let people know who you are. Introduce yourself as a
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‘The 5 Second Rule’ Mel Robbins Shares the Secret to Everyday Courage
You’re standing on a diving board high above the swimming pool. Below, you see several friends who have already jumped in. If you don’t jump in too, they’ll never let you live it down. You take a deep breath and start counting. Five … Four … Three … Two … One! Many people find themselves counting when they are dealing with an emotional situation. Maybe they need to rein in their anger or psych themselves up to overcome anxiety. What’s interesting is that counting down in these situations is more than just an odd habit — it's a psychological tool that can help you overcome life’s greatest challenges. This discovery inspired CNN commentator and motivational speaker Mel Robbins to write her bestselling book, “The 5 Second Rule,” and teach anyone how to become their own cheerleader. Our brains are constantly trying to protect us, which is they we are often so resistant to change or the unknown. Anything could happen, and our brains employ a host of physical weapons to keep us
us jump off the high dive — you are forced to focus on the idea. For five seconds, you put the knowledge of what you want over the fact that you just don’t “feel like it.” Then, at the end of your countdown, you have a jolt of energy that drives you forward. Robbins calls this jolt the “push moment.” The push moment gets you off the couch for a morning run, back on your project for work, or away from that piece of chocolate cake.
What makes Robbins'
in familiar territory, where it’s safe. As Robbins puts it, “If you have an impulse to act on a goal, you must physically move within 5 seconds or your brain will kill the idea.” Why does counting down help us keep our brains from killing our motivation? The same reason counting down helps
5 Second Rule really interesting is that each success compounds on itself. Each time you allow that push moment to drive yourself toward your goal, you achieve greater and greater success. There is never a “right moment” to start on a goal. Our brains will always come up with a reason for us to stay the same and not take that leap. But it’s our instinct to do more that ultimately drives us to push forward in life. In “The 5 Second Rule,” Robbins explores how a simple concept can change your life for the better. The truth is that all that stands between you and achieving your goals is just five seconds.
John 3:16 For God so loved the world, that He gave His only begotten Son, that whoever believes in Him shall not perish, but have eternal life. Matthew 7:8 For everyone who asks receives, and he who seeks finds, and to himwho knocks it will be opened. Jeremiah 29:13 You will seek Me and find Me when you search for Me with all your heart.
Have You Heard the Good News ... As It Relates to "Searching"?
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6. Friends, Family, and Neighbors Who do you know who has had work done on their house in the recent past? Simply ask them, “How did you like the work?” If you see work being done on someone’s house in your neighborhood, go ahead and pull in the driveway, knock on the door, and ask how they would rate the work they are getting done. 7. Civic Groups I talk about civic groups a lot in regard to private money, but these are also networking opportunities to find good contractors. There’s the Rotary Club, BNI, and, the biggest of all, the chamber of commerce. If you only join one of your local civic groups, I highly recommend the chamber. A lot of good, professional contractors and subcontractors who are interested in networking will be members of the chamber of commerce. 8. Building Inspectors Here’s one which you may not have heard about. Reach out to your town and county building inspector and ask what general contractors or subcontractors they recommend. You know the building inspectors will only recommend good contractors, because they don’t like having to go to the same house three or four times and repeat themselves to subpar contractors who have difficulties complying with codes and/or making necessary corrections. Signs of a Good Contractor Once you have located a contractor you are thinking about working with, the vetting process begins. This process can take some time, and you can have someone on your team handle this for you, but you don’t want to cut corners here, because that’s how you end up with a contractor who cuts corners themselves. First, you want to make sure the contractor is licensed and has workers' comp to cover every member of the teamwho’s under them. A good, reputable contractor will be willing to show you their workers' comp paperwork and licenses up front. Next, no matter where the referral comes from, ask the contractor for references. I want at least three references from customers they’ve done work for. While I know the contractor is only going to send me to their best examples, it’s a good sign that they can do so confidently. You may also want to look up the contractor on the Better Business Bureau and ask for additional references from vendors they work with. By reaching out to vendors, such as a plumber, electrician, or HVAC person that the contractor has worked with and asking if the subcontractor can recommend them, what you’re really asking is, “Did they pay you on time?” In the past, I worked with a contractor who didn’t pay their people on time, and I had some problems when the vendors I wanted to use did not want to do business with the contractor. Lastly, don’t be discouraged if you talk to a contractor and they say, “It’s going to be a month before I can start on your project, because I’m currently working on another project.” This is a positive sign! It shows the contractor can practice good communication, and that they are dedicated to their clients and finishing what they’ve started. Contracts and Contractors So, you have a contractor lined up. Now you want to make sure the work is going to get done. Get a detailed agreement in writing, listing a detailed scope ... Cover article continued
of work, a timeline of when the work will get done, and a budget sheet. On that budget sheet, the contract should list every line itemwith a price of what it will cost them as well as what their markup is. Speaking of money, you do not want to work with a contractor who says, “I need money upfront, and then the rest when the job is done.” Any contractor who wants money before doing any work is running their business on a shoestring budget and they’re not a contractor you want to do business with. Instead, depending on how big a project is, I’ll have three draws. Now what I mean by that is, when a contractor or subcontractor gets a certain amount of work done, they get paid a draw. They’ll get paid again when the next percentage of work is done, and then get the rest when the job is completely finished. No matter howmuch you trust the contractor, make sure the house has been inspected before paying each draw. “Trust but verify,” as Ronald Regan said. Never write a check before someone on your team has inspected the work that’s been done. WhenThings GoWrong To keep things on track, I encourage you to have a penalty clause in your contract, especially if you are working with a new contractor. Many of my friends who do a huge number of deals have clauses in their contracts that state, after a one-week grace period, if the contractor goes over time, they are penalized $100 a day on houses valued under $200,000 and $150 a day on houses valued over $200,000. This is a smart move because if a contractor tells you a job is going to take six weeks and they’re still working 12 weeks later, you have a big problem. Now, I’m not talking about a change order that extends the original timeline. For example, not long ago, my teamwent into a house I’d bought, and they found the exterior wall had been eaten up by termites and had to be replaced. As you’d expect, that job took much longer than the contractor had originally estimated. But if there isn't a big change order during the job, it’s not professional for a job to take longer than estimated. On that note, make it clear that any failed inspection or work that needs to be redone will be at the contractor’s expense. Protect Yourself and Your Property There is one more thing we need to keep in mind. Require all your contractors, generals and subs, to sign lien releases on every draw and on the final payment. That protects you from having a contractor file a lien against your property and potentially holding up the sale. Working with a contractor is a huge part of being a successful real estate investor. Once you’ve located a reliable contractor, it is just as important to establish and maintain a good working relationship with that contractor.
To your success!
–Jay Conner
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INSIDE THIS ISSUE
Where Are All the Good Contractors? page 1 Countdown to Success page 2 Don't Miss Jay's Live Event! page 4
Register Now at www.JaysLiveEvent.com or call (252) 808-2927 - Meet Jay’s private lenders - Get private money - FREE Rehab Bus Tour (see Jay’s rehabbed homes!) - Meet Jay’s “Dream Team” (his interior designer, contractors, Realtors, real estate attorney, and buying and selling assistants) - VIP reception - Learn Jay’s automation techniques Event Dates: October 10th-12th
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