Negotiating Pricing With Your Contractor

When collecting bids from a contractor, my rule of thumb is to always get three bids, especially when you're new in this business. You also need to decide on one contractor versus many to do multiple jobs; what is best for your time management and pocketbook?
To figure this out, make sure that you and your contractor do a thorough walk through assessment of the property and define what needs to be done. This can be done through a repair estimates worksheet. Have your contractor write down the scope of the work to be done for each item that needs to be replaced/repaired (i.e. windows, kitchen cabinets, doors, fencing, etc.). By doing this you can determine the general contractor’s price for each item. This breakdown will tell you if you should hire the GC for everything, or if you could save money on an item that you feel is grossly overpriced. Remember, the price may be a little higher than if you were to personally do all of the leg work to get it done, but is it worth the couple extra bucks to not have to worry about it? Additionally, if you think your GC price is way too high, but don’t want to undertake any of the workload, remember that it doesn’t cost anything to get bids, so shop around a little bit more to get the best rate as that means more money in your pocket in the end.
Rehab Investor Tip: You get what you pay for. Cheaper doesn’t always mean better, and most times can mean more expensive in the long run. You don’t get a quality job, or it doesn’t get done right the first time and has to be redone, the work might not be done in the time frame you are looking for, and it might not bring the total job up to the finished product you are looking for. Sloppy work or ‘cheap labor’ to me means money lost.

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