By Rob Jafek | Boomerang Capital Partners
Contractors are awesome and almost everyone uses them, either as GCs or subs. But did you know Arizona has a few very useful tools that will help you find the right contractor for your project and will help you work with him to get the most out of your relationship? Let me enlighten you.
First, a quick review of why contractors are so beneficial to a real estate investment project.
- Specialized Skills: Contractors may know stuff that you don’t, and this is true whether you are new to the game or a seasoned professional. Even if you know how to perform a specific task, are you up to date with all the current regulations? What about your knowledge of what’s going on in the supply chain and what the current trends are? There is a good chance a contractor, who makes it their daily business, can help.
- Cost-Effectiveness: A contractor may help your project be more profitable, for one (or both) of two reasons. The first is that time is money and using contractors can allow multiple tasks to be addressed at once. The other reason is that they may have tools and equipment at their disposal that you would otherwise need to rent or buy, again saving you time and money.
- Flexibility: You can bring a Contractor on board for a specific project or duration, and then release them once the work is completed. This accommodates fluctuations in workload and/or minimizes the cost to you during the downtimes between projects. You can easily scale your operation up or down depending on the project’s requirements, without the complexities of learning it yourself or hiring and/or laying off employees. Note that this is not just for specialized skills, it’s also just raw horsepower. If you are going to do a few projects at a time, or maybe have work done on the project while you are not there, you are going to need to hire someone with the skill to oversee the activities.
- Reduced Liability: Contractors are usually responsible for their own taxes, insurance, and other liabilities. This can be very helpful.
The net benefit of using contractors is that it allows you to focus on what you do best, and perhaps even enjoy, and outsource all the other functions. This can lead to increased efficiency and productivity (and enjoyment) and will also allow you to take on projects that you wouldn’t otherwise have the expertise or equipment to deal with (cracked foundation, anyone?).
With contractors being a benefit to your real estate investment project, how do you go about finding the right one for you? The State of Arizona can help you! The Arizona Registrar of Contractors is here to help and we’re happy to report that they actually do a great job!
Arizona requires contractors to be licensed to perform any work over $1,000 which means most of your contractors will need to be licensed. First, check out the Before You Hire https://roc.az.gov/before-hire page. Despite the fact that many of your savvy investors may know a lot about this – or think you know a lot about this – it never hurts to review and maybe clean up some of your procedures that have gotten a bit lax.
Spend a few minutes proactively reviewing the process and requirements related to hiring a contractor. This may save you time, money, and a giant headache when it comes to hiring a contractor. This is a good example of an ounce of prevention being worth a pound of cure.
Once you have thought through how you will engage with a contractor, it’s time to make sure they are licensed and legit. And Arizona is going to make that easy for you too: https://azroc.my.site.com/AZRoc/s/contractor-search. Start your search here! This includes doing your due diligence on referrals and recommendations.
Reviewing the most egregious problems can help remind you of why you want to cross t’s and dot i’s. For the “buyers-beware” list check out Arizona’s Register of Contractors Most Wanted, https://roc.az.gov/roc-wanted. The most common frauds that seem to be committed are performing unacceptable work, abandoning projects, and taking money for work not performed. A great way around that is to check references before engaging, and of course not paying for work in advance.
Are these resources everything you need to help you seal the deal with the right contractor? Of course not. You’ll still need to check references, oversee the work, and communicate, communicate, communicate. But it’s a great place to start and come back to each time.