The Importance of a Good Contractor - Apartment Real Estate Investing
With Percy Nikora, Co-Founder
When you're finding a contractor for multifamily, at a high level, you have some of the same tenets that you want to have in place, when you find a contractor on single-family, such as do you trust the person? Are they constantly coming back with change orders, once they give you a quote? Because, quite often, you'll find contractors will try to get their foot in the door by giving you a very low quote, but every little thing, then, they want a change order, and then, that's how they really make up their margin. You want to make sure that it's a contractor that, when they give you a bid, they're generally within that. There's always some change in scope; I've never seen a project that has been exactly on scope, but that they're not coming back for every little change.
You also want to make sure that they are familiar with multifamily building and what's needed there because the quotes are a little different. You want to make sure they have a good relationship with the government officials where they're working. When you're applying for a permit, they know who to talk to. Quite often, you have to- if it's a market that's seeing a lot of growth, those people are very busy. So, you want to make sure the plans presented to them meet all the requirements; they can sign off easily; or they know who to follow up with, if you need some follow-up, et cetera. Having some existing relationships in that market certainly helps.
Then, having great references. If they do a good volume of work ... We work with- generally, we work with contractors who specialize in multifamily, or in the commercial space, so they have a lot of relationships with, let's say, flooring vendors, or lighting vendors, or people through whom they buy in such bulk that they have really good discounts in place. You could leverage that relationship, or their relationship with some of these vendors to get deeper discounts than you may be able to get. We do that, as well.
When we put out a scope of work, we get different quotes, but then sort of lean on them to make sure that they're getting us the best price. We have a good idea of what certain things are going for in the market. We always get- no matter who, even if you have a good relationship with certain contractors, we still get two or three different bids just to make sure that they continue to stay competitive, and there isn't something in the scope of work that maybe one contractor oversaw, or interpreted one way, versus somebody interpreted it somewhere else. It's amazing how that tends to happen, as well. By getting multiple quotes, you sort of normalize that playing field, if you will, and get a good idea of the prices to make sure that you're getting the right price, and the schedules, and all of that.
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