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12 Tips You Absolutely NEED To Know Before Hiring a Contractor

by | Oct 2, 2011

One of the most crucial things to learn in Real Estate Investing is to Learn the fundamentals of hiring a Contractor. Making mistakes can be very costly, so go through this entire article to learn on hiring a contractor properly. Asking the undermentioned questions will tell you a lot about the contractor so you can make your contractor choice judiciously.

  1. How old is your company?
  2. How long were you in construction business before you started your own company?
  3. Are you licensed?;
    Most of the States want the contractors and even the sub-contractors to be licensed to work. Physically check the license of the contractor. Anybody can say they are licensed. Make the contractor prove it by either showing you the license or giving you a copy of it. Remember to check the termination date. Being licensed is the law. If a contractor cannot produce a valid license, DO NOT HIRE HIM! Always affirm the status of the contractor’s license with the Licensing department of your State.
  4. Do you carry general liability insurance?
    Check the contractors general liability insurance. If your property is damaged or anyone sues you due to any damage done by the contractor, then this insurance will cover those losses. The insurance company will pay for the cost of replacing, and/or repairing any damage that occurs. You will come across so many contractors who will readily say that they are insured. Ask the contractor to show you the insurance certificate.
  5. Do you carry workers’ compensation insurance?
    Make sure your contractor carries workers’ compensation insurance. It protects you from liability if a worker is injured while on your property. Be aware that if the contractor does not carry workers’ compensation coverage, you may be liable for any injuries suffered by the contractor, or any of his employees on your property.If the contractor has no employees and does all the work himself then they can get Workmens’ Compensation exemption certificate issued by the city or State. If he is doing so legally, he can provide you with a copy of his Construction Industry Certificate of Exemption from Workers’ Compensation. This is very risky for you though. If he shows up with a helper and the helper gets hurt, with no workers’ compensation insurance, you may have to pay the medical bills.If the uninsured contractor is sloppy about confirming his sub-contractor’s workers’ compensation insurance and the sub-contractor gets hurt, again you may have to pay the medical bills. In short, it is much safer to deal with a fully insured contractor.
  6. Do you get Financing?
    Many Contractors are lender-approved contractors. They have been approved and investigated by lenders as being financially sound, maintaining acceptable relationships with suppliers, satisfactory credit and no outstanding complaints at the Better Business Bureau.
  7. Do they have membership of NAHB or NARI?  
    NARI stands for the National Association of the Remodeling Industry and NAHB stands for the National Association of Home Builders. If the contractor is part of NARI or NAHB, then it usually means that they have a good standing in their Industry. In most cases, both organizations only attract conscientious contractors interested in bettering the industry and in weeding out unprofessional contractors. In order to become a member, the contractor’s background and references are thoroughly investigated.
  8. Will you pull all the required building permits?  
    Make sure your contractor pulls all required permits. This is very important. When a contractor pulls the needed building permits, you know things will be done to “code.” Also, many homeowners insurance policies require pulling a permit on any major remodeling to keep your home properly covered.Not all contractors will do this. Many choose not to pull permits because of the time involved and the “trouble” with the inspectors. Some contractors may ask you to get the permits. This could be a warning sign that they are not able to pull the permit because they are either unlicensed or the job is outside of their license. A reputable contractor will permit every job where a permit is required.
  9. Guarantee of the work.
    Usually a good contractor will readily give a one year guarantee of their work from the day of completion. They should also include any warranties from the material used if applicable.
  10. Who will be in charge of the job?  
    Make sure the contractor or his foreman is on the job whenever work is being performed-specially if sub-contractors will be used. The responsible party must be familiar with every aspect of your project. You cannot be responsible about what is going on when you are not there.
  11. Cleanup of the job site?
    Construction is dusty and dirty! It gets everywhere, especially if any sanding is being done. Make sure the contractor will make an honest effort to keep the dust contained, or notify you when the heavy dust generating operations will take place so you can place sheets over furniture or move sensitive belongings. Make certain the contractor agrees to sweep up and place all construction debris in a predetermined place or refuse container at the end of every day.
  12. Will you present me with written references?
    A good contractor will be happy to provide you with references. You should look for a well-established contractor who can give you several customer references from the last 6 months to one year. Ask for the name of the contractor’s accountant or banker. You want to ensure that the contractor is financially sound and will not be declaring bankruptcy in the middle of your project.