Once rehabbers or developers line up a project, the next step is to draft their contractor team. This team will see the project through to completion, addressing each issue with ease and professionalism, resulting in a smooth process for all.
Here are some helpful tips to ensure that developers line up the right contractor team to efficiently turn the project within a reasonable time.
Developers need to plan when purchasing an investment property. Once the property closes, an immediate start date is essential for a quick turnaround and prevents developers from having significant carry costs.
Some integral steps for developers to plan include:
It’s important that developers do due diligence when selecting contractors. Here are some ways developers can execute this:
If developers require specialty contractors that need state licensing, it is imperative to check with local or state government offices to verify that all contractor credentials are in place and active.
A direct lender will require the borrower to obtain property insurance, so they will need to hire an insurance agency that is ready to bind coverage upon closing. He or she will also want the GC to provide a Certificate of Insurance for their work before commencing.
Additionally, it is important to regularly inspect the contractor’s work, especially at the time of all requests for payment. While there is no required number of check ins, a developer should monitor their project as often as possible. After all, if a project runs late, it is coming out of the developer’s pocket, not the contractor’s.
When a rehabber or developer evaluates contractor bids, there are several things to consider. First, what was the quality of the bids? Did all of them have bids from any sub-contractors specific to the job. If not, the quality of those bids might not be very good and can cause problems (i.e., price increases) later on. For this reason, the low bid is not always the best bid. Second, contractor bids are not always apples and apples – make sure the bid you take encompass your entire scope of work with allowances for any items that are not yet specified. Finally, is the contractor and any applicable subs ready to commence on your start date? Contractors often often over-commit since they assume some will not happen, so it is important to understand their workload.
Developers should require that contractors have the capacity, necessary workforce and skills to complete the project on time and budget.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans over that time period. We specialize in financing all types of residential and commercial property investments throughout Texas. Using a common sense and value added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving clear title and a complete file. The process generally takes from two to three weeks, but can be accelerated where circumstances require it.
We are an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.