If you've looked into real estate investing or have done projects you've heard of horror stories in dealing with contractors. Whether it's contractors bailing, projects taking longer or rehab going over.

Contractors can make or break deals. One of the fastest ways to turn a good deal into a bad one is through poor contractor management.

Most people spend a tremendous amount of time analyzing the property. They review comparable sales, estimate rents, estimate renovation costs, and determine whether the deal makes sense.

Then they hire the first contractor who gives them a price to make the deal "work".

That's often where problems begin.

Whether you're flipping a house, BRRRing a rental, or renovating your personal residence, the contractor bidding process will have a major impact on your timeline, budget, and success of the deal.

Here are a few things I always look at before hiring a contractor.

Start With A Scope, Not A Bid

One of the biggest mistakes I see is asking contractors....."What would you charge to fix this property?"

The problem is every contractor sees something different. One may assume you're replacing cabinets. Another may assume you're painting them. One may include flooring. Another may not.

Instead, create a detailed scope of work before collecting bids. Build out what expectations you have and what finish level you are going for.

Instead, create a detailed scope of work before arranging contractors to bid on the property.

For example, don't just write:

"Replace flooring."

Instead specify:

• Remove existing flooring
• Install LVP throughout living areas
• Install carpet in bedrooms
• Include materials and labor
• Include disposal of old flooring

Don't just write:

"Paint interior."

Specify:

• Paint walls, ceilings, trim, and doors
• Include patching nail holes and drywall repairs
• Number of coats
• Who is supplying paint

The same applies to kitchens and bathrooms.

Rather than saying:

"Update kitchen"

Break it down:

• Install new shaker cabinets
• Install laminate countertops
• New sink and faucet
• Install tile backsplash
• Replace cabinet hardware

The more detailed the scope becomes, the easier it is to compare bids accurately.

I've seen one contractor bid $15,000 and another bid $25,000 on the same property, only to discover they weren't pricing the same project. One included flooring, trim, debris removal, and paint prep. The other didn't.

When everyone is bidding from the same scope, you can compare apples to apples and make a much better decision.

Get Multiple Bids

For anything beyond a small project, I strongly recommend gathering multiple bids.

Not because you are looking for the lowest number or cheapest number.

I'm looking for patterns. Looking for what each contractor looks at.

If two contractors are around $25,000 and one comes in at $14,000, there's usually a reason.

On the flip side, if one contractor is significantly higher than everyone else, I want to understand why.

A good bidding process helps find missing items before work begins instead of discovering them halfway through the project.

Price Is Only Part Of The Puzzle

Many people automatically choose the cheapest bid. Yes you want to cut cost but you don't want to take a shortcut.

In my experience, that's often where problems start. The cheapest contractor isn't always the best value.

A contractor who communicates well, stays organized, shows up consistently, and finishes on time may save far more money than someone who simply submits the lowest number.

When reviewing bids, I also want to know:

• When can they start?
• How many projects are they currently managing?
• Who is actually performing the work?
• How long do they expect the project to take?

The answers often tell me as much as the bid itself. You want clear responses on this. Any reputable contractor should be able to address each point.

Watch For Red Flags

Most contractor problems don't appear halfway through the project. They usually appear before the project even starts.

Some of the biggest red flags I watch for include:

• Extremely low bids
• Poor communication
• Large upfront payment requests
• No written scope
• No references
• No photos of recent work
• Constantly changing numbers

If communication is difficult before a project begins, it rarely improves after the work starts. We are creatures of habit.

Understand Change Orders

No renovation goes perfectly. Unexpected issues happen. Hidden plumbing problems. Electrical updates. Water damage behind walls.

The key is understanding how change orders will be handled before the project starts.

Ask:

• How will additional work be approved?
• How will pricing be documented?
• How quickly will changes be communicated?

The goal isn't avoiding change orders. The goal is avoiding surprises. I would also have a buffer on projects for potential change orders.

Trust, But Verify

One mistake newer investors make is assuming everything is progressing exactly as planned. Good contractors will communicate but they are managing a lot where small items can be missed.

Verify:

• materials being installed match what was agreed upon
• workmanship meets the quality needed
• completed work aligns with the original scope
• project milestones are being hit on schedule
• any change orders are documented and approved
• upcoming phases of work are clearly communicated

This doesn't mean micromanaging the contractor. You are verifying what you are paying for is correct and it's matching up to the ARV needed.

I've seen situations where the wrong flooring was installed, paint colors were off, or small details were overlooked because nobody checked in until the project was nearly complete. A quick walkthrough can often identify these issues early and keep the project moving.

It's also a good opportunity to discuss any unexpected challenges so you can learn on the next one. Hopefully avoid a change order.

Small issues are much easier to correct early than after the project is complete

The Real Goal

Most people think the goal is finding the cheapest contractor. It isn't.

The goal is finding the contractor who can complete the project at the agreed scope, within a reasonable budget, and on a realistic timeline.

A contractor can make a deal. A contractor can also break a deal.

The bidding process may not be the most exciting part of a renovation, but it's one of the areas that can have the biggest impact on the deal.

Closing Thought

Whether you're renovating an investment property in Kansas City, preparing a flip, in the works of a BRRR strategy, or simply updating your own home, taking the time to properly vet contractors can save thousands of dollars and countless headaches.

The best projects rarely happen because someone found the cheapest bid. They happen because the right contractor, the right scope, and the right expectations were set up from the beginning.