Types of Contractors and What to Use Them For


Types of Contractors and What to Use Them For

Contractor – n. – “A person with a tractor,” from the Spanish ‘con tractor‘.

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Royal Rose Properties deals with a lot of contractors. Lawn maintenance and landscaping, plumbing, electrical, driveways and landscaping, roofing, flooring and carpet cleaning, and dozens of other specializations make for a large Rolodex. So, we’ve experienced various levels of service and formed our opinion about contractors. When we deal with a contractor (of any variety) for more than a job or two, we quickly categorize them into one of four basic types.

Level One: The Big Guns
Big Guns are, in short, usually excellent to work with but expensive. Because of their experience they have a wide array of subcontractors they use and maybe have a few directly on payroll. You can count on them being fully licensed, insured, bonded, and have all of their other paperwork in order. They generally have staff to answer phones and keep their schedules, and office space dedicated to that staff. They provide quick, reasonably accurate bids and change orders. And they generally do the work well and in a reasonable time-frame.

On the other hand, they also tend to have multiple ‘layers’ of contractor and/or management that have to communicate details about jobs between them, which can mean that while the work gets done quickly, questions about the work take longer to answer than you might expect. Also, staff and office space is expensive, which means the Big Guns need higher margins to pay their bills. And of course it can be hard to find a pro willing to take on a small job even for a large payout relative to the typical cost of the job.

We rarely use Level One contractors except for higher-end flips, and even then, only if we can negotiate their prices down.

Level 2: The Pros
Pros have most of the advantages of Big Guns, but are a little smaller, often running out of a single rented room and working with a small group of known subcontractors rather than a wide array. They’re almost always licensed and insured and usually have at least one ‘office person’ available to answer the phone during business hours, but sometimes that one person can be hard to get through to. Generally speaking, they offer professional bids up front, but can be less formal/thorough in dealing with changes that happen mid-job.

It also seems like most of the Pros we work with have certain specific areas that we end up calling them back for semi-regularly, like one general contractor’s habit of not checking whether the existing paint is matte or semi-gloss before buying more of the same color. Those issues are generally minor — certainly not enough to keep us from moving a tenant in — but they can take a while to resolve, as they’re often not caught until after the contractor has moved on to a new job.

Overall, our experience with Pros is they’re the ideal contractors for your average flip and high-end rental houses, where you have to strike a balance between quality and cost. Just be careful when the Pros claim that they can work efficiently enough to offset their higher costs — it’s rarely true, so be sure you’re willing to pay the greater cost in order to get the greater quality, time notwithstanding.

Level 3: The Chucks in Trucks
We affectionately refer to contractors from our most often-accessed group as “Chuck in a truck,” meaning “a dude with a truck or three and the expertise to call themselves a contractor.” Chucks generally work out of their home with their significant other handling the paperwork. They tend to be licensed, are sometimes insured, and are rarely equipped with much more paperwork than that.

On the upside, that means their overhead is substantially lower than the first two types on our list. They also tend to have all of the answers to your questions readily available (if you can get ahold of them; see below). Perhaps most valuable, they tend to be much more willing and able to negotiate over details while still providing a reasonable level of quality.

Unfortunately, their lack of infrastructure means they don’t advertise, so they can be hard to find — but counterintuitively, they’re always super-busy because they’re so much less expensive than the types above them. This means it can take a week or more to get a response from them when you do get their number. Because they’re so busy and unorganized, they don’t particularly have a need or understand the business value of professional bids and formal change orders. Which means they need to be managed fairly tightly to keep costs from suddenly spiraling upwards and to monitor their workmanship quality.

Ultimately, Chucks are our favorites because most of what we work with are average rentals and flips and this group regularly produces high-enough quality work to pass inspections and keep tenants happy while being very economical (and thus keeping owners happy!)

Level 4: Hacks
Hacks are small, solo contractors who are a dime a dozen. They generally aren’t licensed or insured, have no paperwork, will only accept cash, aren’t particularly reliable, and their quality is always suspect. They’re almost always the cheapest upfront, but oftentimes the time and effort spent chasing them down to finish or correct errors costs more than the difference between them and a Chuck.

On the upside, no job is too small (or off-putting) — and if you don’t care about details like permits or bonds, they will generally overlook them, too. But that’s it! That’s all the upside you get for this price. Don’t expect a bid other than a scrawl on a piece of notebook paper, don’t expect them to do anything that they can’t do with a single friend of theirs, and expect it to take a long time for them to get started.

In general, we do our best to stay away from Hacks, although we sometimes get fooled for a project or two. They’re really only good if you have the time to “babysit” manage them to make sure they don’t explode your costs and do the work right — basically, the option to take if you prefer spending time and not money and don’t care about liability risks.

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