How to Hire Contractors for a Flip: A Vetting Checklist

Where do flippers find good contractors?

The contractor is the single biggest variable in whether a flip finishes on time and on budget. It's worth spending real time on this choice.

• Other local investors (ask who they use, and who they stopped using)
• Real estate agents who list renovated homes
• Property managers who manage turnover repairs
• Supply houses, where trades buy materials
• Inspectors who see contractors' finished work every week
• Local investor meetups

A referral from someone who has paid that contractor on a similar project is worth more than any online review.

What should you verify before hiring?

Licensing. Requirements vary by state and city, and by trade. Check with your state or local licensing authority, and confirm that trades such as electrical, plumbing, and HVAC are performed by appropriately licensed professionals where required.

Insurance. Ask for certificates of insurance, typically general liability and workers' compensation where applicable, sent directly from the insurance agent. Ask your attorney or insurance agent whether you should be named as an additional insured.

References. Call at least three recent clients, ideally investors, and ask specific questions (below).

Current work. Visit an active job site. Is it organized? Is the crew there?

20-point contractor vetting checklist

Credentials

• Licensed for the work in your jurisdiction, where required (verified with the issuing authority)
• Certificates of insurance received from the agent, coverage dates checked
• Business entity in good standing
• Pulls permits in their name for the work that requires them

Track record

• Three recent references called
• At least one reference is an investor client
• Visited a current job site
• Has completed projects of similar scope and price point
• No unresolved pattern of complaints (check local consumer and licensing records)

Bid quality

• Priced your written scope line by line
• Separated labor and materials where useful
• Listed exclusions and assumptions
• Gave a start date and a duration
• Explained how change orders are priced

Working style

• Understands lender draws and inspection timing
• Agrees to payments tied to completed stages
• Will provide invoices and lien waivers with each payment, where appropriate
• Communicates on a schedule you agree to (for example, weekly photo updates)
• Has crew capacity for your timeline
• Has a named site lead for your project

Questions to ask references

1. Did the project finish on time? If not, why?
2. How close was the final cost to the bid?
3. How were change orders handled?
4. Did they show up when they said they would?
5. Did inspections pass the first time?
6. Would you hire them again for the same kind of project?

How do you compare bids?

Put every bid on the same scope into one table.

Example (hypothetical numbers):

Contractor C looks cheapest but left out electrical and can't start for a month. Add the missing line and a month of holding costs, and C isn't cheapest anymore.

How should you structure payments?

Tie payments to completed, verified stages that match your lender's draws. The live Axelrad guide on cash to close and rehab draws advises confirming the draw arrangement before committing to a contractor payment schedule.

• Keep any upfront deposit modest and tied to a defined first stage
• Pay against invoices for completed work
• Collect lien waivers where appropriate
• Hold back a final payment until the punch list is complete and permits are closed

Ask your lender how quickly draws are released after a complete request, and build your contractor's payment schedule around that answer. Draw timing helps keep a crew paid on schedule, but only when draw requests are complete.

What should the contract include?

At minimum: the scope of work as an exhibit, price, payment schedule tied to stages, start and completion dates, change order procedure, insurance requirements, permit responsibility, warranty terms, lien waiver requirements, and how disputes are handled. Have an attorney in your state review it. Lien laws and consumer protection rules vary by state.

How do you manage a contractor once work starts?

Set the rhythm on day one. Agree on a weekly site meeting or call, a photo update schedule, and a single point of contact on each side. Walk the job yourself regularly; in-person visits catch problems photos miss. Keep a running log of decisions, change orders, and payments. When a milestone is slipping, ask why and what the new date is, in writing. Most contractor relationships go wrong slowly, through small missed dates nobody addressed, rather than all at once.

What are red flags when hiring a contractor?

• Large upfront payment demanded in cash
• No written bid or a one-line "total" bid
• Can't or won't provide insurance certificates
• Suggests skipping permits to save time
• Can't provide recent references
• Vague about who will actually be on site

Key takeaways

• Source contractors from people who have paid them on similar projects.
• Verify licensing and insurance directly with the issuing sources.
• Compare bids line by line against the same scope, including start dates.
• Tie payments to completed stages that match your lender's draws.

Build the team before you close

When your contractor and scope are set, include their bid with your budget when you submit your deal. Details are on the fix-and-flip loan page.