Ep 11: How Do I Find a General Contractor I Can Trust? Part 2

In part one we talked about when and why you will consider hiring outside help to complete your real estate investment project.

Hiring a general contractor is not an easy decision, and we outlined how you should approach forming relationships in episode 10.

Today, in part 2, Tim details how he found his long-time contractor and how that relationship works and has stood the test of time.

You will also learn how to interview a contractor with exact details on what you need to cover before hiring them for a project.

And Bob details why it's so important to start small with a story about testing a contractor they would never hire for a second job.

Because, ultimately, if you want to build a business and increase your ROT (Return On Time) you need to partner with a good general contractor and DON'T do it yourself.

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In This Episode (timed with podcast)….

02:04 If you really want to build a business, you need to focus on this...

05:25 How Tim, met and trusted his longtime business partner, his general contractor, Chris.

09:44 How being in business with a GC is like a marriage

14:07 Where is the best place to start looking for a GC

16:38 Why Home Depot may be your go-to early on

20:53 What to look for in a perfect general contractor

23:09 The GC's Bob doesn't trust

27:38 Why it's important they are insured

38:00 Necessary questions when interviewing a contractor

50:31 Why you shouldn't hire a busy contractor

Miss an episode? Catch up!

Full Transcript

Robert Grand (00:00:00):

5 4, 3, 2, 1.

Tim Murphy (00:00:05):

We're back back at the back of your podcast with my buddy, Bob grand. How the hell are you doing Bob Gran. Doing great buddy. Doing great, dude. I'm excited, man. And you know, it's cool. You just got out, literally you ran from the fire station to the podcast and here you are three days of being the firefighter that you are. And now it was great. Cause I like Bob, you got any good stories and you like, get your brain going. Okay. Fire pirate stories, or like talking real estate. What am I doing? You're going to be told a story. And you're like, okay. Okay. Yeah, that's what I needed. Okay. Now your brain switched over. Awesome,

Robert Grand (00:00:46):

Man. It's a story about a firefighter and real estate. So it's worked out good. You know, when you talk about living

Robert Grand (00:00:53):

Life on your own terms, you're saying that last week, so, you know, I always work, work, work, and then I take chunks of time off. Well, I know we have a bunch of podcasts scheduled for the end of this month and stuff, but Shelly just said we're booking a trip to, or we booked a trip to Hawaii. We leave next week and we're going to be there for 10 days. So when you see me at the next series of podcasts I'll be recording from the big island. We'll be staying in

Tim Murphy (00:01:17):

Show and then we'll be done. I love it, dude. I love it. And so today, you know, last episode well today's episode again is going to be part two of how do I find a general contractor? I can trust part two now, part one. What did we talk about when it was, when we talked about how do I find a general contractor you can trust it was about two real key things. It was about opportunity costs. Well, should I be the general contractor or should I really put in the effort to find a general contractor that I can trust? And then the other thing was control because if you decide that you want to be the general contractor, then yeah, you're going to have a lot more control. But how does that control add up to your rot, which is return on time and at the end of the podcast.

Tim Murphy (00:02:04):

I think Bob and I can agree that if you really want to build a business, that's going to be scalable. If you want to be build a business, that's going to give you life on your terms. You want to build a business, that's going to give you financial freedom. Then you're probably want to pay attention to rot, which is return on time and opportunity costs. And that will result in you looking for a general contractor that you can build a relationship, especially longterm, and that relationship will pay dividends for you. You can flip houses on your own. You can be your own general contractor, but I just want you to know you will have a limited amount of jobs you can do. You will have a lot more stress. And at the end of the day, your rot will not be what it could be.

Tim Murphy (00:02:51):

Especially if you compare yourself to a Bob grinder myself. And so it all comes down to, you know what? This is your life and it's on your terms. So you do what you want to do. And we're just giving you the information that we have. So today I'm excited because I, we're going to talk about a couple of different things. As on part two, all of the, how do I find a contractor I can trust? And in part two, what we're going to talk about is actually going out there and finding it, where do you go? What resources do you use? Who do you talk to? Where do you get the referral? But then I think the real meat and potatoes of this podcast episode is going to be about how do I interview a contractor? Now I was telling Bob, before this thing even launched, before we hit go on the podcast today, I said, Bob, look at all those questions.

Tim Murphy (00:03:39):

And Bob said, yeah, look at that. And I said, Bob, that's an hour. And we're, long-winded, that's going to be an hour, at least talking about all those different questions about how do I interview a contractor. And the reason I say that, I know that is because there's so much that goes into each one of those questions. There's so many stories that pop into my head. And, and it's so important because when you interview that contractor, you are, you don't really know who you're getting involved with. The interview gives you and sheds light on who you might be able to get involved with, but then through experience, you're going to know through every one of those answers that that contractor gives you. Hmm. I wonder if he's telling me the truth or not. Hmm. I don't think so. Hmm. Yeah. This is the guy.

Tim Murphy (00:04:31):

This is the guy. And you know what that was. What's awesome about Bob story at the end of the last part, one of this topic Bob basically gave us a really good guide through his story of, ah, Bob's really apprehensive. Ah, Bob is really good at firing his contractors. Ah, Bob really learned, and he learned, you know what? I gotta be more open-minded. And then as he became more open-minded and more trusting and willing to give people a second chances, or just give them a chance, he now is working with a contractor that he's really excited about. And I think that's a great segue into, into today's episode part two of how do I find a contractor I can trust. Now I want to start this episode off with the story, because I am very fortunate enough to have found a contractor that I can trust.

Tim Murphy (00:05:25):

And he's my buddy, Chris and Chris and I have been working together. And you guys have heard this if you've listened to every episode of the podcast he and I have been working together for, I think it's like 12 years now. And I want to tell the story of how did I find Chris now, how I found Chris was, because back again, you're going to hear, this is going to seem like a repeat of some of the stories they told, but it's really important because it has a lot to do with how did I find Chris and what we're talking about today? So how I found Chris was through back when we were doing all our in the foreclosure days, call it a 2000 nine, ten, eleven. We were working with multiple different general contractors. We had 3, 4, 5, 6, 7 general contractors at once. We were doing smaller jobs.

Tim Murphy (00:06:10):

It was, it was crazy. It was you. I mean, talk about managing relationships, org, AKA babysitting. But the beauty was, we really learned who the good contractors were because the babysitting, you know, I told you that horror story in the last episode, part one, and the babysitting on that when you're in a horror story is terrible. It sucks all of your time. How you determine if you have a good general contractor, is the babysitting gets less and less and less and less and less to the point where you have enough trust in that guy. That it's kind of like, Hey man, between my designers and you, like, you really don't need me because let me go find the next deal. And they're all like, yeah, that's what we need you for. You go find the next deal and we'll take care of this. And that's essentially what happened is, is that we had all these contractors going and we would just dump one, dump another one, dump one, dump another one up the inventory started to shrink, oh, we didn't need that one.

Tim Murphy (00:07:07):

We'd get rid of the weakest link off. The inventory started to shrink up. We don't need that one. Number five, get rid of him and then boom, blah, blah, blah, blah, blah, all the way down to like the banks, quit giving away houses. We didn't have enough deals. And we hadn't gotten into the Advil development business, which is what we're doing right now doing these 1.4, $1.6 million projects. And so we were like, okay, who are we going to stick with? Who's going to be our guy. And on top of being a great contractor, we could trust. He was also an independent thinker. And he was also like us. Like he, he had figured out how to live life on his parents. And that general contracting was a thing that he wanted to do. He worked independently financially free. I mean, he didn't have money problems, which when you're looking for a contractor, if you can find one that doesn't have money problems, like that's a huge winning formula.

Tim Murphy (00:08:01):

Like, so I mean, all these things added up. And so like I said, what, what really made us decide, okay, you know what? This is, our guy was that we could trust him that we didn't have to babysit them, that he believed in what we believed in and was on the same path as us. But then the next big kicker for me was he came up with the next idea, what are we going to do? Where are we going to go? How are we going to leap from doing all these foreclosure bank owned bank on deals to the next thing? And the next thing was infill development. And that was his big idea. So he brought that awesome idea to us. And he also was the one that helped kick us out of the plane to make us do it now. Wow, that's way more than being a general contractor.

Tim Murphy (00:08:48):

That's being a business partner. And if you can find a general contractor that can also be a partner and help grow, you grow this relationship, grow this business, grow this opportunity with you. That's what you're ultimately looking for. And I'm so thankful that not only is Chris a good friend of mine, Chris is also thinks like me, and you know what, when we, you know, when you have an amazing contractor, amazing business partner, when the bullets are flying, when you know you're at war, when you're about to lose money, because it will happen. These moments that guy stands shoulder to shoulder with you and says, you know what, man, whatever happens, dude, I got your back. If we lose money, we lose money, but just know I'm there for you, man. And, and I, and he knows I'm there for him. And like, if you can find that, like I found it, it's unbelievable.

Tim Murphy (00:09:44):

It's unbelievable. And, and then from that point forward, you have to realize, now you're in a marriage and when you're in a marriage, like if you're not good at, at being married, then this is going to be a problem. And I say that sincerely, because marriage is hard. Marriage is like, you know, it's forever. Right? And, and I say that generally speaking, but you know, a real marriage, my marriage with my wife is forever. Well, I have to understand that forever means that I have to have compromise forever. It means that I have to listen to both sides of the argument forever means that I have to have self-awareness forever. It means that it can't just be my way. And so that's my story about Chris is that I've learned so much about going from seven different general contractors, breaking them all down, finding what I need, deciding who's the one person that I want to run with to get to the next opportunity.

Tim Murphy (00:10:41):

And then here I sit today, right now, I'm not going to tell you though that I'm ignorant enough to not work with other general contractors because life is what it is. And things happen. If I lose Chris, because he gets in the snowmobiling accident, we need to have another person that can still run our business. So I still do work with other general contractors here and there. I have other general contractor relationships that I'm continually growing, but it will never take over my relationship with Chris. Chris will always be my number one until in less, something happens where a trust is lost. But then God, for 12 years it's been that way. So I started off with that story because it's, it's feasible. It's possible. You know, last week I started with a story of, of like, is this really what I want to do?

Tim Murphy (00:11:34):

Like this was your problem. This is like horrible. And then today I start off with a story of hope because I have a great thing. Bob has a great thing and he's working on a great thing and it's possible, but does it take a hell of a lot of work? Yes. It takes a hell of a lot of work and just like a marriage, you have to look at both sides of the coin. So I started off with that story because I think it's super important going into how do I find a contractor I can actually trust. So Grando kick it off, man. Like if I'm sitting there, I'm in the survival phase of real estate and I'm like, okay, you know what? I've been doing? These wholesale deals, I'm excited about these wholesale deals. I'm making money doing these wholesale deals, but I'm seeing these other guys, even when they pay me my wholesale fee, they're still making more money than me. So how do I find a general contractor I can trust and maybe start doing what they're doing, keep the margin that I would make on the wholesale fee and now make even more because I can actually build out the project grand a, where would you start looking for that general contractor you can

Robert Grand (00:12:40):

Trust? You know, so I'm in real estate. So I'm always, always looking, you know, in places where people are touching real estate. So my, my own private money lender is a great person, you know, local, private money lender. They're seeing all the contractors, you know, when people are doing dry requests with private, they're seeing, so my first place, if I'm borrowing money and I'm thinking about going that route, and I'm a wholesaler, that's the next step you're going to figure out the money aspect probably borrow it. So with that, I'd probably say, who do you know, that would be great to work with me inside of that. So go into your private money. Lender, property managers are another great place. You're working on a project. You said, Hey, I'm going to be working on some projects. I'm thinking that I'm going to be doing some rentals down the road, probably keeping some of them and selling some of them.

Robert Grand (00:13:23):

But I wanted to see if you had any great contacts for me that you utilize in your property management world, forgive contractors, property managers, the good ones can do almost a complete, you know, rehab on a house for you. So they're kind of like a little bit of a Jack of all trades, but that gives you, I think, access to some of the smaller offbeat people that potentially can grow with you. The first thing I had an issue with is I was going to bigger contractors. They've had a lot of business and that were doing a lot and I didn't have an, I maybe had kind of an established or a known relationship with them, but not as good as something that, you know, if I would have started, like I'm starting out here in the survival phase, they're in their survival phase. Or maybe they're just out of that survival phase, but they're maybe not as big and you could potentially grow with them.

Robert Grand (00:14:07):

I think that would be a pretty good place. Cause those people are more likely to have time to be able to go out with you and even look at your projects and be like, Hey, here's what I'm thinking. And then you're like, what do you think all that could cost? You know, how would that look? How would this be? So that's, I think like if I were to like really sit down and think of two ways, you know, that would be outside of being like, I'm going to Craigslist and I'm going to just look up people in on Google and stuff like that. That's probably how I would probably start because those are the people that are doing work and they're usually more affordable, you know, if those prices, cause there we're doing a lot of business with those places and you can ask those two places, like, you know, a property manager as well as a hard money lender for an introduction to them too. So then you get that third party connection where they don't want to let that person down because they're already doing business with them. So

Tim Murphy (00:14:51):

Yeah, I a hundred percent agree with you. A referral from someone you already trust or doing business with would be your best resource for a contractor that you're probably going to end up trusting. Cause that's, again, how I came in in touch with Chris is that he was referred to us. He said, you know, Hey, you got Chris, you got to talk to these guys. They do a lot of work. We knew the guy that referred them over to us. And then through his track record, obviously, you know, the rest is history, but it was a direct referral and he actually got referred to us instead of us going to him. And so we put them through the stringers and boom, there it went. So that's great. The other thing that really made me think about your recommendations there with private money lender and a property manager is that's exactly what I'm doing.

Tim Murphy (00:15:35):

I'm as I'm going into multi-family and different states, San Antonio and down in the Southeast in the Tennessee market as we build up multifamily that's exactly what I'm doing is we're going to a property manager, which is a referral referral. And then the property manager is saying, yeah, we got contractors, we've got a whole book of them. Here's a couple of guys that you might want to talk to instill that really made me think like grandiose on it, because we were going to a whole nother level, which is commercial when we're dealing with millions and millions of dollars. And that's how we're finding our referrals is exactly how grand said, but now great. Let's get a little bit into the deeper weeds here. Like referrals hundred percent agree. That is the number one way. You're going to find a contractor you can trust, but what are some other ways, like what about going to your hardware store? And I'm gonna throw this out there. Granted, you can just tell me how about you telling me this granddaughter yay or nay when I stayed. Okay. So how about going to your hardware store? Like at ACE hardware or your home Depot and saying, Hey, you know, I do a lot of rehab on properties. Do you have a contractor I can trust? What are your thoughts on that?

Robert Grand (00:16:38):

The pro desk at home Depot, a hundred percent that pro desk and at least in my home Depot is the pro desk at all. Home depots are getting really good and they actually have really competent people there. So I think the pro desk at home beat home Depot is a great place to go because those contractors go through, they have the pro account and they're always putting job names and stuff. So they're always cycling through there. They know a lot of the contractors by first name. And I was actually in one the other day. I'm not as known, but we do a lot of volume business with our little handy dues through home Depot. And they were trying to figure something out on our account. They said that I had like a thousand dollars of free money. I was like, I don't think we do.

Robert Grand (00:17:11):

And then we looked it up and yeah, it was already utilized, but there, every time I was standing there watching that a new contractor come in and he'd be like, oh, Hey, such and such this and that. And he's like, oh yeah, I'm working on this. And they're like, oh, it's ready over here. And I was like, huh? I was like, thinking that that's a great place to sit there and pick up people, you know? So I can see that. I mean maybe an ACE hardware might be the same. You talk to those guys. Those people are just in and out all the time, so much. And they contractors are, they have the people and the places they like to work with and they keep going back time and time again because why they get perks everywhere they go, there's coffee there, there's donuts. There there's stuff. They're, you know, it's like they built a relationship and it's all about relationships.

Tim Murphy (00:17:52):

So grandiose. So let's go to the next one. Google, when you do a Google search, what are your, what are your thoughts on Google searches?

Robert Grand (00:18:00):

Good. But it doesn't have the third party connection that's bringing you together. So I caution most people, you know, like the people that are doing a really good job on that and they're coming up the one, two or three spot, I think that they're worth talking to they're worth interviewing. There's there's some value there, but you, I think you just have to be a little bit more careful and you're going to want to, you know, kind of vet them out a

Tim Murphy (00:18:22):

Little bit. Okay. Let's go to the next one. Online community, Facebook room. So like, let's say it's like you live in Eugene, right? And so you go to the Eugene Facebook group about, you know, home improvement or something. Cause there's always a quirky little niche-y. What do you think about that?

Robert Grand (00:18:39):

I kind of rate that up there a little bit with Google. Like, I mean, I'm vetting people and I'm going to figure out who they know that I know. So if they're in that Facebook group, I'm going to look for mutual friends and then I'm going to go and I'm going to talk to those mutual people and ask them how they know him before I even make contact with them. Okay. But I think there's value there. You can do it. So, but not as good as that third party referral or word of mouth,

Tim Murphy (00:19:02):

It'll never be as good, but I'm trying to get creative, you know, like I could say the yellow pages, but I don't even think they have the yellow pages anymore. Yeah. That'd be epic. I remember that dude. That's right. When we remember the 19 hundreds you have, do you have one that pops into mind, like a different just alternative source? That's not referral that isn't home Depot or Google or Facebook, private groups. Like, do you have one that pops in your head that I'm not thinking of? God,

Robert Grand (00:19:34):

I really don't on top of that. I mean yeah, no, I don't. I mean with me and my profession, like, you know, like I know a lot of firefighters have third, you know, do other jobs and stuff like that. So I instantly, if I know one of them, you know, I'll go to that person or I ask that group. So actually that is one, like if you do a different job and you have a peer group of people, that peer group is a, probably a great place for more referrals. So it kind of goes back to that referral. So it kind of feeds back into that, but third-party police firefighters. A lot of those people have second time part-time jobs. And if you can find militaries and other great ones. So like if you find military people that are w the guys that I really like past military dudes, my plumber's a past military guy.

Robert Grand (00:20:15):

I love that. But the people that are reserves, like a lot of those guys, they're still serving and their reserves, man, if you could go and like talk to, you know, the local reserve office or that, and ask them who they know, like you're getting a person that is, you know, not going to let anybody down that is a person they don't believe in quitting, right? No, no. That's like, I love it. When one, if a contractor tells me they were a vet or they're in the military, the reserve, or they're a police, or they're a firefighter, any of that stuff, I get like excited because I know they won't quit. You know, bullets are flying, they're running at the bullets, you know, and

Tim Murphy (00:20:53):

Grand old, that's such an awesome piece of advice because it is really what you're looking for when you're, when you're looking for that perfect general contractor, you're looking for an attitude and you're looking for a personality more than you're even looking for experience. Now experience matters. Don't get me wrong because they've solved more problems. And if there's one thing, they need to be good at it. That's called problem solving when it comes to the construction. But yeah, I think there's an attitude and a general contractor has to have a never quit attitude. You know, so, okay. This is, I mean, it just sums it up. Like I keep asking Bob for different resources and he keeps coming back to referral referral, referral, referral referral, because it comes down to integrity. It comes down to word of mouth. It comes down to trust. I mean, it's hard to find someone you trust.

Tim Murphy (00:21:42):

If you don't get that person from someone else you trust. And so there's not really much more we can talk about as far as where do you go to find this guy? But now I think the meat and potatoes, like I told you is how do you interview the guy? Now he might be a firefighter. He might be a military background. He might be a highly recommended referral for someone that you really, really trust, like your mom, your dad, a past business partner, whatever it might be. But that doesn't mean that you don't interview them. That's not, it doesn't mean that you don't go out and think for yourself and come to your own conclusions of, is this the right guy for me? So Greg, I want to kick it off with you in the new process. The first thing that I think you need to ask is what is their experience level? What are your thoughts on that?

Robert Grand (00:22:32):

Yup. Experience level is number one. I want to know what their experience level is, where they've worked, what they've done in those jobs. Like the well RA, like there could be, you know, the instance that you have a general contractor, who's just basically has a general contractor license, at least in Oregon. And he can just hire all the other people in project. And he's essentially a project manager. Right. And that's okay. And maybe he doesn't have construction experience, but I want the guy who I know who's done it. Right. He started out maybe start out when he was 18, as a framer, worked for two years there and was like, I got to do something else. Then he goes to roofing. He was like, it ain't getting any better here. Then he gets to here and there, and then he's now offended and he's did finish work.

Robert Grand (00:23:09):

And then he's like, you know what? I need to GC, you know, like I need to be this guy. Those are the guys that I'm always looking for. Who've been through the trades and done it. They don't have to be amazing at all of them, but they just have to know how each phase goes together and how they understand that. And so talking to them about their experience level and all that is key. And what I really like to hear from a general contractor is the ones that say, I can do everything, throw up a red flag for me. Oh, I can do it all. It's like, well, what does that mean? But the ones that say, okay, you can do it all. And I say, what about framing? They're there. If they're like, oh yeah, I do framing. And the answer a quick, you're like, oh, I'm not sure. I'm like, well, how much framing? Cause that's a big one. Right? But the ones that will have the honesty and integrity to say, I've done framing, it's not my number one. I'm better at doing like interior remodel framing where I'm not dealing with major structural issues or new construction framing when people have the ability to be honest with you and real with you, that's the ticket when you're,

Tim Murphy (00:24:09):

I 100% agree with you. And I think though, you also in the context of what you were talking about, you know, what do you guys, you know, you asked the guy, well, what do you think about framing? Can you do framing? I think a really good general contractor, like an experienced general contractor would say, well, I know how to frame, but I have four guys that on my crew that will be doing the framing. See, that's the difference between a subcontractor and a general contractor, a general contractor is the quarterback. He runs the team, he, or even the offensive coordinator. He runs the team and he tells all the players on the field what to do, you know? So the GC, his offensive coordinator, and he's got to find a really good quarterback. And that quarterback is his framer. Let's say. And so you also have to think about how are they thinking about it because you don't want a GC that's necessarily going to jump on the job and frame the whole house, or has his own internal framing crew.

Tim Murphy (00:25:00):

And he's part of that crew. That's not really the GC I would be looking for because I want the guy to be up in the box, watching all the players on the field and making sure they're doing the right things. And then they have the right resources. If somebody gets hurt, he knows that he's got a new player that he can pop in and he knows exactly how to pop them in. So I a hundred percent agree with Grando a great assessment on experience. Now let me take this next one. The next one is, are they licensed, bonded and insured? That's when you're interviewing a general contractor for the job you need to find out, are you licensed, bonded, and insured? Now you're probably like, well, duh, okay. Yeah. Right. Duh, I get it. But I've even taken, made this mistake and work with guys that aren't fully licensed, might not have a big enough bond and they might not even be insured.

Tim Murphy (00:25:46):

Well, Tim, why would you ever do that? Money? Because when you start, you're like, well, gosh, so you're licensed, bonded insured. You're expensive. How about you? Are you licensed by the insured? Well you know, I, I have a bond, but it's not worked for a guy who is. Yeah. Yeah. And so then all of a sudden it's like, okay, but you're so much less expensive and you're so much more expensive and it's all of a sudden your brain is going okay. You know, I, I make more money. If I go with the less expensive guy, I make less money. If I go with the expensive guy who should I go with? You go with the guy that's licensed, bonded, and insured because every time anything goes wrong, you're covered because you hired that guy because he's covered through his license. He's obviously has to have a he's knowledgeable. And he could lose his license if he doesn't do the right things, he's bonded, meaning he has a bond. So if something happens, the house falls down, he's covered through his and his insurance. And so these are super important things. Granted, I know you, you probably know more about the licensed bonding insured than I do. So if you want to add something to how it is that someone's licensed, bonded insured, that'd be awesome.

Robert Grand (00:26:56):

I mean, it's, it's so important. And, and then taking it a step further. A lot of people don't think about this. And my insurance lady actually told me this, having them make you as an additional insured person on their bonding and everything. It's a simple, easy form that they do and all they have to do. And that guarantees, you know, that they're with you on that project. And especially like big projects and stuff like that. If they're coming in as a little bit of it, like a small sub, and it's a few thousand dollars, I could see not probably spending all the time to do that, but if they're the GC and they're running it, every project they're putting you down as that. So that way you're added to their insurance. And you're additionally insured on that whole thing, because you know what happens in Oregon, if somebody is not licensed insured, they go and cut their foot off on your job site.

Robert Grand (00:27:38):

They walk into the ER and then they ask, was this an on the job injury that guy's going to be like, well, yeah, I was working on this and that, if that guy wasn't insured, it's coming back on you, you know, it's coming back. And, and that's one of the reasons why, like, you know, I hope my general contractors license still as a developer, just so I still have that layer of protection in place. And I can cover myself just in case, you know, somebody slips through the cracks, at least then I have my own backup with my own license and stuff. Cause we're, we're subbing all that work out, but it's so important, you know? And that's why I feel like I even just keep my license just because I don't ever want to have a gain issue.

Tim Murphy (00:28:15):

So let's go onto question. Number three. Do you offer a warranty on your work? Now? This is a really great question because there's big difference between like new construction in the state that I'm in. And I would believe every state, I haven't done the homework, but you're going to have warranties because in Oregon they have construction. Right. New construction one year.

Robert Grand (00:28:36):

Yeah. Yeah. They've got to cover all the major systems and all that stuff for one year. That's mandatory for new construction. Yeah.

Tim Murphy (00:28:42):

So, so a new construction and I think every state you're going to have mandatory warranties. Like in Minnesota, you have a one year warranty, you have a two year warranty and then you have a 10 year warranty. The one year warranty is just for everything that they've done on the house, they have to stand behind their workmanship. The two year warranty is for major mechanicals, like your furnace, your AC, any other major broken water heater, that stuff, which is usually not really a big warranty by the builder because it's warrantied by the actual manufacturers of each one of their products. So that's a pretty easy one for the builder. And then you have the 10 year warranty, which is for major structural, like your foundation and your framing stuff like that. So yes, you want to have a warranty now let's get a little bit simpler here though.

Tim Murphy (00:29:23):

Cause we're talking about maybe flipping a small house, maybe $80,000 house or a hundred thousand dollars, $150,000 house and flipping it into like that 300, $400,000 house, a little bit smaller job, you know, it's going to be maybe 50,000 to a hundred thousand dollars in rehab give or take. And again, I'm being general because they know different areas of the country are gonna have different prices. But it's not a huge like remodel where this guy's like adding additions or anything. It's more of just a cosmetic remodel. Do you have a warranty for that? And I would tell you that a builder, a builder that's worth anything should warranty their work for at least one year, they should stand behind what they're doing, because if they install something and it wasn't done, right, you should be able to call them and you should be able to have a discussion with them and they should be willing to come out if it wasn't done. Right. And they admit that it wasn't done. Right. Which again is a hard thing, but it's pretty easy to know if something isn't done. Right. So Brando, would you agree that, I mean, a really a good contractor, which means a good person who stands behind their work and has integrity. They should stand behind their product for at least a year. Would you agree?

Robert Grand (00:30:34):

Yeah, for sure. The roofer that we use right now, he does a five-year and I'll pick him every day of the week just because he says five year warranty and like I'll pay more money to have that level of security, you know, especially when I'm flipping and it's hard to say you're giving up your profit, but you're giving up your profit for protection.

Tim Murphy (00:30:53):

Yeah. But you're giving up your profit and in exchange, you're reducing headaches because when, when contractors stand behind their work, then when you have a problem. So you're the one that actually sold the product because it was your property and they contact you and say, I have a problem. You can say, no problem. I'm going to call that refer. He stands behind that. His work for five years, we'll have him come out Mrs. Johnson. And he will take care of that. And he takes care of that problem. But if that rougher doesn't stand behind, if he doesn't warranty his work, then who has to take care of the problem, you have to take care of the problem. So you have to think about that. Especially as you're scaling a business, you want guys that are going to stand behind their work, because if problems come after the fact, after you sell the property, your reputation is still on the line.

Tim Murphy (00:31:39):

You can go to your guys who there's reputation is still on the line and they will go take care of that problem on behalf of the team. And so you definitely want to make sure that they warranty your work. You definitely want to make sure how long that warranty will go. And you definitely want to know, well, do you put that in writing? So that's the question. Number three, the next one's going to be, how will I handle mistakes or disagreements? So again, that's part of the warranty. Oh gosh, you guys made a mistake. So grant you go into this one. How do you expect general contractors to handle mistakes and disagreements?

Robert Grand (00:32:13):

Well, I mean, how people handle that and how their ego gets involved in that, it's hard for every single person, you know? So that's probably a great question. I haven't even really truly thought about that is asking them upfront how they deal with that and how does a mistake and this and that. I love the humble person, you know, that humble contractor, you know, like if I make a mistake, I'm happy to come out and fix it. I like those types of people. And you can just judge by that conversation that you're it with them, but you know, how would we handle, you know, mistakes and disagreements? I think that comes down to just a good quality contract, right? So like that's where the contract comes into play. That's why I spent $1,500 on a GC contractor or worker contract that has everything on the whole nine pages right down to the change orders, the scope of work and everything that you put into it, you know, so good contracts handle mistakes and disagreements

Tim Murphy (00:33:04):

And, and you're right, Bob, because that's the whole point of a contract. You know, I hit on tracks because I'd rather do everything on a handshake, but unfortunately not everyone has exactly the same level of integrity as maybe you or I have. And that's where the contract comes into play. You know, the one thing I learned about contracts is that you don't need a contract until you have a problem and then contract to know exactly how you're going to solve that problem because you've already agreed. Yeah. In, in really good general and sometimes specific terms as to how the problem the mistake or this agreement's going to get resolved. And so I totally agree with you. It's definitely worth the money spent to have a contract and hopefully you never have to use

Robert Grand (00:33:46):

Yeah, I agree. I can see like where you're at or like, you know, as we get better in our relationships, like you, you don't necessarily have to have a contract for every single thing, but definitely when you're starting out with somebody's boiler plate contract at minimum or the contract that I've got, that I'm throwing into the notes here that Tim will have. So it's a, it's just a great one in that $1,500 I spent, you know, they can have when they're part of that.

Tim Murphy (00:34:09):

Right. All right, granddaughter, the next one is going to be, how will they obtain necessary permits? Now, this is a really great question because some GCs contractors do not like to deal with the city. And it's very understandable why they don't like to deal with it. I hate it. I hate it. You have to ask that question because Bob knows the pain of having to deal with the city. And when you have to get the necessary permits, you have to deal with the city. And now the reason why you need to ask that question is because you need to know, okay, well, what permit, if you say, yes, contractor, what permits will you need to get? Because you want to know, and you want to have an inventory of the permits that they pull. Number one, to make sure that they're pulling the proper permits.

Tim Murphy (00:34:54):

Because if you go to sell the product or the property that you own, you need to disclose, okay, we did this work and permits were pulled on this work, especially plumbing and electrical, anything structural framing, all that stuff you have to have permits. And the permit really also covers your butt because once you pull a permit, odds are, there's going to be a city inspector. That's going to come out to the house and they're going to make sure that the work was done up to code. And so grandma tell us, I love to response. Tell us why a general contractor would be like, oh yeah, you know, I could do the permit, but do we, you know, maybe we don't have to pull that permit for the day. Oh

Robert Grand (00:35:33):

God. Yeah. That's the worst thing ever. I mean, I've actually not pulled, permits on some, on my own place that I that I remodeled on some of the stuff. And I got turned in for it and had to go back and re permit it. And you know, so that's been one of my own experiences. I wasn't a contractor then, and I was just a homeowner, but it's such a daunting thing to go through the process and cities are so complicated. Right. And so I see why a lot of stuff and it wasn't major work, you know, but still I got popped for it just because a neighbor turned me in and said, I think they're doing this right. But a contractor that can't navigate those waters, isn't doing enough work to be navigating those waters. And if they're willing to go off beat, what else are they willing to cut?

Robert Grand (00:36:14):

What else are they willing to hide? What else? Or, you know, maybe it's, oh, it needs to be a two by six, but a two by four work. Right. It's that whole ethical thing. And I learned my lesson through that and, and you know, it's one of those things, but that's a good contractor, knows how to navigate those waters better than you or I, and I just spent three months trying to get, or getting permits on a new construction project. And I saw I was burnt out on it. I was like, why is this taking so long? Well, I didn't have the relationships with the city. You know where this guy, you know, our newest guy, he, you know, I was like, dude, I got here's the plans. Can you get the permits on this one? He's like, I got it. I go, what do you mean? He's like, I'll go down there. I'll talk to him. He goes, I'll have the checkbook. And I know the people. And I was like, I go, you're not just doing it all in line. He's like, no, I'm not doing that online. You know, it was like, you guys, he said, in-person thing. He's like, and I know the inspector. And then like, we can get through. I was just like, yeah,

Tim Murphy (00:37:09):

It's a relationship. There is an art to it, Bob, because there is is amazing at it. I mean, we've been, we deal with the city of Minneapolis, which I'm going to tell you is absolute torture. And we've done a lot of products and projects in the city of Minneapolis and he knows everyone down there. And he said the same thing. I go, dude, he goes, they're making me do it online. I'd rather go down there. And so especially with the COVID world that we're in right now at the moment he's not happy about it. So you're right. It's a relationship thing. And on top of that too, though, you're right. Grando because getting permits is another layer of insurance. It's another layer of protection for you as other, whether you're the homeowner, the developer, the builder, the investor, whoever you are when you're using a general contractor, it's another layer of protection.

Tim Murphy (00:38:00):

When they go down there and get a permit on behalf of the work they're going to do on your house. So let's move to the next one. So we don't make this four hours long. What is their estimated timeline and process? So when you're interviewing a contractor, you're going to ask, what is your estimated timeline and process? Now I can tell you this, I've done this so long that just reading that question, it hurts because there's one thing that a general contractor will tell you is, oh yeah, I'll get it done in 90 days. Okay. You're going to get it done in 90. So you're going to do a full gut of this house and it's going to be done, permits everything out the door. I can list it in 90 days. Yeah. Oh yeah, no problem. No problem. Okay. So then what's the process.

Tim Murphy (00:38:45):

And then they break down the process of what's going to happen at what stage, how the products are going to be ordered. Dah, dah, dah, dah, dah, dah, dah, dah. I can tell you with almost a hundred percent certainty, very, very, very rarely will a project get done within the timeline that the general contractor will give you. Now, that is a big test because if you interview that contractor, if you decide to work with that contractor, and if that project gets done within that 90 day timeline or whatever the timeline is, they give you, let me tell you that is a good contractor. That is an organized contractor. That is a contractor that has relationships. That is a contractor. You probably want to give another shot too, but if they don't hit their timeline and if their process isn't exactly what they said, it was going to be just know that's very, very normal.

Tim Murphy (00:39:36):

So Grando tell us, let's say we're doing a project, like your last project, the one that you just sold recently, that is a smaller project. That was the one you were going to sell to your fireman, buddy. What was the, what would you, you know, if you were talking to a contractor and you were hiring a contractor for that job, what would you be asking her? Hey, what would your expectations be on timeline and on process? And in the end of the, at the end of the day, did, did you, if you were the general contractor or the general contractor, your hire, did they actually live up to the timeline and the process that they told you? They would?

Robert Grand (00:40:13):

Yeah, no, that one actually we slated out and we thought it would take, you know, 60 days it was just a skim coat all the way around it did it. The only thing that slowed us up was we didn't realize the extent of the electrical work that needed to be done. So the electrician had to do like a 90% re-elect trickle work or redo on the house. So that took up a little bit more time, but we kind of like on skim when we know it's like a skim coat, like where you're just kind of doing like cosmetic flip, we know it's about 60 days, you know, so we can kind of judge that, that one just took a little bit over 60 days because of that, that delay. And I think, you know, it, it, it all really truly comes down to, you know, how well organized they are.

Robert Grand (00:40:51):

And so like, like I, like, you know, I'm not where you're at, where you have the, just the general getting, taking everything and rolling with it. Like, you know we're we have kind of like designer, project manager organizing that aspect, onsite guy. That's kind of the lead GC, but we're still kind of overall in control of it and organizing, and he's saying, Hey, okay, we're ready for X, Y, and Z doing that. So we're able to kind of control our timeframes that way. But a good general contractor. I mean, like, if you think about a remodel, if they're telling you to take you a month and it involves anything like removing a wall, even, you know, like gutting a bathroom and, and, and, and including a whole house touch up paint and all that stuff, it just takes time because it only goes together one way.

Robert Grand (00:41:34):

But the problem with remodels is it has to also come apart. And that's the difference between new construction or remodel, you know? And, and new construction is almost easier to me sometimes because in a remodel, you've got to rip it all apart, and then you find all these problems that can just blow your freaking schedule. It's never planned for dude never planned for. So that's like, so, you know, I always say like, give yourself three months minimum, you know, when you're doing any sort of thing where you're even touching a wall and, you know, moving it at all, you're going to need a plan for three months. And so if a general contractor is telling you a month, you know, and this is a small house like this, a thousand square foot house. So the bigger the house, the more time it's going to take, right? So if it's 2000 square feet tack on another month, you know, it's like when you look at those types of things, and, but if they're telling you one month or 60 days, it's just unrealistic. I mean, like, it takes two weeks sometimes just to paint.

Tim Murphy (00:42:24):

So grant, let's talk a little bit about the process. Cause I think you're going to be very burst as a general contractor, the process, what I mean and be very like timeline specific as far as step one, step two, step three, but not go too deep into the weeds. Like what would the process be? That, that when you say, okay, Mr. General contractor, if I hire you, what's the process going to be on? Let's say finishing my basement. Let's go with that.

Robert Grand (00:42:48):

Yeah. So if you're going to finish say a thousand square foot basement, right. I don't know, that's probably good sized basement. So you've got a thousand square foot basement and you have that. So the first phase of that is going to be the demolition phase. What needs to be demoed out what pipes need to be pulled, what needs, what infrastructure systems need to be fixed before they can get to the next phase, which would be the framing phase of that basement. Right? So it's like, how long does this take? And, and knowing phases of construction is what really will help people understand that. So it's like, I know the first thing on a remodel remodels, the demo phase and all this stuff now it's like, okay, now we're to the framing phase, once framing's complete, then it's like, okay, how long is that going to take?

Robert Grand (00:43:26):

We've got a thousand square feet. You've got a three man framing crew and a basement or whatever. So you're going to be like, all right. So that's going to take X amount of time with three guys and you should be kind of going, okay. Yeah. A couple of weeks to frame that that would make a lot of sense. We got to beam it and do stuff like that. Then you've got electrical, you've got plumbing. Those people don't like to work at the same time in a house. Like they freak out. If you have a framer there and electrician there, they just spazz out and want to leave. You know, they all want the house to themselves. You have to give them that timeframe, you know, and then those guys will know their timeframes. Like how much time they're going to need tack on a couple of more days for, you know, delays and stuff like that.

Robert Grand (00:44:05):

So, yep. The unexpected, then your next phase, you know, you're going to go from all the infrastructure being done, electrical plumbing, then you've got that. The next thing from there, it's going to be, you know, the installation portion of it. So insulation, drywall, that's like it's whole new phase right there. And you know, that's the installation's really quick. Right. But then the drywall there's layers of finish that have to go into dry drywall. There's an inspection, you know, that involves just like when the drywall has placed, you know, like that's gotta be inspected and all that crazy stuff. So there's that phase of it, you know? And once you're past that point, then you're kind of what I call, you know, onto the finishing phase of a project where you're putting in like that beautiful things. And that's where everybody loves to be. The other stuff sucks and nobody sees it, you know, and like that finishing phase, when I tell, tell, I always tell people like on new construction from the day, you think your place is all dry walled in and that's finished.

Robert Grand (00:44:59):

You still got like another 90 days to go, you know, cause all that stuff. Now it takes a lot of time, like the finish, you know, putting in all the flooring, putting in all the cabinetry, putting in all the, you know, the plumbing fixtures, there's a base, the trim, the Woodward trim, all that stuff that actually takes the longest. And so in smaller places, you can get that all kind of squeezed down into probably a one month timeframe, but most bigger places, it's going to take a couple of months to knock all that stuff out. So I just to recap that, I think, so then you have, so what I say demo phase, then you've got the framing phase, then you've got the kind of like re putting in the infrastructure insulation. Then you've got the, you know, which involves drywall and then you're onto the finishing phase, you know? So just kind of picking out and understanding those phases of construction.

Tim Murphy (00:45:46):

Yeah. And if somebody, if the GC doesn't explain those phases of construction to you, then you're, you should be apprehensive because exactly how Bob laid it out. They can go into more detail, but they better be explaining on a finished basement hire, if you're going to hire somebody to finish your basement, they better go over those general processes. And then you got to ask questions that go deeper into it. So, Bob, that was a, that was a great explanation. Let's move on to the next one. What is the payment schedule? So I would tell you this, that the bigger, the job, the more payments. So for instance, like I'm working on a $1.4 million new construction situation, right? And usually the standard amount of draws that the that my contractor will pull is around five, but on this one at 1.4.

Tim Murphy (00:46:33):

And because, you know, it's got a lot of custom detail into it. So it depends when you order product and, and different variables go into it. We have six draws. So the payment schedule means that the general contractor comes to me and says, Hey, I need a payment for the foundation and for to order the lumber. So I need half down for that. That might be drawn. Number one Hey, you know what, now draw number two is I'm going to put on the outer laymen of the house, the windows that might draw, draw number two. And then it just keeps going through the cycle of the build and then draw number six is like, Hey man, I got to pay for the cabinet finishes. And then we got the electrical guy we got to pay for. And we got to pay that plumber that was in there like 30 days ago.

Tim Murphy (00:47:17):

And so that's how it usually breaks down. Now, when you're doing like, let's go back to the basement finish. What should you do as far as payment schedules on a basement finish? I would tell you, you should probably do a down and then half on completion because the thing about payment schedules is that you have to realize, and there's, this is, again, this is painful for me to say, because I, I, for good contractors, I know the pain, they go through collecting money from homeowners because homeowners use that money against them for every thing. And that's not fair because a lot of good general contractors do good work. And then the homeowner tries to milk free stuff off of them because I'll give you that check. I'll give you that check. I'll give you that check. And then finally, you know, sometimes the general contractor has to go so far as to put a lien on your house because you're playing too many games, they've done what they said.

Tim Murphy (00:48:09):

They're going to do the product's good. And you're just playing games to get free stuff out of them. That's why that's painful. That's not fair. You shouldn't do that. But on the flip side, you do need to protect yourself and giving half down, gets the job going and pays for materials and pays for maybe some of the subs that the general contractor needs to get paid to get to the job, but it doesn't give the general contractor any profit. So he needs to keep making sure that project gets done because in order to get his profit and for himself to get paid, he needs to get that second half installment. So I would just on a finished basement, I would do half down and then half when when everybody signs off on a, on a good finished product. Granda, what are your thoughts?

Robert Grand (00:48:51):

Yeah, you know if I were using a GC to run that whole thing and he said, here's the budget, this and that. I would definitely do that. How we work on a smaller level right now, we, we like to pay our contractors every Friday, so they know we'll pay out on Friday and we always cover materials. So we pay for, we don't even, you know, if they're at a home Depot, they would have one of our corporate cards and they would use that. Or if they're one of our suppliers, they would put it on our account and that bill would come to us. So we try to like, on the smaller micro level, when we're project managing, we like to just be able to have them just, we just basically pay their labor costs. So one week's labor is one's weeks pay.

Robert Grand (00:49:27):

Right? So that's kind of how we do it. The more we step back and we do bigger projects, like we're on our apartment complex, like our, you know, electrician, they're like, here's, it will not exceed this. And then, so we'll need this. And this will be the material breakdown in this. So we're happy to pay those, you know, to like reputable companies, just like you said. But on some of the micro more cosmetic things, you can, you can pay for materials, have the materials there for them and then pay for their labor costs. And if you find guys that like to work like that, that's a good relationship on a lot of small, especially rental rehabs and stuff like that. That works out really smoothly, I think. Yeah,

Tim Murphy (00:50:01):

Totally agree with you. I totally agree with you. Okay. Let's move to the next one. Is there a dedicated team working on my project or will you be going on and off the job and, and you know, maybe juggling one or two or three projects at one time, Bob, I don't need, I'm going to leave this up to you because this is a huge pain point. And this, I, I believe this could be one of the, the biggest questions you need to ask. And I would work with the guy if he answered it in one specific way. What's your thoughts on it?

Robert Grand (00:50:31):

Well, yeah. So if you have a contractor that's basically GC and he's got 20 projects going on and he's, you know, moving all over the place. You're not going to get the service. You're going to get with one, one contractor right there. So I I'm like you. I want a contractor who I know that's going to be working on my project until that project is done. You know, the guy we're working with right now, he's running point on that, you know, with, with design and Shelley our project manager. And she's bringing, get him, all the materials and all that stuff he needs when he's like, oh, okay, electrical's going in this week. They're not going to need me on site there. He's like, and we got the apartment complex. He's like, I'm going to jump back over the apartment complex and go work on that and get the framing done over there and make sure everybody's working on that, that, I mean, you know, there to there, I think like maybe another project, cause there's always dead spots and stuff going on, but man, when they've got like too many things going on, you know that to me like a lot of, yeah,

Tim Murphy (00:51:22):

But it's also different because Grando, you have a guy he's kind of under your wing. See Chris and I, I mean, we're, we're a partnership, so he's under my wing. So like we're married, right? So, I mean, he wants to take care of me as much as I want to take care of him. That's different than what I guess the context I'm thinking of in this question, when I'm in the survival phase and I'm trying to get to know a guy and I know he's not undermining there, you know what I mean? And he's like, well, you know, yeah, I got, I got Susie and, and, and Jim and Bob, I got their houses going, but I can take on your, your investment property. So yeah. I mean, I'll go back and forth, but I'm not going to leave you hanging. No, no, no, no, no, no, no, no.

Tim Murphy (00:52:00):

Do you have a dedicated team, like three guys in your crew that will be at the house every day working on this house until it's done so that I know that there's not going to be dead time of a week because you got caught over on Susie's house and you just can't make it over because you see that happening. Be careful because you just went from, okay, what was your timeline? Or by our timelines, 90 days to what was our timeline? You guys said 90 days and now we're at 180 days later. Why is the house not done? Because they can't manage the situation of bouncing through jobs. And so many problems are coming up, things aren't getting done. So you, you have to be very careful about finding someone that says, yeah, man, I got three guys. They won't leave that job site until that job is done because it's calming.

Robert Grand (00:52:50):

Yeah. That, that actually happened to me on a project that was a little bit further out of town. It wasn't getting done, wasn't getting done, wasn't getting done. And I found out that they didn't have people on site every day. Yeah. So looking at it in that aspect, like I have a lot more control over what I have going on. And it's because of what you just said right there. That's why I haven't. But my goal is to bring the guy we have up to the level of what you're talking about with the dude that, you know, you're your partner, Chris. So that's the exact path I'm on. And that's exactly

Tim Murphy (00:53:19):

Right. Granted, we learn all these things through just pain, pain, pain, pain, pain. And we just are like, I don't want that pain. I don't wanna go into what I said, permits. Bob's like, I gotta walk that pain. I hate those things. So next one. So the next one is a, will I have a main point of contact through the job? So just like you want to know, you want the guy to say, yeah, you know what? I'm going to have three guys at your job site every day and it will be there until it's finished. Okay. There's three guys on the job site. Who's going to be my main point of contact. That's managing that job site. Grando why is that so important? I mean, you're structuring that right now.

Robert Grand (00:53:55):

Oh my God. One point of contact comes down to what we call in the fire service span of control. You know, span of control is five to one. You know, one person can manage five people and you always have to kind of think about that. So if you don't have one point of contact on a job site and you're trying to go to five people, they're going to tell you five different things. And they're going to give you their five different perspectives. You have to have one leader on that job site every single time who says, this is the plan. And he talks to the, if it's two other guys, the two other guys know he's the leader and they're following the plan. So without that, if you have a GC that doesn't or a person or anybody you're working with this contract that doesn't have that, they don't know the unders, they don't understand the basics of span of control, and it will become a nightmare. And your time lines will be so far below.

Tim Murphy (00:54:39):

Yeah. And it really comes down to too, is that your one point of contact is the leader of the job. And he also has confidence in making decisions. Because if there's one thing you need out of your GC is a guy that's very decisive has experience enough to have confidence in their decision-making ability. Because if you have someone that is indecisive as a general contractor, again, if they tell you the job's going to take you 90 days and you're 180 days into the job you're going, why didn't this take 90 days? And you have an indecisive decision-maker, that's probably one of the big reasons why. So definitely find out if there's a main point of contact. Yep. I agree with that, man. Okay, let's go to the next one. What do you do at the end of every job? Now I'm going to put this into context because when a job is finished, it's not finished.

Tim Murphy (00:55:33):

Like when you have a DC that drinks to just shut the door and walk away. Oh my God, it's wrong. Because when you do construction again, that comes all the way back up to warranty. Do you warranty your work? Yes, sir. I worked in my work for at least one year or five years. Like your refer Bob, but that is what I'm talking about. If they don't mention that. Well, what do you do at the end of every job? Well, the job isn't over just because we finished the, your basis. Ma'am doesn't mean that we're necessarily done because what we have to do is we have to obviously clean it, have it spotless. We actually hire a professional cleaner. And then we have you sign off on all the work that we've done once you're completely happy. The job still isn't done. Ma'am because you know what, for a year you can call us because if there's nail pops or if there's some expansion and contraction like in Minnesota, when you have the cold and the hot, you know what, we're going to come back and we're going to make sure that we got everything figured out really well.

Tim Murphy (00:56:28):

And another thing is like on siting in Minnesota, if you install signing in Minnesota in the winter, and then the summer comes and it expands, you can have things that happen to that material. And so they need to come back and they need to address things like that. So if they don't say something along the lines of, well, ma'am the job really? Isn't over once we leave the job, you know, cause we stand behind our work or they don't come up with something along those lines or, or you know what, man, you know what the jobs over after we have the place completely spotless and you sign off and we're all on agreements and everybody's happy if they're not talking that language, then you're probably not talking to the right guy. Right.

Robert Grand (00:57:06):

I have nothing else to add to that. You're a hundred percent.

Tim Murphy (00:57:10):

Okay. Okay. That's awesome. Cause you know, I mean that's a fact like the jobs over, you know, what, and if they want it to be over the second that you hand them, that last paycheck that comes down to integrity and that comes down to, Hmm, is this the right guy for me? So definitely pay attention to how they answer that question. Now the next question is, what precautions do you take to protect my properties finishes both the current finishes that I have in my property because you know, if you're working in a kitchen, there's still stuff that's finished around that kitchen. And also the new finishes that you're installing, like these beautiful custom cabinets that I have. How do you protect them from all the other work and all the other things that are going on grand, I'm gonna let you take that one.

Robert Grand (00:57:55):

That's the biggest thing. Like I hate it when things get damaged, you know, like even trim work, you know, like once you're in that. And so when you're in that like construction phase of stuff, you know, kind of in like that framing this and that, the demo, then you're into the framing. I get that things can happen because you're tearing apart a house, you know, all the major things that can be packaged up and moved and wrapped up should be wrapped up and clean. You should have floors covered. You should have dust curtains up and all sorts of stuff to try to keep and minimalize the rest of the house. If you're working for somebody you know, most of our houses, everything would be vacant. So, but you know, we still have like, we're not doing any work over here. Let's not touch these walls here.

Robert Grand (00:58:35):

Let's not mess this up here and let's keep this over there. So you're still doing a lot of that type of stuff. And it just comes down to taking the extra time, you know, to, to minimizing the effects everywhere else, because you can prevent dust from just flying in there. She don't have to spend $500 cleaning out two bedrooms that you didn't need to do. Cause you could have just put up some Visqueen, you know? And then really like when it comes down to it, like after you're through that and you've got it done and put in brand new floors are the floors just going to be uncovered and everybody is walking on it. Cause contractors all wear vibrant soul boots and stuff. They're walking through mud, then they're walking right in there. It's like, does the guy that do the floors? Does he cover them up afterwards? Or does the drywall guy covered up? So he doesn't get a bunch of dry wall stuff on it. All those people should be held accountable to that level of detail and takes a good general contractor to ensure that they're doing that. You know, he doesn't care then they don't care because they're not going to do it unless they absolutely have to. You know, and it's just,

Tim Murphy (00:59:32):

You know, nailed that. Like that's this $1.4 million build we're doing, we have a client. So we, I was able to pre-sell it. And it's new construction, but I'm telling you like that is to the nth degree of the answer to this question. Like how much detail are you going to spend on protecting all of these fine finishes that you're putting into this home so that you don't get splatter on the cabinets or you don't get a ding on the cabinets or the trim doesn't get a ding on it or the railing doesn't get a ding on it. Or the guys don't come in to these beautiful white Oak floors that cost an arm and a leg. And, and all of a sudden there, they have rock on the bottom of their foot. And all of a sudden you have this big scuff on these floors or like, how does that light fix?

Tim Murphy (01:00:17):

You're going to go up and not get ruined. I mean, it's that this will like when you go to the scale of a $1.4 million new construction build this scale of how much money you spend to protect the finishes through the stages is ridiculous. It's like when I first started seeing the number of like, you guys spent all that just to like put up the plastic and protect the floors and wrap the railings and I'm like, oh my gosh. But at the end of the day, those are people who care. That's someone who has integrity. That's someone who stands behind his work. And you have to understand though that when you see that that's an expense as a general contractor has, that's not a bad thing because then you know, the end product, Hey, number one, it's going to have integrity, but number two, it's not going to have a bunch of Nicks and splatter paint, and it's not going to be something that you walk through. And all of a sudden there's blue tape. Like there was a murder scene in the house. Yeah, no doubt. And it's multiple

Robert Grand (01:01:17):

Times, sometimes the paper gets torn up or something gets trumped. You've got to fix it again. But you know, at the end of the day, if something gets damaged and you've done everything you can to protect it, then that's just a casualty of the job. Right. And then it's like, okay, I had a fridge where they were putting in this fridge and, and I was watching them and he go through, I was like, ah, man, you know, I didn't want to be the jerk because I was like, don't, you know, I was thinking it was tight where they're going, it's right at the corner of a thing. I go, man, if they hit that thing, they tweak it and they hit it. It was a brand new fridge. Luckily it was a flip house and they're like, oh, we're really sorry. I was like, well, it was only an $1,800 fridge now as a small ding in it.

Robert Grand (01:01:51):

It's that level of detail where I'm just like, I'll never want you guys to install a fridge for me again. And that's where I have to like, be like, I have to have give second chances because they were like, we are so sorry, what are we going to do? I go, you know what, it's a flip house. We'll just say it was a discounted fridge that we put in there and we'll just write this one off, you know? And like I was like, so, but in the end I was like, I'm make taking a mental note of that. Like you guys, it wasn't your fridge. It was my fridge and my money, you know? And you just decided to take the easy route when you should have went around the other way, where it was wider, you know? And it was like, Ugh. And those are the things that, those details that are so important with a good Jesus, the

Tim Murphy (01:02:27):

Details matter, especially as you move up from, you know, the lesser and lesser houses, like if you're selling a $150,000 house, the expectations are less certain Lasser. Like I said, as I moved up through the ranks and now we're doing these $1.4 million houses, like that's a 10,000, even from like $4 million, don't I get to have really high expectations. And I would say, yes. Yeah, you

Robert Grand (01:02:50):

Do. And that's a $10,000 fridge in that house, you know? So a Dean there, ain't gonna it's it's toast. It's like a $10,000 mistake, you know, versus a 1600.

Tim Murphy (01:02:59):

Yeah. So, okay. Let's go with the final question that we have on our list. Now I want you to understand, like this conversation we're over an hour and I knew it was going to go an hour, but this list one for days. But I think these are some of the very, very key things that you need to ask. These are the things you need to pay attention to. So let's go onto the last one and I saved the best for last Grando handle change orders. Now this is, this is the point where the customer or you, if you're the property owner or me, the developer and the builder get to argue about, okay, so you want to charge me this much more for what or Tim gets to say, the developer says, I want this. How much is it going to cost? And then it adds to the bottom line, which whenever you add anything to the bottom line, whether you're a homeowner getting your house remodeled, or whether you're a developer hiring, hiring a general contractor, whenever you add costs to the bottom line, it's less money in your pocket.

Tim Murphy (01:03:59):

So it's never a fun conversation, change orders. And how do we deal with the change orders and what is a fair change to ask you? Like, Hey, can you add an outlet? Hey, can you add it to can lights right there? Do you, should you expect to get charged or something like, Hey, you know what I want to upgrade those floors. I know you gave me, you know, $20 a square foot. I want to go to $30 a square foot for these beautiful Brazilian cherry floors. Yeah. Okay. Well, that's a change order. That's legitimate that the contractor has every right to charge you for, but is a change order legitimate when it's like, Hey, will you add two cans when it really costs like 50 bucks or a hundred bucks maybe to add two cans? Probably not, but Grandville, tell me about change orders. I mean, from a general contractor's perspective, and then I can give a little light from the developer's perspective in regards to how general contractors look at change

Robert Grand (01:04:56):

Orders, right? Yeah. So if it's like paint colors, if it's like a different type of trim, but at the same cost, you know, it's cost neutral. I think those change orders are fine, you know, but if it comes down to altering or changing or adding costs or adding can lights or anything like that, those are change orders that have to be charged because the profit in a job as a profit that you set with a buffer, like a contingency, you know, for the project for overages, not just for changes. And so that's, that's kind of the way I see it. It's like, yeah, you want six cam lights in the living room versus four. Perfect. Let me just give you the exact true cost of that can candlelight, you know, and go right to the GC and the electrician. What do these two costs that, that and that, okay.

Robert Grand (01:05:42):

Can we add that? And most general contractors, everything they touch that runs through them gets marked up 10%, right? Because they're going to make money off that. So he'd leave it up to him. You fill out the change order paperwork. And then from there, everybody signs on it. Cause if you don't have clear expectations on like what something's going to cost, all of a sudden they want to change 30 things in a house, you change $31,000 items. You've just added $30,000 to a house, you know? And then they get the, the budget and they're like, and they see that. They're like, what, what, what, what you said? And the classic thing I've seen is somebody will walk through a house, you know, a spec home or something with a builder. And they're like, yeah, can I do this, this I, oh yeah, we can do that.

Robert Grand (01:06:21):

Oh, we can do that. We can do that. And they'll, they'll break down their budget. And then the price that was like for this spec home that you could buy here and they're going to have another home built, you know, by that contractor. Cause they all love to have the teaser spec home and then they have the other one that they're going to build you. That's more custom. They're like, oh yeah, we could do all these changes for you. And then you see that price compared to that price. And you're like, well, I can't afford that. And then sticker shock. Right? So it's just preventing that sticker shock and having real expectations, being very upfront with people when they do change something. That's not really typically what you like to do in your process. And if you do do it, it's an exact cost. And if there's a markup for the GC, knowing that exact markup and walking it back through, but you know, my contractor's contract has that exact thing and it has the change order it there. So it's line by line. What you're going to change specific, not like I want a whole new kitchen that's this and this that'll be 30 K it's like, what are we changing in the kitchen? And it's just very detailed out. So people can go, oh, I can't change that. Now. I can't change that. Now I can't change that. So yeah,

Tim Murphy (01:07:20):

A hundred percent agree with you from the general contractor perspective. Like, so from my developer perspective, see you don't, if you're in the survival phase and this is the first job you're going to do, and you're asking that question saying, you know, sir, if I hire you as my general contractor, how will the change orders work? You don't have the context to understand what you need to protect yourself from. So, you know, you're going to learn the hard way. Probably there's no really no real way around that, but at least you can have something documented, whether it's a contract like Bob has. And so you have a documented process for change orders or you can learn from it because the contractor gives you something you know, in their rough contract, it's not your contract, but it's their contract when they, when you hire them to do the work.

Tim Murphy (01:08:08):

And it explains what they're going to do in a change order situation, either way, again, always default to have something in writing, then you can resort to it when the time comes. But a lot of things are going to happen in the change order situation and from a developer because I've done enough of these jobs I bought for myself costs. And so I know that I might change my mind. I know my designers might change their mind. I know that something's going to probably cost more than what I initially thought it was going to cost. And so I create a buffer based on, and it's sometimes a percentage or it's a fixed dollar amount based on the size of the job in the, in the scope of the work. So you, as the, whether you're the homeowner, the developer, whomever hiring that GC experience will tell you that make your own buffer.

Tim Murphy (01:08:56):

Don't tell them what the buffer is, but make your own buffer so that, you know, when you have change orders, you're okay with that because Bob is a hundred percent, right? Yeah. Change orders are sticker shock. And instantly the first thing you think about is if you're a developer is wow. I just lost $10,000 of profit right off out of my pocket and it hurts and it gets emotional and you gotta stay away from that emotional. So, Bob, do you have anything you want to add on change orders? Cause that is one of the painful things in the past.

Robert Grand (01:09:26):

Yeah. I mean, clear communication, clear documentation is the way to save yourself and everything. When you have clear expectations added on top of that, you'll do, you'll be successful in that whole process and the contractors that aren't on board with that, and, and, and don't play by those rules are not the good ones

Tim Murphy (01:09:42):

Grandiose. So we're at the end of our hour long podcast. And I think that this could be one of the most valuable podcasts, just, I mean, find, and this is part two, like we're going to go into probably we're going to probably have like 15 episodes around contractors because it's so dynamic. And it's such an important piece of what we're trying to do as a value driven investor and, and transforming property. But you have a story or anything you want to share along the lines of finding contractors like your big thing was focused on referrals and relationships to find good contractors or all the different questions that we went into. I don't know if you have a story or something you want to do to sum it up and take us out on this one. I

Robert Grand (01:10:23):

Got a small story and this is how I test contractors and which we didn't really talk about it. You know, a lot of times, if you have smaller projects, you can test people on. It's a really great way to start building that relationship. So we had this guy that sought us out, right. They know we're flipping houses, this and that. And they're like, oh gosh, man, I really, I got to work with this guy. And he's like a younger kid who just broke out on his own. Right. And he's like, I'm a contractor and I've worked for X, Y, and Z, and I've done this work. And so I was like, and he had the courage to come and want to meet with us, sit down in our office and say he wanted to work with us. And I was like, okay, great. You know, and I go, how we'd like to get started with you is since you're like a newer contractor, you said you've got experienced, went through the, kind of the questioning, you know, what he's done and all that type of stuff.

Robert Grand (01:11:08):

I go the next time, you know, on our brokerage side, when we have a punch list, pop-up for a house, we'll get you started on that. And we'll just see how you work kind of on the smaller stuff just to get you started. Cause I get, I go, you know, I think that you could be a good person. I go, but I'm not willing to trust a $60,000 rehab with you and have it take, you know, two years and never get done. You know? So we're going to start small and we're going to build a relationship and you can always do that in many different ways. When, you know, even if you've got a rehab, you can, you can always have something else. There's something house that you can have done. Even if it's on your own house, you know, you can test people that way.

Robert Grand (01:11:43):

So yes, it was just like an Eve fix and some, a little bit of roofing work, this and that. And I was like, okay, so my brother works on it and we're were like, okay, so what's the ballpark cost. He goes, well, if it's going to be this and this and this, it could be like $600, you know, but if I have to tear into X, Y, and Z, it could be up to $1,400. And I was like, oh, seems reasonable for that level of work and what he's going to have to do. So he gets done inside of one day and sends us a bill for like $1,350. And so my brother calls me, he goes, dude. And he goes, he said it would be this, but it was like this. And I go, oh, okay. And he's like, I go, we'll call him and ask him how long it took this and that.

Robert Grand (01:12:22):

And he goes, oh yeah, I got it done. This and that. And he goes, well, that's, you know, like going contractor rate with profit and start sharing all this thing. Or there's like, no, no, no. You said, if you didn't have to do X, Y, and Z, it would be $600. If you had to do that, it would be up to like, not to exceed that. And he say, he goes, yeah. And he goes, so why are you charging me the full amount? And he goes, well, you know, if you were to hire somebody else to do that type of work and it would be this, and he's like, he goes, cool. He goes, all right, we'll pay you. And we paid him. And then he, two weeks later, he goes, Hey, what are we going to do next? And I was like, oh, we're not working together. He was like, why? I was like, because you did not adhere to your word on the first project we

Tim Murphy (01:13:02):

Did in switch. Yeah.

Robert Grand (01:13:05):

I go, wait, that was the test project. And I go, you failed the test project. I go, I think you're a good dude. I go. But I think you need to go get some work experience with somebody else that you can work with and kind of sub under and stuff. And then maybe come back in a couple of years and talk to us, you know, about how things are going. You'll understand your pricing. You'll understand how to do things, this and that. And he's like, well, he goes, I didn't know. That was a test. I go, everything's a test. Everything's a test. And you failed. I didn't have to tell you it's a test. I was just seeing like, will he hold to his word of the $600? And I go, we're going to pay you. Cause we're never going to argue. You know, we're never going to argue with some guy that we owe money and have him go around saying, these guys shorted me.

Robert Grand (01:13:44):

I'll pay you $2,000. If you say to IOG $2,000, I don't care. I'm never going to use you again. But at the end of the day, it's your word. And it's what you say that you're going to do and how you follow up. And the actions that you take that determine whether you get to work with us again. And that is just like a small way of testing people to see that little thing. And it costs you so much. Now imagine that that guy on a $60,000 project give us a bill for 80, $90,000, we'd feel obligated to pay him, but we'd be like, we're never using him again. We have no money left in this deal. And you know, it's better to test people on small things and it is on big things and build that relationship over time. So, boom,

Tim Murphy (01:14:25):

That was awesome. That was the perfect story because you summed it up on how do I test somebody and how do I find out? Because at the end of the day, that's what you're looking for is how do I find someone I can trust? And so, you know, what thank you for listening. If you've listened to this entire podcast, I am hoping you got some value out of this. And, and I think you did because there's a ton of value here and there's a ton of experience talking, but if you want more experience and you want to become part of our community again, visit value-driven investor.com and you sign up for our email list and join our Facebook group. We put together a private Facebook group and in that Facebook group, we're going to have some awesome resources around contractors, like grant said today, he's got a contract that he spent thousands of dollars on. We're going to get a contract like that into our resource resources in our private Facebook group, because that's going to save you thousands of dollars to have to go ask your own attorney to do it, but it's also gonna save you time and it's gonna save you stress. So we plan

Tim Murphy (01:15:26):

On adding tons of different resources like this into our private Facebook group so that you guys don't have to go through the pain that Bob and I go through on a regular basis, and you can shortcut it and become more successful faster. So thanks again for visiting us on the value different investor podcast. We're out. Thanks for listening to the value driven investor podcast, where we lead by giving for more information about our community and what's new visit value driven investor.com. The value-driven investor podcast was produced by digital legend media in Minneapolis. Build the or legend digital legend media.com.