How to Fill Jobs and Get Bids That Don't Destroy Your Margins ([the property] $113K Story)

TLDR

Getting bids is an art. The wrong approach adds friction, drives prices up, and attracts bad contractors. The right approach is cost-based pricing, minimal friction at each step, and one rule that runs everything: never be behind on the money.

Cost-Based vs Market Pricing

There are two ways contractors price jobs.

Market pricing is what most people assume: the contractor knows what the market rate is for a job, and they quote accordingly. The problem is most contractors don’t have a database of market rates. They’re figuring it out on the fly based on their daily pay rate, their crew size, and how complex the job looks.

Cost-based pricing is what you want. This is where you’ve done the work to know what things actually cost. Materials plus labor plus a reasonable margin. When you know your numbers, you can evaluate a bid intelligently instead of just hoping it feels right.

Here’s the thing most investors skip: if you don’t know the cost basis, you either overpay because you can’t push back, or you underpay because you accepted a low bid and the contractor takes shortcuts to survive on it. Both are expensive.

Your job before taking bids is to know your numbers. Cutting corners is caused by accepting bad bids.

The [the property] Story

I got a bid on a project at [the property]. The number came in at $113,000.

That’s the kind of number that makes you want to walk away from the deal. But the deal was real and the house needed the work. So instead of panicking, I went and got better bids. The work got done for a fraction of that.

That $113K bid wasn’t necessarily malicious. It was a high-tier contractor with overhead, a sales team, and a waiting list. They priced it the way they price everything: with margin for complexity, delay risk, and their business model built in.

The lesson isn’t that contractors are crooks. The lesson is that if you don’t know what things should cost, you have no leverage in this conversation. That [the property] number would have looked reasonable to someone who didn’t know better.

Know your cost basis. Get the right contractor for the tier of work. The bid will reflect both.

How to Show a Job and Get a Bid

You’ve chunked the scope of work into phases. Now you’re bringing a contractor out to bid one of those chunks. Here’s how to run the meeting.

Walk the job with them. Show them the written scope. Ask them what they think. Let them be the expert on the execution even as you stay the expert on the vision. Through that conversation, you may adjust the scope a little. That’s fine. Update it.

Then you do three things: verbal, written, and video.

Verbal is the walkthrough itself. Written is the updated scope document. Video is you walking the job with your phone recording, narrating exactly what you expect. “We’re doing the trim this way. Don’t touch that door. If you paint over the hinges, you’re scraping them. Do paint before floors.”

I’ve seen what happens when you skip the video. The contractor finishes, comes for payment, and the floors are overspray-painted. And they’re not wrong. You never said it in a way they could reference.

Once you have the walkthrough done, step back. Ask them to send you a price. Don’t interrogate them at the job site about rates. Don’t create friction early. The more friction you add upfront, the higher the price because they assume that friction applies to everything you’ll do together going forward.

If the price comes in high, ask: “I’m sorry, I actually budgeted less than this. Am I missing something?” Make it your problem, not theirs. They’ll be less defensive and more likely to explain or adjust.

If the price comes in suspiciously low, verify the scope is right. “I just want to make sure that price includes everything we walked through.” Don’t call out the low price. Just confirm they understood the scope.

Once you land on an acceptable number, send them the video and written scope and ask them to confirm it covers what you discussed. Step by step, removing friction at each gate.

If you’re hard to deal with, they’ll give you the hard-to-deal-with price. Make it easy and earn your discount.

Set Expectations Three Ways

Verbal. Written. Video.

This isn’t busywork. It’s protection. The better you set expectations, the more ruthless you can be when you hold accountability.

Being an a-hole on a job site is almost always a mismatch between what you expected and what you actually communicated. If you set it clearly and they missed it, you have every right to hold the line. If you thought you set it and didn’t, that’s on you.

Walk the job. Send the scope. Record the walkthrough. Every time.

Pro Tip

Don’t use fancy property management software and expect your contractor to log into it. That’s your admin work. They’re there to execute the job, not use your tech stack. Let them communicate however they want. You do the system management.

Contracts: No

This goes against everything the internet will tell you. Here’s why I don’t use them anyway.

These are small businesses, one-man shops, or little crews. If you have a contract and something goes wrong and you want to sue them: what are you getting? They don’t have assets to go after. You’ll waste time and money chasing a contract that won’t pay out.

Your real protection isn’t a contract. It’s being ahead on the money. If you manage the pay schedule right, the contract is irrelevant. And all a formal contract does is add friction that raises the price.

Here’s my contract: I sent you the video. I sent you the written scope. You texted me the price. We’re good.

The video and written scope are your contract. The pay schedule is your enforcement mechanism.

The Pay Schedule

This is the most important rule in managing contractors.

Whatever white-collar management training you’ve had doesn’t apply here. The power in this game is the paycheck. If you give it away, you get run over.

That means two things: you never pay upfront, and you’re always ahead on the money. Every dollar you pay should be for work that’s already done and already checked by you.

If they want money for materials upfront: set up a Pro account at Home Depot. They can pull materials, ring them up, and you get a text to approve the purchase before it goes through. You can see everything they’re buying. That’s actually a useful management tool on top of solving the materials problem.

For the actual pay schedule, ask for it after you’ve confirmed the scope and the price. Not upfront. Add one more layer at a time.

Ideal structure: pay periods tied to completion of defined work portions, not time worked. “When the flooring is done and I’ve checked it, you get paid. When the paint is done and checked, you get paid.” The fewer pay periods the better for me because every pay period requires me to come inspect. But I’ll cut it up as small as you want. I just won’t pay ahead.

I’ve had an HVAC contractor let his bill run up to $65,000 across multiple jobs before he came to collect. He treated my account like a savings account. Knew the money was there whenever he wanted it. Multiple contractors have done this with me. That’s the signal that you’ve become the bank. That’s where you want to be.

Common Mistake

Paying before you’ve checked the work. Every payment requires a site visit. No exceptions. That visit is your leverage.

When to Get Three Bids

I usually don’t get three bids anymore, because I know my pricing and I know my guys.

But I’ll be honest: on your first few flips, you should. Here’s why. Prices for the same scope can vary by 40% or more. Not because someone is cheating you, but because different contractors perceive jobs differently. Some see complexity where there isn’t any. Some have lower overhead. Two bids at $25K and one at $15K is a real scenario.

Later on, when you’ve run the same scope with the same contractor ten times, you can skip it. You’ve got cost basis. You know if the number is right.

There’s also the consultation method: find a GC you trust, pay them $500 to bid the job with no expectation of getting hired. You get a knowledgeable bid and a mentor walkthrough at the same time. Worth every dollar when you’re starting out.

One timing note: a lot of contractors price based on starting soon. They’re bidding you because they’re looking for the next job to start Friday. If you take three weeks to decide, the price may change. Strike while the iron is hot.

The goal: develop your cost basis so you can evaluate bids on your own. Until you get there, three bids is your safety net.

FAQ

What if the contractor won’t give me a written scope?

That’s your job. They give you a price, you put it in writing. “Hey, just wanted to confirm the $8,500 covers all the scope items we walked through.” Get that confirmation in text. That’s your paper trail.

The contractor wants 50% upfront. What do I do?

Hard no. Set up a Home Depot Pro account for materials if that’s the concern. For labor, you don’t pay until work is done. This isn’t negotiable. Any contractor who won’t work under these terms is signaling they don’t trust themselves to finish. Take that seriously.

A bid came in way under what I expected. Should I take it?

Verify the scope first. Make sure they understood everything you walked. If the scope is confirmed and the bid is still very low, the contractor may be hungry for work and cost-effective. That can be fine. But if the price is so low it seems impossible, it probably is: they’ll cut corners to survive on it.

How do I handle it if they go over scope during the job and then ask for more money?

That’s a change order conversation. If it was genuinely unforeseen, it’s worth discussing. If they just didn’t scope it correctly, hold the line. The scope was set, confirmed three ways, and priced. Adding after is expensive for both of you.

More on the full contractor management system: @rosspaller on YouTube

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