Should I Pay This Contractor? A Walkthrough of a Cosmetic Rental Rehab

TLDR

A contractor said a house was done. I walked it. Some stuff was great, some stuff was lazy. The trick to paying a contractor fairly is to know which details are worth pushing back on and which ones are the price of getting the job done. Here is how I sort them on a real rental walkthrough.

Table of Contents

• What We Asked the Contractor to Do
• The Three Types of Contractors I Use
• Why Relationships Save You Money
• The Good: Cost Savings That Still Look Nice
• The Bad: Paint on Hinges and Overspray
• When Picky Stops Being Fair
• Why Cosmetic Rehabs Are the Cleanest Playbook
• FAQ
• Related

What We Asked the Contractor to Do

Here is the short version of the scope of work. Demo carpet, countertops, and sink. Paint cabinets. Paint interior. Window repairs including a broken pane. Some curb appeal items on the outside. Deck repairs on the back. Exterior carpentry and gutter repairs. And a built in budget for miscellaneous interior carpentry repairs because I know stuff always comes up.

Most new investors think buying a rehab means they have to put on a hard hat and be on the job site daily learning construction. Sometimes these projects are a heck of a lot easier than that, especially cosmetic rentals.

The Three Types of Contractors I Use

Every project uses a mix of three contractor types, and the mix determines how much efficiency you capture.

The handyman on our jobs is our internal crew. They know how to do everything and they break bottlenecks across all the projects we have running. They are expensive, so I only put them on problem solving, not production.

The allarounder is who I use most. These guys can do everything from demo to kitchen install. Some of them even mow the grass. You hand them a package of jobs and they run it.

When you group jobs together under one allarounder, you get better pricing and you only have to manage one person.

Why Relationships Save You Money

What you can do with allarounders is group all the jobs together. Instead of bringing somebody in to tile the backsplash and somebody else in to put in countertops and somebody else to paint, you bundle paint, floors, countertops, hardware, and tile together. Same crew comes in and works for an extended period. No break and setup time. Better price.

It is not because they are doing it for cheaper. It is because they create efficiency.

The window on this job is a good example. Pressure treated wood. Tongue and groove to save a little dough. They painted it, even though I do not think I specifically put paint on the scope. They masked off and kept the wood look where it made the house feel like it had character. That came out of the relationship, not the scope.

This is why it matters to work with the same contractors over and over. They start caring about the outcome. They start covering the gaps you forgot to scope.

Pro Tip

The first three projects with a new contractor you will overpay and micromanage. By the fourth project, they know your standards and you can almost hand them a new house and a budget. That gap is the payoff for not replacing your crew every job.

The Good: Cost Savings That Still Look Nice

The house came out nice for cheap. Brand new LVP throughout. Painted cabinets. Butcher block countertops. New hardware. Backsplash tile probably a few hundred bucks, butcher block plus the tile maybe 1,000 bucks on material.

The whole rehab cost me around 24,000 including material. That is genuinely nice for a cosmetic rental.

One nit: there is a gap behind the butcher block near where the stove plugs in. The stove probably cannot push back any further because the electrical outlet is in the wall instead of on the floor. An outlet on the floor would let the stove tuck back flush. That outlet was probably put there for the original stove and it never got changed. A pretty expensive little inch to grab, so I am leaving it.

Even my kid, who never says nice things, said it was a genuinely nice rental.

The Bad: Paint on Hinges and Overspray

I had one closet I originally wanted taken out of the scope and they left it in. Fine. I can live with that.

What I cannot live with is paint on hinges and door knobs. I hate hate hate it. There is no way the guy I hired would have done that himself. One of his crew missed it and he did not catch it. I sent him a quick picture and I expect it to get fixed.

Then there is overspray on the hinges. Overspray, overspray, overspray. That is the ultimate sign of laziness. It is also something I am consistently clear about with contractors, so it is reasonable to ask them to fix it.

Common Mistake

Paying the final check before you do the walkthrough. The hinges, the overspray, the closet doors, the touch ups, those are things that get fixed only when the check is still in your hand. Once you pay, the motivation to come back and fix ten small things is gone.

When Picky Stops Being Fair

You do not want to be so dang particular that nobody wants to work with you. It is impossible to get the job done. You are never going to pay them because they are never quite done.

You could look at it and say, well, the expectation is that it is all done nice. Sure. But to get every little detail right, you better be willing to pay more money.

My rule: get just enough done to make it look nice and pass inspection, but the things I am clear about, like paint on hinges and overspray, those I push on. I leave the rest alone.

There is a balance. Call out the things you are consistent about. Accept the things that are minor. Most contractors will fix the big stuff if you are reasonable about the rest.

If your list of pushback items is longer than five things, you are probably being a pain. If it is two or three specific things you have mentioned before, you are being fair.

Why Cosmetic Rehabs Are the Cleanest Playbook

Before I went for this walkthrough, I sent somebody to check all the water, electrical, and HVAC. It checks out. So I am mostly looking for the things that will fail an eye test, not a function test.

That is the whole point of a cosmetic rental. You are buying a property where there is not a whole lot of mechanical, electrical, plumbing, or structural. You come in, make it prettier, pass the safety and liability items, and hand it off. Way less bandwidth from you as the investor. You group all the jobs together under one contractor, agree on payment terms, and do not come back until they say it is complete.

Then you walk it, do your inspection, and pass it off to your property management company. They do their own inspection for livability. Then it is cash flowing.

The hard part about cosmetic rentals is not the renovation. It is finding the deals. These properties are close to livable, so sellers want too much money for them. Sometimes the numbers work out, sometimes they do not. When they do, like this one, you run a clean playbook and the work is pretty easy.

FAQ

How do I know if an allarounder is any good before I hire them?

References from other investors, and a small trial job. Not a whole rehab. One bundled job like kitchen and floors on one house. See how they handle the scope, the timeline, and the payment terms. If they clear that bar, bundle more on the next one.

What should I always check on a final walkthrough?

Water turns on at every fixture. Switches turn on every light. HVAC runs. Toilets flush. Behind every door and inside every closet. Hinges and door knobs for paint. Overspray. Caulk lines. Edges of countertops. Floor transitions. The stuff your contractor’s crew is most likely to miss is the stuff you should check first.

Is it worth rejecting a contractor over paint on hinges?

Not rejecting. Asking them to fix it before final payment. There is a big difference. A good contractor will fix a ten minute problem. If they refuse to fix paint on hinges, you have a much bigger issue than paint on hinges.

Why do you keep a budget for miscellaneous repairs in every scope?

Because stuff always comes up. The window pane that the demo crew broke. The receptacle that got buried behind drywall. The piece of trim that was not on the list. A 500 to 1,500 dollar miscellaneous line keeps small issues from triggering a change order conversation and keeps the project moving.

How much should I expect to pay for a full cosmetic rental rehab?

Depends heavily on size and finishes, but for a modest three bedroom rental with paint, floors, cabinets painted, butcher block, new hardware, and basic exterior, 20,000 to 30,000 all in is a reasonable ballpark if you have a good allarounder and you are not buying fancy materials.