Building Success: How to Vet Contractors for Your Investment Projects

Thursday, February 29, 2024

The Larossa Workshop Blog/Building Success: How to Vet Contractors for Your Investment Projects

Building Success: How to Vet Contractors for Your Investment Projects

Essential tips for navigating the contractor landscape with confidence.

It took me years of sleepless nights, money sucking rehabs, and a “close to arms” experience before I figured out how to find the BEST contractors for my rehab projects.

Here we are again - this is the LAST time I’m ever going to get sucked into hiring the wrong type of contractor.

I don’t even have a name for this kind of crappy contractor - maybe we should go with “The Criminal!” After a barrage of change orders that didn’t fit our parameters for paying extra (and general shoddy work) we had to part ways with this one. He didn’t take it well, even though we made a very fair offer when we ended the relationship.

And that’s something we like to do in these situations - give the other guy the better end of the deal to help us cleanly part ways.

Unfortunately, this gesture was lost on him.

He started threatening us over phone and text and even visited our office acting aggressively. After that, we did some quick research and found an alarming criminal history. I actually had to send the staff home until we resolved this issue for fear of their safety.

Not a situation you want to find yourself in.

However, this was far from the first time I had dealt with a contractor who made a project “less than optimal” - in fact, I’ve actually identified 10 different types of contractors who don’t fit the mold for an investor-grade rehab.

Now before you get worked up about any of these types, you have to understand that one of the bigger issues at play is that people tend to group all contractors together, such as “contractors for construction.” But the truth is, there are different types of construction. There’s high-end renovations, new builds, commercial work, etc.

Here at Larossa, we’re talking specifically about investor-grade rehabs, so here are the nine different types of contractors we’ve gone through.

Types of Contractors

#1: The Professional

When I was first starting out I had just come from a corporate type of job, so the type of contractor I was looking for was a “polished pro.”

I imagined it just like those shows on HGTV. The guy shows up in his collared shirt with his clipboard and starts taking all the notes, has all the answers with my vision in mind, spits out a price on the spot, I agree, and then a couple months later I’m rolling in the profits.

Well, these guys will certainly get it done. However, they are generally built for different types of construction than what you’re doing, so good luck with your pricing. I hope you got a great deal on the front end, like… price = free.

I call this one The Professional.

#2: The Craftsman

Well I knew that wasn’t going to work for me. Deals are always tight. Besides, if you can make the initial rehab price work for the deal, wait until you get the first change order.

So I went back to the drawing board - and my roots. I grew up in a blue collar community, so I started searching for the kind of guys who knew how to build and did it all themselves. You know the type - he basically wears his worn-out leather tool belt to dinner, a real Bob Villa. This worked out great. I got a phenomenal price (at least in comparison to Mr. Wall Street from before), so I took it thinking that I had figured it all out - then 5 years later the project was complete.

I’m joking, but not by much.

Fortunately, everything worked out well enough, and by the time he was done, it was time for the next project.

However, this new project wasn’t as nice as the last one (which was more of a cosmetic renovation). This one was more like what you actually deal with out there as an investor, not what they show you on TV. This is where the problem began. It didn’t take long for “The Craftsman” to become “The Ghost.” These guys want to build pretty things on clean job sites. Also, they strive for perfection.

Unfortunately, the types of properties we get our hands on rarely fit this bill, and “quality craftsmanship” is really about continuity between projects and things being “good enough.”

This just doesn’t keep these guys happy for long.

#3: The C****head

Well I had had enough of dealing with ghosts.

I wanted to find someone who wasn’t going to care about the crappy houses I was buying and could give me a price that worked for my deals. My goal here was price above all else, and I found guys who I could work with - in fact, I found lots of them.

“Paint that whole building for $800? Floors installed for $1/SF? SIGN ME UP BABY!”

The problem was that my job sites always smelled like a scene from Breaking Bad. And wait, who is that random guy at the jobsite, where did you go for the past 10 days? How did you get those materials so cheap? Who broke into my tool trailer? Oh no……..

This one has gotten me multiple times. The shiny object of that low price tag just kept dragging me in. Maybe that’s my drug? Well, my final intervention came when I had a house broken into and all the materials and tools were cleaned out. I finally realized that there is just no escaping the true price of rehabbing.

If you save on one thing you’ll pay for it another way.

#4: The Grower

After this revelation, I started to go to some local investor meet-ups where I ran into a guy who seemed to have it all together.

He was a contractor who had a large crew and took on a high volume of projects. The high volume allowed him to get better pricing due to efficiencies. It made perfect sense, like the Walmart of contractors - smaller profits on higher volume. That’s my type of guy. Hired!

There's one small problem. Growing that fast requires intense and never-ending management. More importantly, it requires growing a pool of crew members that are high-level and somewhat self-managing.

Well I can tell you, that is dang near impossible. I know, because that contractor was me.

After many years of trying to grow a crew large enough to handle a high volume of projects, I realized that that was not the way - at least not for me. At that point, I decided to heavily downsize my business and do mostly internal projects with a small handful of customers that are really aligned in values. With the free time I gained, I decided to make a YouTube channel discussing all the dumb mistakes I’ve made over the past 10+ years. You’re welcome.

PS. “The Grower” is actually “The Shower” - overpromising and under-delivering.​

#5: The Go-Getter

During the process of building a fierce, internal crew I ran into a few different types of guys that just weren’t going to work out.

The first is what I call the “go-getter.” He’s ready to do whatever. He’s there to please. The problem is, he’s so scared of making a mistake that he’ll call you to make sure he’s raking the leaves right. Well dang it, I can’t be on the phone with you all day!

He’s the total bandwidth thief.

#6: The Rookie

With lessons learned from bandwidth thieves, I decided that if I was going to have to put that type of time in anyway, I might as well hire someone who is the right person but new to the industry. The problem here was twofold:

  • ​I underestimated the extent of the time investment needed to train a rookie. Turns out, it takes years to actually learn how to problem solve some of these things. Most of those lessons were on my dime. Which leads to the next problem…
  • Once they had finally learned how to problem solve, they’d move to the other types of construction I mentioned earlier. I would never get to fully reap the rewards of my time investment.

(Never is not true - I still work with some great dudes.)

#7: The Union Steward

Next, I decided to hire guys with some experience under their belts.

Turns out that a lot of them had other things on their mind than churning out rehab projects. I got to learn all about how I needed to send 3 guys to do a one-man job. Also, I got to learn the proper form for leaning on a shovel to watch other guys work.

This is what I call the Union Steward.

#8: The Dirty Contractor

And finally, we’re back where we began - a guy turning in shoddy work and coming to my office to raise fists. Read our blog about these Dirty Contractors at the link mentioned in the beginning of this post.

The BEST Contractor

The encounter with this particular Dirty Contractor left me cold and callous.

There was always some issue between his work and the scope of work we had discussed. Nothing we spoke about seemed to get through to him, so I started questioning my own side of things, trying to figure out what I was doing wrong. After he showed up at the office that day, I decided I’d never let that happen again. I’d make the most detailed scopes of work the world had ever seen. I’d hire people to do the work, and if my expectations weren’t met, I would come down on them like a ton of bricks.

Nobody would take advantage of me again.

This went on for quite a while.

I got results - lots of them. Projects were getting completed on time. Customers were happy, and my portfolio was growing.

But I wasn’t making many friends.

Then, I ran into a guy that used to work with me in my “Grower” days.

He had started his own contracting business and most of his crew was his family. He was out looking for some work, so I gave him a shot. I followed the same old routine, ready to lay down the hammer when expectations were missed.

But this guy was different.

He worked his butt off.

He exceeded expectations. He didn’t want to just “get his paycheck,” he wanted to deliver a great product. He understood that a “great product” meant an investment that made me profit. He believed that if I made profit, he would make profit. We could both be successful in this game.

This guy helped me understand what was really important when searching for contractors.

Moving forward, I looked for contractors who understood these principles:

  • ​Understanding Business
  • ​If you make money investing, everyone makes money.
  • In the RE investment game, “quality” means consistency, not necessarily craftsmanship.
  • ​Long-Term Focused
  • ​Investor grade rehabs may have some downsides, but the huge upside is that if the investor is making money, the work can be never ending.
  • ​Skills
  • ​They aren’t newbies. They know the trades and have experience working with other contractors on the job.
  • ​They Are Leaders
  • ​They have a crew that is bought-in. They care deeply about their crew. They know how to manage it effectively.
  • ​The Crew is Made up of Family or Close Friends
  • ​This helps reinforce their leadership.


Although this guy helped me to finally realize the characteristics of a great rehab contractor, more importantly, he shed light on an even greater topic - the true Blue-Collar spirit.

He embodied it to a T. He brought his family here and is willing to do what it takes to bring them to a new level. His approach to this business made me realize that I could embody that spirit myself. Instead of beating my head against the wall, I could build relationships that matter and give guys like him good jobs.

And on top of that, I’d get the side benefit of more bandwidth and more profits!

Good luck out there investors.

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Hi, I'm Ross Paller

CEO Of Larossa

After flipping over 300 houses, holding a portfolio of 150 properties, and creating a successful construction company for over a decade, I felt compelled to pay it forward by sharing the wealth of knowledge and experience I’ve accumulated on my journey.

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