What Is Contractor?
A contractor runs your renovation. A general contractor (GC) coordinates subs — plumber, electrician, HVAC — and manages the timeline. You get 3 bids minimum, lock the scope of work before closing, and use written change orders for any addition. A bad contractor = delays, scope creep, and finishes that don't move the ARV. A good one hits the budget, hits the schedule, and delivers quality that appraisers reward. On a fix-and-flip or BRRRR deal, they're make-or-break.
A contractor is a professional responsible for performing or coordinating construction, renovation, or repair work — the person who turns your rehab costs into finished product.
At a Glance
- What it is: Professional who performs or coordinates construction, renovation, or repair — GC manages subs; you pay GC, they pay trades
- Why it matters: Rehab costs and timeline drive fix-and-flip and BRRRR returns; contractor quality controls both
- How to use it: 3 bids, same scope; lock scope before closing; written change orders for additions
- Common threshold: Never pay 100% upfront; milestone or draw-based payments; 10% retainage until punch list complete
How It Works
A general contractor (GC) takes your scope of work and turns it into a finished property. They hire subs — plumber, electrician, HVAC, flooring — pull permits, and manage the schedule. You pay the GC; they pay the subs. You don't have to find a plumber at 2 a.m. when a pipe bursts during demo.
Bidding. Get 3 bids minimum. Same scope to each — every line item, every room. Line-item bids beat lump sum for rehab costs tracking. The lowest bid isn't always the best. A bid 30% under the others often means they're cutting corners or will hit you with change orders later. Mid-range with solid references usually wins.
Scope lock. Walk the property with your contractor before you close. Agree on every item in writing. Kitchen: cabinets, countertops, backsplash, appliances — specified. Bathrooms: vanity, tile, fixtures — specified. No "we'll figure it out later." That's how scope creep starts. Lock it. Then require a written change order with price and timeline impact for any addition.
Payment. Milestone-based or draw-based (if you're using hard money for a flip or BRRRR). Never pay 100% upfront. Typical: 30% to start, 30% at rough-in, 30% at finish, 10% retainage until punch list complete. The retainage gives you leverage when they're 95% done and want to move to the next job.
Real-World Example
Jacksonville fix-and-flip, 2024.
You buy a 3-bed ranch for $87,000. Rehab costs budget: $34,000. You get 3 bids. Bid A: $28,000 (suspiciously low). Bid B: $35,000 (references check out, 4 similar flips in the area). Bid C: $42,000 (premium, 8-week timeline).
You go with Bid B. Scope: kitchen remodel, 2 bath updates, LVP flooring, paint, HVAC service. Locked in writing. Hard money funds in 3 draws: demo/rough-in, finishes, final. Contractor hits week 6 — on schedule. Then: "The bathroom vanity looks dated next to the new kitchen. Want me to upgrade it? Only $1,200." That's scope creep. You ask: "Will it move the ARV?" He says probably not — comps are capped. You say no. He finishes on time. ARV comes in at $155,000. You sell. Profit intact.
If you'd said yes to every "only $X" suggestion, you'd have added $7,000 and cut your margin 20%.
Pros & Cons
- One point of contact — GC coordinates subs, you don't chase plumbers
- Permits and inspections — they handle the paperwork
- Quality control — a good contractor delivers finishes that support ARV
- Timeline management — they're incentivized to finish (next job waiting)
- GC markup — typically 10–20% on top of sub costs; self-GC saves money but costs time
- Availability — labor shortages in most markets; 2–4 week lead time common
- Trust risk — bad contractor = delays, overruns, callbacks
- Scope creep source — they'll suggest additions; discipline has to come from you
Watch Out
- Vetting risk: No written contract, no proof of insurance, cash-only, no references — walk. Verify license with the state board. Unlicensed work can create lien and liability issues.
- Payment risk: Never pay 100% upfront. Milestone or draw-based. Hold retainage. If they demand full payment before starting, that's a red flag.
- Scope creep risk: Contractors suggest additions — it's more work for them, more money. Put every addition in a written change order. If the number on paper doesn't justify the ARV bump, say no.
- Timeline risk: Delays cost you hard money interest on flips and BRRRR. A 2-month slip on a $100K loan at 12% = $2,000. Build buffer into your hold timeline.
Ask an Investor
The Takeaway
A contractor turns your rehab costs into a finished property. On fix-and-flip and BRRRR deals, they're make-or-break. Get 3 bids, lock scope before closing, use written change orders, and never pay upfront. The discipline to say no to scope creep has to come from you — they'll always suggest more. Vet references, verify insurance, and hold retainage until the punch list is done. Your margin depends on it.