Today we're going to continue talking through the basics of house flipping and we're going to focus on hiring contractors. For most new contractors, this is the scariest step of the process after putting in a bid on a property.

Hiring a contractor needs to be taken very seriously, and it can be daunting, especially when you don't know anything about the work that needs to be done.

The fastest and easiest way to find a contractor is to put out an ad. What I do is I put out an ad on Craigslist which says: "Looking for a contractor to do complete home renovation. All applicants should have a builder's license and builder's insurance." When anyone applies, they need to show you proof of those things. When you interview people, you need to ask for references and even drive to see their past work. The next part of the process is to actually bring them into the property and have them give you a quote. You need to do this with a few contractors so you can compare quotes; I even suggest bringing them all in at the same time. Give them all the same information and give them a deadline to give you a quote. That is your first opportunity to see if they can meet deadlines. Once you get the quotes in and have an idea of who you want to go with, double-check their references. Be suspicious of quotes that are much higher or much lower than the rest.

You can easily lose money if you hire the wrong contractor, so take this step seriously. And if you have to, you can always fire a contractor halfway through a job. It's not fun, but sometimes it has to be done to cut your losses.