In real estate, there are a few common threads or themes you need to know upfront in order to be a success. One of them is “want a friend get a dog”.
Along these lines a very wise person told me early on do not become friends with anyone you deal with in business. He was right; sadly I did not always listen and let my guard down too often. Here as some thoughts on dealing with contractors after either owning or lending on thousands of investment properties both residential and commercial.
What Are Good & Bad Contractors
I have an expression and that’s they all are good until they go bad. Both are true in this case. There are a many ways to get in trouble with contractors; there is always the old bait and switch trick. This happens either because they are idiots and do not know what they are doing or they are trying to con you.
How Contractors Get You Each Time
They do it two ways, one is to under price the job and then when you hit the point of what they think is a point of no return tell you the price will increase for a variety of reasons, or they leave items out of the bid and again once they hit that point they come back with this or that.
Either way you need to know ahead of time a good idea of costs for materials and labor. Always remember, in most deals there will be someone up at night worrying. Make sure it is them and not you.
How Not To Get Taken Advantage Of
You do this by controlling the cash and advances; make sure they are always into you and not you into them. You need to always be prepared for them to walk off the job or you throw them off at any time.
The easiest way for you to get in trouble is to give them too much money and either walk off the job or push it back. Time frames are also important with dealing with contractors as every day the project goes undone costs you money and sometimes they will not be in a rush to complete it.
Common thing is to over book themselves and have too many jobs at once. When dealing with them please understand what you’re dealing with there, while all are not bad and there are some great ones out there.
In my experience the majority of them are real problems and can cause you problems. They never have money, seems to be unreliable and in general hard to deal with. There is a point in job size when you can go to a reputable GC and get it the job done, but you are paying for this. And this is only practical on larger jobs lets say $100k or more.
As an example of some of the land minds that are out there I had a job I handed over to a GC not only did he not complete it, I had to have someone else finish it up. He did not pay one of his sub contractors and that sub put a mechanics lien on my property which I had to pay. Of course he disappeared; by the way he did a great job for me in the past. Desperate people do desperate things.
Having said all this and I could go on all day with stories, I have worked with some good contractors who have become my friends and in fact have worked with some for about 15 years without problems but there are many more that I have worked with that have been disasters.
Always Ask For the “Papers”
Another thing to always be aware of is insurance and permits, its only a matter of time when something bad will happen and you better be prepared with there insurance coverage. Also, be aware if you need a permit for the work your doing. Townships and city’s are tougher than ever and you need to know in advance what permits you need and if the person doing the work needs to be licensed.
Final Thoughts On Contractors
I have not addressed quality……. That’s for latter.
Best advise when dealing with contractors or handyman is to never let your guard down and always be on top of things.