Why It Is Important To Be Brutally Honest In Real Estate Investing

Sometimes being brutally honest is the best way to be with contractors.

We treat people the way we want them to treat us but there are instances when we need to tell them the real situation even if it means embarrassing them during the process.  So much more in business setting, where most professionals are not always comfortable to confront their customers with the truth.  When you are working in a company, you often feel that it’s your responsibility to make everyone happy at any cost.  And while it is your job to do to comply with the customers’ requests, there are instances that they are not knowledgeable or simply they just don’t know what is right or how to do it.  As a professional, it’s your responsibility to inform them of what’s going on or what’s the real score.  Customers are counting on your expertise and knowledge in whatever field you belong so they can get the best service that you’re providing even if it means informing them of what they don’t want to hear and that is the truth.

In real estate investing, we often work with contractors when we rehab houses.  We count on their expertise and knowledge on how to do things properly in their field. However, even though they’re vetted and you think you’ve done your job by carefully selecting your contractors there are instances that’s just uncontrollable. You started questioning why your project is behind schedule, the workmanship is disappointing, and what’s worse is that he’s gone AWOL without any notice at all. Then your problem started, in this instance there are only two things that you can do, ask them to give you an honest explanation, or fire the contractor.

Although we have a choice to discontinue the job and fire the contractor you will have to think again of the costs that you’ll shell out all over again when you rehire another one especially if you have paid the contractor already. So if it has something to do with workmanship ask them to explain and say pay only what you think is the right price for the job done. And remember:

• Do not pay the contractor in advance no matter what the case maybe because in the end, it’s gonna be a headache, and I have experienced this pitfall many times over.

• Document each calls and dealings that you have with the contractor, it pays to know the specifics when things go sour.

• And as I mentioned above, confront them, be upfront and be brutally honest to the contractor. That way the contractor knows that he is dealing with a serious person.

Serious things can happen but firing a contractor should be the last resort as it doesn’t only cost money it cost time and effort as well. And when you have several negotiations going on in the end you’re just wasting time which will not do you good.

Another investor dealt with some dishonest contractors recently. These contractors did not give the rehabber a bid based on a scope of work which is a major red flag. All rehabs should have a scope of work otherwise bad things happen like they did in this case. They ended up buying the house and it’s now in trouble.

So rehabbers should be reminded of the following steps:

• Define the scope of work.

• Ask contractor to submit catalogue pictures for kitchen units and bathroom fittings specifics to what is required and agreed upon.

• Agree the timeline to get the work done.

• Agree on the price to get the work done within the agreed timeline.

If you don’t create a path your project is likely to go sour but if you follow the above path you’re in with a greater chance of the rehab going smoothly and to plan.