5 Entirely Avoidable Reasons Contractors Fail (& How YOU Can Prevent Them!)
I see article after article on BiggerPockets regarding contractors and how difficult it is to find a good one. It is my opinion that if you have been "taken" by a contractor and you delve deeper into the details, you might discover it is at least partly your own fault. This applies whether the scenario involves money, quality of work, time delays, or most other areas of contention.
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Jack Campbell wrote in the book Dauntless, “I need to stop getting into situations where all my options are potentially bad.”
I am a law enforcement officer for my day job. One of the well known facts in law enforcement circles is that EVERYONE lies. (Now, before I get inundated with emails about my inhumanity to man, please allow me to explain.)
When law enforcement officers (LEOs) say that everyone lies, it means that victims, witnesses, suspects, offenders, and even LEOs often see the same incident differently. Three people can look at the same person and report the color of the shirt differently. They are not intentionally saying the wrong color, but under stress the body can play tricks on the mind. To be on the safe side, trust but verify statements and/or actions of any contractor and their references.
Contractors Are Often Wrongly Accused
There’s something you don’t hear often. But the fact is that it is easy when things go bad on a job site—whether it is a fix and flip, remodel, or maintenance/repairsâto blame the contractor. I am going to come down on the side of the contractor though and say that, in reality, it is more often than not due to an action, lack of action, or miscommunication on the part of the property owner.
Failing to properly vet a contractor is no one's fault but your own.
Contractors are a necessary, important, and integral part of the real estate investment world, and that is not about to change. Having access to a quality contractor is a must if you hope to be successful in the real estate investment business. Yes, you may be able to get by with a subpar contractor, but it is like having a tiger by the tail. Eventually you will get bit!
I have read several excellent articles on how to screen for a contractor, and as I often write, education is the best equalizer. However, I want to go one step further with that education and list several reasons why a contractor may act like they do. This will help you, the customer, make an educated decision about whether the contractor's actions are influenced by factors outside of his control or if he genuinely is a poor businessman or businesswoman and shoddy contractor.
Also, I will offer up a few other contractor screening ideas I've learned as a result of my day job.
DISCLAIMER: While I am not a contractor, my twin brother, with whom I partner on investment properties, is one. My youngest brother is as well. Both are highly skilled, ethical, reliable, and successful, and both strive to excel at customer service. Furthermore, in my local area, I've found many ethical and quality contractors.
The level of quality of your contractor can also greatly depend on the quality of subcontractors he or she brings to the job site. While those subcontractors are only a part of the whole, you will quickly find that they are an important part.
OK, let’s say you completed your initial screening; you checked references and checked out quality of work, dependability, etc. First off, let me say one thing. I have heard several times to go to Home Depot or Menards or somewhere similar to see what contractors show up at 6:00 a.m., as those are the reliable ones.
It is my opinion that this is a poor way to find a quality contractor. No contractor I know starts work at 6:00 a.m. on a regular basis (unless he is a roofer). Most work normal hours, such as 8:00 to 5:00 or 8:00 to 6:00, Monday through Friday.
In addition, many quality contractors do not even shop at Home Depot or Menards. While the materials may seem to be the same as the local lumber yard, they are often not the same quality.
5 Lesser-Known Facts About Contractors They Wish You Knew
1. Estimates may be free to the customer but not the contractor.
Estimates may be free for you, but they are NOT free for the contractor. Estimates cost the contractor in "billable" time. While this may be argued as the cost of doing business, most of the small, independent, quality contractors I know will not give you a detailed estimate if you are getting several estimates and looking for the cheapest price.
Instead they will give you a ballpark estimate for budget figures, and if that fits your budget and you want to proceed, the contractor will then get you final numbers. This method can cut down on those who are "tire kickers" and do not care about quality as much as price.
Estimates can take anywhere from a couple of hours to 40-plus hours of work for a larger project. Unless you are working with a large company, most contractors who have just a handful of employees need to work billable hours to get paid.
2. Contractors have more than one customer.
In order to have continual income, contractors must have multiple customers at once. These customers all want their projects completed within specific timeframes. This often creates a situation where the contractor gets overbooked or double-booked, but that is one of the fine lines a contractor must continually walk in order to be successful.
Remember, many times there are down times on a job as a contractor waits for a subcontractor to finish his part.
3. Contractors schedules are impacted by subcontractors.
Contractors are often slowed on a project by things outside of their control. Plumbers, electricians, HVAC, drywallers, and so on can greatly influence the pace of the project. Keep in mind that contractors try to work with quality subcontractors, but issues do arise. Those secondary trades are the same as the contractor, as they have multiple customers at once and their schedules are often dependent upon others, as well.
Furthermore, customers frequently want to order their own materials, which can easily create delays and in turn have ripple effects on the subcontractors. As you can see, a job can easily be slowed by things far outside of the contractor's control.
4. Customers change orders, which alters timelines.
As mentioned, it is rare for any project to be completed from start to finish with no changes. These changes, most often made by the customer, can slow a project dramatically, especially if the customer expands the scope of work.
This is most often seen in a flip, remodel, or update, where customers want to add projects that arise out of the construction. These could include updating wiring since the walls are open or removing a wall because the space seems too tight. My brothers frequently deal with this as customers decide to increase the size of the project once it is started.
5. Contractors want to be paid in a timely manner.
In many projects, contractors manage the subcontractors and pay them directly. There is no one single factor that will put a stop to work faster than a customer who is slow to pay. A quality contractor should only bill for work completed, including work completed by subcontractors. If a customer is billed and slow to pay, the contractor often cannot afford to continue on the project until he is paid.
Look at your own job. What would you do if your boss refused to pay you or delayed your pay due to various factors you may or may not agree with?
The Bottom Line
These are just some of the issues that contractors face when on a project. Notably, most are beyond the control of the contractor, and many are created by the customer themselves! As a result, you may want to discuss the above items with your contractor during the screening phase.
Ultimately, communication is key and a contractor who does not keep in contact with you is a contractor you do not want to hire.
Another important (yet often overlooked) issue for security of a project or remodel is the help the contractors or subcontractors bring to the job site. I have often found that while the owner of the companyâwhether it is the contractor, plumber, electrician, HVAC, or drywall finisherâis trustworthy, their help may not be.
Many thefts and burglaries are often perpetrated by someone who has been in or on the property. Often, it is an employee or past employee of someone doing work either currently or formerly on the property. This can be difficult to guard against, so it is something you should discuss with the contractor and ask him to discuss with his subcontractors. Both of my brothers usually know everyone on a job site personally and will use a subcontractor who has quality employees and who screens potential employees.
Another part of your screening should be to contact the subcontractors of the contractor you are using. If the subcontractors speak highly of the contractor, he is probably a good fit. I pay any contractor I hire as soon as I get the bill or the same day the job is finished. Paying promptly has allowed me to establish mutually respectful relationships with them. As a result, often they prioritize my work, which in turn has allowed me to get projects completed quickly.
As I often write, there is no “one way” to invest in property. Find what works for you, and work it to its utmost. There are some less than honest contractors out there, but there are also a vast number of quality contractors and subcontractors.
The next time you hire a contractor and run into issues, ask yourself if YOU are part of that issue. Remember, any time money is involved, you should trust but also verify.
What do you look for in a contractor? Do you have any victories to share? Tragedies to warn about?
Leave your stories in the comment section below.