Contractor Keeps Picking Up Other Jobs During My Flips
I have a contractor whom I met from a friend of a friend. He is a jack of all trades. This is the second house flip I hired him for. First one went about 30-45 days over what was expected. He is a one man show so I get it however he keeps picking up other jobs during my flips. I am torn on how to handle this, he is priced so well. He is only charging me 17k in labor for a whole house rehab. Not including bathrooms updates though. I pay my bathroom guy separate for those. Do I be firm and say look man I don't appreciate you picking up other jobs while I have holding costs on this or do I say no problem. The jobs he takes on for side gigs are like 2-3 day jobs but they take away from my flips.
Unfortunately you're not paying him enough (and he's not charging himself enough) to stay on your project all the time so he has to create supplemental income. If you tell him to quit you can find someone else but it would certainly be more as contractors dont like to start mid project like that and finish someone elses' work but its best that you have a more constructive conversation with him about his absence. You can consider paying him more for his exclusive time and give you a bonus for completing ahead of schedule.
#1 Wholesaling Contributor
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Quote from @James Robert:
I have a contractor whom I met from a friend of a friend. He is a jack of all trades. This is the second house flip I hired him for. First one went about 30-45 days over what was expected. He is a one man show so I get it however he keeps picking up other jobs during my flips. I am torn on how to handle this, he is priced so well. He is only charging me 17k in labor for a whole house rehab. Not including bathrooms updates though. I pay my bathroom guy separate for those. Do I be firm and say look man I don't appreciate you picking up other jobs while I have holding costs on this or do I say no problem. The jobs he takes on for side gigs are like 2-3 day jobs but they take away from my flips.
You could offer to pay him more if he gets the work done within a certain day. Instead of paying extra holding costs you pay him a bonus if work is done ahead of time.
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#3 All Forums Contributor
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You said it yourself - "He is priced so well" and "he keeps picking up other jobs". He is taking on other jobs because his pricing is too low. If you want him to be exclusive to your project you will need to pay him more, probably a lot more. SO you have to decide what you want.
Having said that, most General Contractors carry a few jobs at the same time. I used to aim for 5 jobs going at the same time....but I had a good sized crew and multiple Subs to throw at every job so there was something going on at every project most days.
They all do. lol. And I pay my guys well. But they’d rather go do a 100k kitchen remodel than deal with a 60k full home rehab from me. It’s frustrating when they’re in the middle of project for me and someone offers them a ton to do work somewhere else. They go where the money is, but eventually get back to me. This is why I hate rehabs.
Quote from @John Morgan:Yeah its frustrating. Holding costs are alot on hard money loans. I almost want to just hire workers full time at an hourly rate and have in the contract they cannot take other jobs until mine is done.
They all do. lol. And I pay my guys well. But they’d rather go do a 100k kitchen remodel than deal with a 60k full home rehab from me. It’s frustrating when they’re in the middle of project for me and someone offers them a ton to do work somewhere else. They go where the money is, but eventually get back to me. This is why I hate rehabs.
Timing is everything for us. I will ask my contractor for a completion date when he bids me. If he says 8-10 weeks. I will hold him to 10 weeks and constantly remind him of our list date so we can make our desired profit.
It is key to have this conversation the very beginning. Any extra month of rehab means extra holding costs and opportunity cost because we can't move on to the next deal. For me, I care more about the accuracy of costs and finishing on time than the actual cost of the reach.
If you really like this contractor, offer a bonus structure if he finishes on time.
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Quote from @James Robert:
I almost want to just hire workers full time at an hourly rate and have in the contract they cannot take other jobs until mine is done.
That's a whole different animal....then you assume all of the risk and liability. ALL of it. You are essentially running a business and must carry Liability Insurance and Workers Comp. And check that it is legal...quite a few states will not even allow you to do the Owner/Builder thing except on your own residence.
Quote from @Jake Baker:
Timing is everything for us. I will ask my contractor for a completion date when he bids me. If he says 8-10 weeks. I will hold him to 10 weeks and constantly remind him of our list date so we can make our desired profit.
It is key to have this conversation the very beginning. Any extra month of rehab means extra holding costs and opportunity cost because we can't move on to the next deal. For me, I care more about the accuracy of costs and finishing on time than the actual cost of the reach.
If you really like this contractor, offer a bonus structure if he finishes on time.
I like this idea. I might tell him if he gets it done by completion date of march 15th ill give him an extra 1.5k
The first thing I'd do (if you haven't) is talk to him about it. Explain that you have holding costs and these delays are expensive to you. See what he says. He may stop doing it as a courtesy, or you may need to explain that it's a requirement to keep working together and he needs your work so he stops taking other work, or he may say that he can't afford to pass up the other work and you can negotiate a better pay scale or a bonus for timely completion. There are a bunch of solutions. One perk of working with a solo operator is that there ARE options.
A downside you should consider is that this guy has no coverage if he gets hurt or sick, and that's a big risk to you both. It's ultimately why I stopped being a small-scale contractor.
@James Robert My contractor does the same thing. He works for probably 15 big investors/companies and probably at least60 other people, does snow plowing and lawn care and makes time to have most of Sunday off with his son. I’m thankful we’re having a light snow winter with relatively mild temperatures because he’s working on renovating 6 units simultaneously for me!
But his price is so good that if I tried to find anyone else my costs would probably triple.
And now I’m planning on going to look at a new building today or tomorrow.
You have holding costs, he's got bills to pay.
You're upset he's taking other jobs, he willingly accepted a low price offer from you. Did you mention timeline in the offer? If not, that's on you.
I would've paid him a more fair amount and got a soft & firm estimation on completion, and priced him to do it on the quicker of the two with no workmanship issues. They'll put all their energy in the project, and you're buying time. Now you're paying for the time.
"What will it take for you to commit to getting this job flip done by X date?" is the question you need to ask the contractor. Everyone has a price. Envelope of cash with a concrete, agreed upon date, will more than likely get this resolved. Moving forward, I'd recommend laying out firm expectations and completion dates before he quotes the job and get it in writing. He will then price accordingly. You may have to give up the cheap pricing, however, it could be worth it if your holding costs are higher.
Clear and constant communication regarding progress and deadlines is important with contractors, they're often overwhelmed dealing with a ton of moving parts and trying to juggle more than one customers expectations.
#2 Contractors Contributor
- Severna Park, MD
He is a one man show , he has other customers . Of course he will do other jobs , thats how you make money . If he stays only on your job , when its done what does he have ? If you want the job done faster , hire a larger company with a crew . Sure it will cost more , but it will be done faster . Now it costs less and gets done slower . In the end either option will cost about the same .