Met a contractor in WalMart
Investor · Surprise, AZ · Member since 2018 · 156 posts · 110 votes
So I'm in Wally World minding my business and a guy comes up and down the aisle giving out business cards! Lo and behold he's a remodeling contractor! Don't know if it's a sign from God or not, but I have been looking for contractors for when I get my first property.
I give him one of my cards too. My question is, what kind of things do I need to ask him so that I don't come off as brand spanking new to this? Obviously I went and looked him up on social media, google searches, etc. Good work based on the pics. He is licensed and insured and works in my area!
When you are dealing with contractors what kinds of questions do you ask?
Hey Aminze, I would recommend asking him these questions:
The reason I tell you this is because Well Known renowned contractors don't just go around giving out business cards because they should have business already attracting them. Here's a funny story, when I first got into rehabbing and flipping I put up a " We Buy Houses" ad on craigslist and a crooked contractor contacted me and gave me their business name and what they do. I said " ehh whatever I'll give them a shot." So I brought them out to a prospective property I wanted to rehab and this dude pulled up not in a contractors vehicle but in his family's jeep with his wife?! So I brought him through the property and he didn't even give me a business card or anything. So that's when I knew something was fishy. So after he finished the walk through he begged me for $50 to write the estimate and I was like " ehh whatever he didn't even mention this over the phone that he charged for estimates." So I was riding back home, and my partner said " Call him up and tell him stop at the next street so he can give you a business card cause I don't trust this guy." So I called the contractor, and he didn't even have business cards but had a estimate paper with his "logo" on it!? So I was real upset and make matters worse he took like 6 days to send the estimate from the UPS STORE! He didn't even have a computer or a laptop. He had to scan it to me from the UPS Store! The reason I shared this story is because Contractors put the CON in contractor and they cannot be trusted. Make sure you vet this guy to make sure you don't get screwed over.
Hey Aminze, I would recommend asking him these questions:
The reason I tell you this is because Well Known renowned contractors don't just go around giving out business cards because they should have business already attracting them. Here's a funny story, when I first got into rehabbing and flipping I put up a " We Buy Houses" ad on craigslist and a crooked contractor contacted me and gave me their business name and what they do. I said " ehh whatever I'll give them a shot." So I brought them out to a prospective property I wanted to rehab and this dude pulled up not in a contractors vehicle but in his family's jeep with his wife?! So I brought him through the property and he didn't even give me a business card or anything. So that's when I knew something was fishy. So after he finished the walk through he begged me for $50 to write the estimate and I was like " ehh whatever he didn't even mention this over the phone that he charged for estimates." So I was riding back home, and my partner said " Call him up and tell him stop at the next street so he can give you a business card cause I don't trust this guy." So I called the contractor, and he didn't even have business cards but had a estimate paper with his "logo" on it!? So I was real upset and make matters worse he took like 6 days to send the estimate from the UPS STORE! He didn't even have a computer or a laptop. He had to scan it to me from the UPS Store! The reason I shared this story is because Contractors put the CON in contractor and they cannot be trusted. Make sure you vet this guy to make sure you don't get screwed over.
@Account Closed, thank you for this, I really appreciate the response! I have seen some more reputable GC contractors but you know they 1. don't return calls, 2. won't take me seriously yet because I am new, 3. I don't have a property yet but want to line folks up (so of course no one is going to waste time on that)...and 4. I don't want to be a Debbie downer but, I'm a woman (surprise) and many male contractors assume that women don't know anything about anything. Thankfully my experience in the military has allowed me to know and have skills in many things, but I'm no expert at RE (yet)!
I will definitely make sure I do my due diligence! Last thing I need is to get tied up with some scammer...those are great questions to ask and keep in mind for contractors. Thanks again!
@Account Closed Mainly what @Account Closed says in #4. Be sure and get these and see what he has done and can do. But everything else in his post is relevant.
@Mike Reynolds, thank you for that input as well!
I'm disappointed. Painting all contractors ( or even most of them) with a broad brush of con men is like saying all RE Investors are just out to be slum lords and only care about the money and Flippers are selling you junk houses with paint jobs.
It is smart to be careful, check licensing, insurance, bonds and references. That is just smart business. I am a woman in construction for most of my life now and I still get the "good 'ol boy" syndrome from time to time. It is wise for you to use your military experience with this type of attitude. The good news is if you are talking to a contractor like that ... uh, DON'T use them! They have to be willing to respect you so that you can respect them.
@Account Closed This will decrease as you work with them over time and multiple jobs and become more flexible as you both build a relationship of trust. Don't pay them half up front( typical 10-30% ) and hold 10-20% until job completion, depending on the total cost of the project. % complete payments as you go is a great pay schedule.
@Laureen Youngblood I agree with not stereotyping contractors. But - come on 30% down , that will be a nightmare for @Account Closed Please aninze , don't do that .
I trust Laureen but , she is experienced in the industry where she developed relationships and perhaps the contractors know not to mess and they have the incentive to provide better service.
As a retail buyer , you can't do that . I request laureen to add some helpful tips to not get ripped of . Lets say - the job is 30k , Aninze pays 9 k , contractor stops answering the phone or the typical scenario is that Contrcator does some demo work and then stop showing up .
How could she protect her investment ?
On the other hand lets assume , the contractor completes the work perfectly with out any issues , then that's a win win for everybody .
The most important thing you ask him if you can go to a property that he completed and meet the owner. If he says no you run away.
I'm a contractor and I do this with all my clients
@Kumar Tummalapalli, thank you, makes sense.
@Tim Johnson, I just went to a meetup a couple of weeks ago and a contractor that was presenting said to do exactly that. Good to have further confirmation, thank you!
@Laureen Youngblood, thanks sharing your expertise!
@Account Closed was pretty spot on with what she said . And as far as deposits go 30% is the norm in my world as a contractor . You dont want to put up a deposit means you have no money . For every unscruplious contractor out there there is an unscruplious customer .
@Matthew Paul, thanks, yes, I never contacted that contractor. lol
Not that I need you say anything to me, my idea was to get some contractors lined up for when I do actually have a property so that I will be ready to go with renos as soon as possible. I'm just a prepare ahead type of person. I wouldn't want to waste anyone's time any more than I want them to waste mines.
Something like going to a project they have in progress is a good idea. Do I need to have a property already to ask a contractor something like that?
I have funds to put down, however, I'm not a complete fool either. A certain percentage is reasonable depending on the size of the project.
@Account Closed was pretty spot on with what she said . And as far as deposits go 30% is the norm in my world as a contractor . You dont want to put up a deposit means you have no money . For every unscruplious contractor out there there is an unscruplious customer .
I don't know whats wrong with handing out cards in walmart - He might be a starter with no marketing money , and willing to pass on the savings to his customer . Lets say he buys a promoted package on "Houzz" or "angies list" - that's doesn't make him great .
It could be a contractors business strategy to not talk to some one with out the house under contract - its completely up to you as the business owner . But why can't a contractor have a conversation about her budget , the work that she is anticipating to get done , her likes disliked , if out of 10 contractors that she reached out , you are the only one who took the time to explain and ask qns , who would she call , when she has the property under contract - 3 months down the line . Or you could be the 5 th guy walking in to the house which is "under contract" to give her a "bid"
Also - lets say the investor/buyer has to wait until the property is under contract to talk to a contractor , I just went under contract for a property on 21st , I had few references that I could call , but surprise , none of them even answered , now I have to get new referrals , call them , schedule walk through s and out of the 4 who answered , 3 are clearly out of contention as these are the ones who want 50k for a medium end kitchen job ( no problem with this - they can charge anything ) but if we had a conversation before the property was under contract , it would have saved their time and my time . Now understand that - all of this should happen in 5 days , or may be 10 days .
Not at all surprised to hear that - for every unscrupulous contractor there is a unscrupulous investor , I would challenge that , but lest assume that's true , would you like to provide some pointers of how she can protect her down payment . Also I think you are not serious when you say that - if a home owner doesn't want to down pay it means they didn't have money :-)
I am not an expert and definitely the other experts can provide better practical ways to protect your down payment , But try asking for insurances , last 3 references , a contract with a tight scope of work , any judgements/ official complaints .
I don't know for some weird reason as soon as I ask for half of these , they stop responding . I think its industry standard to not carry licenses , insurances , not having good references , not agreeing to sign the contract
By the way - I think its also important to know that - different states have different laws , even for people with 30 yrs of experience or great contractors , for ex in California you can't ask for more than 1000 $ down .I am not making it up, see here .
http://www.cslb.ca.gov/Media_Room/Press_Releases/2012/August_15.aspx
Also your state of Virginia seems to be agreeing with that 1000$ down ... I know the experts would have shared this sooner or later ..
Hope this helps
@Account Closed What I was trying to say is that most contractors are busy . Sure you should talk to them , get a feel for them . But unless you have a job to bid on , there isnt much they can do for you .
As far as deposits , I am a contractor for 30 years plus . I dont extend credit to the customer . Why , its their project , not mine . My money is invested out there working for me .
The new contractors on the block dont have the money to put in a customers job , the old contractors are too smart to do that .
I am also a landlord , if you dont have the security deposit and first month rent and good credit too bad . no money no house .
As a contractor , its no money no work .
I see you are in the DMV area , this area is booming , contractors are busy , and there is no reason at all for us to be cheap , especially if we are full businesses and we are good . When you do find a property dont expect things to start fast . Or get done fast . I am waiting on subs , inspectors , and deliveries . The deposit gets your place in line , pays for permits , dumpsters , administrative time, some materials and other up front costs . When we walk thru the door on the first day a good portion of that 30% is gone .
Now a good contractor will provide you with a detailed contract explaining what he will do , how long it will take and what it will cost . BUT our contracts also state that anything outside the scope of work will be billed as an extra . EXPECT to pay for extras . If its not in the contract its an extra or change order . If you get a Maryland property , it falls under the Maryland Home improvement commission . Contracts and must contain certain clauses to be legal . ( So when you here someone say "Have the contractor sign YOUR contract " Not in Maryland ).
But when you deal with a professional legal contractor , you will pay more . But in the long run it will cost you less .
@Account Closed Definitely gotta respect the guys hustle.
I would immediately start by asking for references. He can feed you crap all day long. Go directly to the people he's done work for and see it for yourself. Ask them if he showed up on time. If he followed code. Were his bids accurate? Can you see the work he did?
Another good way to find a contractor is to stop into an active job site and politely walk in. Introduce yourself and let them know you're an investor looking for a good contractor and you'd like to see the quality of their work.
But at the end of the day, it's all about the references. Good luck!
@Kumar Tummalapalli Deposits in Maryland 33% at contract signing , 33% when work starts ( that can be parerwork ) the final third can be in draws . 5 day right of recision , 10 day if the customer is over 70 , if I remember correctly ( they just changed it ) .
David , I cant answer questions about a property that doesnt exist , its pure speculation .
Unscruplious customers ? Back when I was young , I would get the "while you are heres" . While you are here can you fix this , do that etc . But they didnt want to pay . Thought I would do it for free .(Learned that lesson ) . Or when the wife comes in " Thats not the color I wanted in the living room " And I show her the signed off paint codes she signed for each room . And then they dont want to pay because they dont "like" it . The last one was a roof job 2 story colonial like 33 square tear off , customer wanted to supply materials , like a idiot I agreed and I wrote on the contract roof top delivery . I show up and there on the driveway was 33 square of shingles , and felt . His response was for 3 of us to carry them up . " Sorry chief , but you can climb that ladder over 100 times to get them up there , call me when you are done " .
Now 95% of the time everything works out fine .But In the begining I learned some great lessons . I ALWAYS finished a job . But left money on the table . Now its ALL in writing
I finally learned to have a iron clad detailed contract .
@Kumar Tummalapalli Deposits in Maryland 33% at contract signing , 33% when work starts ( that can be parerwork ) the final third can be in draws . 5 day right of recision , 10 day if the customer is over 70 , if I remember correctly ( they just changed it ) .
David , I cant answer questions about a property that doesnt exist , its pure speculation .
Unscruplious customers ? Back when I was young , I would get the "while you are heres" . While you are here can you fix this , do that etc . But they didnt want to pay . Thought I would do it for free .(Learned that lesson ) . Or when the wife comes in " Thats not the color I wanted in the living room " And I show her the signed off paint codes she signed for each room . And then they dont want to pay because they dont "like" it . The last one was a roof job 2 story colonial like 33 square tear off , customer wanted to supply materials , like a idiot I agreed and I wrote on the contract roof top delivery . I show up and there on the driveway was 33 square of shingles , and felt . His response was for 3 of us to carry them up . " Sorry chief , but you can climb that ladder over 100 times to get them up there , call me when you are done " .
Now 95% of the time everything works out fine .But In the begining I learned some great lessons . I ALWAYS finished a job . But left money on the table . Now its ALL in writing
I finally learned to have a iron clad detailed contract .
I don't know where your numbers came from - can you post your source ?
You are not answering qns about a property , for that matter you are not answering anything , you are trying to understand the investors rehab strategy , his/her expectation , If she is ready to pay retail prices ( perhaps she needs work done fast or whatever reason ) , you don't need to have a property to understand her strategy and when she has a property under contract , you will be able to charge top of the market price , and provide value . On the other hand , if her budget and situation only allows her to pay investor prices and you would rather do one retail job than three investor jobs , it means you are not the right fit for that customer. Understand that I am not saying that one of you is right or wrong
Ok - understood that you have a unreasonable customer , but why is it a breaking news , Every business has unreasonable customers , and also understand that when I asked some one to do a job for 90k they said its ridiculous , their quote was 170k , with in a month some one was willing to do for 95k .so "unreasonable " is subjective
I understand that an iron clad contract is what is protecting you
Can you help the OP understand what should be included in the contract such that - everyone wins
@Aninze A.
Nothing to get excited about . There are probably two hundred contractors in your town but most don’t go around soliciting people while they shop . Of those two hundred contractors 190 of them will not show up half the time and do lousy work the other ten will be good . My point is practice due diligence on these guys . A good contractor is wonderful a bad one can put you through a living hell
@Kumar Tummalapalli here is the link https://www.dllr.state.md.us/license/mhic/mhiccont...
Never heard of "investor prices" . A dumpster cost the same , drywall cost the same hung per sheet , paint cost the same , doesnt matter who is paying the bill or what the customer is doing with the property .
Honestly most contractors will run from someone who decides they want to buy a house to flip it , especially someone who hasnt done it before . Most are doomed from the start , they pay too much for a property , have unrealistic expectations , and no clue what things cost . They think the guy swinging the hammer is a "contractor " . When he is only an laborer . They dont realize a contractor ( Legal licensed etc ) is a full for profit business .
What can I say to someone about pricing on a house that doesnt exist , that I cant see its condition , its location ? Nothing . Now I can show them pics of completed work . Thats about it .
As far as contracts , Here in Maryland there are things required by law . Those are there to protect the consumer . My contract contains these , but the contract favors my interest . As it should .
@Kumar Tummalapalli Deposits in Maryland 33% at contract signing , 33% when work starts ( that can be parerwork ) the final third can be in draws . 5 day right of recision , 10 day if the customer is over 70 , if I remember correctly ( they just changed it ) .
David , I cant answer questions about a property that doesnt exist , its pure speculation .
Unscruplious customers ? Back when I was young , I would get the "while you are heres" . While you are here can you fix this , do that etc . But they didnt want to pay . Thought I would do it for free .(Learned that lesson ) . Or when the wife comes in " Thats not the color I wanted in the living room " And I show her the signed off paint codes she signed for each room . And then they dont want to pay because they dont "like" it . The last one was a roof job 2 story colonial like 33 square tear off , customer wanted to supply materials , like a idiot I agreed and I wrote on the contract roof top delivery . I show up and there on the driveway was 33 square of shingles , and felt . His response was for 3 of us to carry them up . " Sorry chief , but you can climb that ladder over 100 times to get them up there , call me when you are done " .
Now 95% of the time everything works out fine .But In the begining I learned some great lessons . I ALWAYS finished a job . But left money on the table . Now its ALL in writing
I finally learned to have a iron clad detailed contract .
So if I had a $60,000 contract, it would be $20,000 to sign the contract and $20,000 the day work starts (could even be paperwork?)? So a client would be $40,000 into a $60,000 job before a hammer ever knocked a hole in the wall? That seems high, but I'm not in that area.
@Brian Pulaski thats what we are allowed to do , Now I always get 1/3 down . Since each job is different the draws past that will be set up differently . A lot has to do with how long the job will take . How many subs I am using . For the work to move fast , the money has to flow . I pay subs quick , thats why they show up quick .
@Kumar Tummalapalli here is the link https://www.dllr.state.md.us/license/mhic/mhiccont...
Never heard of "investor prices" . A dumpster cost the same , drywall cost the same hung per sheet , paint cost the same , doesnt matter who is paying the bill or what the customer is doing with the property .
Honestly most contractors will run from someone who decides they want to buy a house to flip it , especially someone who hasnt done it before . Most are doomed from the start , they pay too much for a property , have unrealistic expectations , and no clue what things cost . They think the guy swinging the hammer is a "contractor " . When he is only an laborer . They dont realize a contractor ( Legal licensed etc ) is a full for profit business .
What can I say to someone about pricing on a house that doesnt exist , that I cant see its condition , its location ? Nothing . Now I can show them pics of completed work . Thats about it .
As far as contracts , Here in Maryland there are things required by law . Those are there to protect the consumer . My contract contains these , but the contract favors my interest . As it should .
@Matthew paul
"Investor prices" is a term used to mention , prices that an investor would pay , prices that some contractors who see the advantages of working with investors would agree to . Ever heard the term "economies of scale "
Nothing costs the same for everybody and everytime - do you pay the same price for bread when you buy in walgreens vs when you buy in costco, that is called economies of scale . If I walk in and buy a piece of drywall as a retail buyer , it will obviously cost more than a prolific flipper who has a"managed pro" account and can send it to bid desk . If you are an established contractor - who pays on time , as a vendor I would be dying to provide you with credit , discounts , If you are always 90 day late , forget about discount , I wouldn't even extend credit to you .
So - summary is nothing costs the same . It depends on thousand different things . scale , type of payment , terms , availability , your business case , your credit worthiness , sellers need , buyers knowledge and viceversa buyers need , sellers knowledge .I can write a book on the price differences.
I don't know , how you can conclude that "most contractors" run . even if we assume that's true , "most" people doing it won't justify anything . Most people are broke , Most people don't have successful businesses , most people don't exercise - I would rather substantiate with sound rationale why it might or might not be a sound business strategy for you .
I wouldnt comment much on your statement regarding contractors willingness to work with new investors , as you seem to have made pretty broad generalizations of investors not knowing anything and not knowing how to buy properties . I can provide my view based on the rationale you provide - For ex , would you be ok with me generalizing about ALL the contractors skills , based on my discussion with you in this thread .
Regarding talking before contract , either you did not understand , or you chose to ignore . I won't assume , as I don't know . I have given plenty of examples of topics you can discuss before the property goes under contract . I will try to rephrase here , but I don't expect you to get this . The investors risk tolerance , their budget consideration , are they looking for a contractor with better communication and management , or are they looking for a contractor who can give better price but ok to bear with communication problems , are they planing to rent or are they planning to flip . The investor might evolve over the next six months , and they can evolve and do things different after engaging you , but these are only some of the things that you can do. An experienced GC who is business savvy might add so many things to this list .
Thanks for sharing the link - It seems Maryland permits 1/3 rd as soon as the contract is signed . So if a client is willing to pay that to you - great . But If i understood you correctly - you want 66% even before you lift a hammer. I am not a lawyer but that extra 33% is illegal - its same as deposit , because you haven't done any work . Keeping legal things aside , If a contractor is asking me 66% even before any work is started , I don't know a single investor or home owner who want to do that . may be you have clients doing that . For any one reading this and thinking of putting 66% before work starts , I would ask you to spend few hundred and get a consultation with an attorney , call up any investors or any home owners you know in your circle who has got some rehab work done , read through the posts in this forums by searching with "contractor" keyword , general google search and even call other established contractors in the area - Then Make a decision , This is subjective but I would not run , but I would "bolt" from there , ha ha .
Keeping all this aside , including my personal opinion - how would you justify a 66% upfront payment , because in any deal , both sides should share the risk . Particularly in an industry where consumers tend to have lot of bad experiences .
And absolutely I don't find fault with any business entity for writing contracts in their favor . I would do the same for my business - with in the law .
@Kumar Tummalapalli I do know the economics of scale , that does come into play doing track work for builders . It doesnt for the small investor . I am well aware of the pricing for contractors vs walk in retail . I get great pricing , the spread between that and retail is additional profit to the contractor .
I do have to agree that most people are broke , I check out potential customers prior to working for them .
As far as generalizing , contractors seem to be looked down upon ad beer drinking , lazy , dishonest idiots with no financial sense that are always looking to rip someone off . And when someone throws out the term "Investor " they feel they are entitled to the special low pricing they think exists out there .
As far as talking before there is a house , unless there is a specific property to look at , all talk is speculation . I have people ask for ballpark estimates over the phone , now if its a regular customer who speaks the language , I can throw them a rough number . If its someone I dont know price shopping , no way .
I dont get 66% , I get 33% on a deposit each and every time . I am ALLOWED to collect additional moneys as soon as the work starts . Now , filing permits , placing orders , lining up subs , etc , well thats part of the job its work . I usually get a second draw after demo . And yes its another third .
Now I am a contractor , I do not agree with your last comment that both sides should share the risk . I am a contractor , I dont get half your profits after the job , I dont share your risk . Thats why I am a contractor , I get paid to do give the customer a finished product . Investors take risks , contractors build things . The only risk I take is not getting paid by the customer . And thats why we get a third down , a third just into the job , and draws on the final payments . Extras are paid right away .
I buy and hold , I dont do flips . Why ? Because as a contractor I make an excellent living with very little to no risk . I have no money tied up in a project . When the project is done I have done very well . Now if my customer is moving in the house , renting it out or trying to sell for a profit or has a loss , none of this is of any concern to me . As long as I do whats required in my agreement its a good day .
There is a general equation in contracting that the cost of a project is 1/3 materials , 1/3 overhead and 1/3 profit . generally speaking this is pretty close . But one of my mentors in contracting early on explained it to me is that the formula is in this order 1/3 profit , 1/3 overhead , 1/3 materials .
@Kumar Tummalapalli I do know the economics of scale , that does come into play doing track work for builders . It doesnt for the small investor . I am well aware of the pricing for contractors vs walk in retail . I get great pricing , the spread between that and retail is additional profit to the contractor .
I do have to agree that most people are broke , I check out potential customers prior to working for them .
As far as generalizing , contractors seem to be looked down upon ad beer drinking , lazy , dishonest idiots with no financial sense that are always looking to rip someone off . And when someone throws out the term "Investor " they feel they are entitled to the special low pricing they think exists out there .
As far as talking before there is a house , unless there is a specific property to look at , all talk is speculation . I have people ask for ballpark estimates over the phone , now if its a regular customer who speaks the language , I can throw them a rough number . If its someone I dont know price shopping , no way .
I dont get 66% , I get 33% on a deposit each and every time . I am ALLOWED to collect additional moneys as soon as the work starts . Now , filing permits , placing orders , lining up subs , etc , well thats part of the job its work . I usually get a second draw after demo . And yes its another third .
Now I am a contractor , I do not agree with your last comment that both sides should share the risk . I am a contractor , I dont get half your profits after the job , I dont share your risk . Thats why I am a contractor , I get paid to do give the customer a finished product . Investors take risks , contractors build things . The only risk I take is not getting paid by the customer . And thats why we get a third down , a third just into the job , and draws on the final payments . Extras are paid right away .
I buy and hold , I dont do flips . Why ? Because as a contractor I make an excellent living with very little to no risk . I have no money tied up in a project . When the project is done I have done very well . Now if my customer is moving in the house , renting it out or trying to sell for a profit or has a loss , none of this is of any concern to me . As long as I do whats required in my agreement its a good day .
There is a general equation in contracting that the cost of a project is 1/3 materials , 1/3 overhead and 1/3 profit . generally speaking this is pretty close . But one of my mentors in contracting early on explained it to me is that the formula is in this order 1/3 profit , 1/3 overhead , 1/3 materials .
Glad that you understood why the prices won't be same. You seem to have made up your mind that everyone will look down on contractors , I personally don't . Do you get the same vision or do you think most people will get that vision of "drunk ....and so on" when they think of their doctor / engineer / Agent ? NO . so there is definitely reason why tpeople feel that way
Also it looks like you take great care in vetting your customers who are "broke" . The property you are working on itself is the asset , which means they are not "broke" . That's why you have a concept called mechanics lien . On the contrary , a client won't know nothing about the contractor - in some states they have good laws , but in states like IL , you could walk out of jail and become a contractor the same day . you can clearly see why the risk is imbalanced.
I have explained about investor pricing , some contractors agree because of some unique benefits , which I explained , I won't repeat .
Talking about strategy is not speculation , If that's the case all the CEOs get paid for speculating . In every industry , the people who provide strategy and provide planning are the ones who are valued and paid the most . Anyway , the readers would have understood by now .
I am posting your words here "Deposits in Maryland 33% at contract signing , 33% when work starts ( that can be parerwork ) the final third can be in draws . 5 day right of recision , 10 day if the customer is over 70 , if I remember correctly ( they just changed it ) ."
Now you say that you only get 33% upfront ... this is a good example of why no one should pay anything down to a contractor.
Sharing risk : You are not asked to share the risk of project , ha ha. Risk sharing for the rehab work that you are contracted to do ,Specifically - in your example , for a 100k project , you want 60k right away . It could take you 3 months .so The entire risk is with the client , the client is paying for a product he doesn't have. ( the guy at best buy says , the laptop costs 2000 , give me 1500 , and come back three months later , I need this to pay my semiconductor guy , touch screen guy . you wouldn't be comfortable , right ? In this case this is multi million dollar company with tons of oversight , but you still are not comfortable paying for something you don't have in your possession ) I am sure you know what happens next . Contractor doesn't show up , or shows up one day in a week , misses time line , and hey by the way I already got 60K , let me repeat the same with another guy , now I have 120K , and you haven't even done 10k worth of work , this is risk imbalance .
I am happy that you make lot of money in rental properties . That is good for the economy and for the industry .
I don't go by "general" equations - I develop detailed heuristics which serve as cognitive shortcuts to make better decisions. but I am glad that 1/3rd rule is helping you .