Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
We have a particular contractor we have used for 2 jobs now. They do GREAT work. They are creative and stick to budget. But they are slow. I think I want to give them one more shot. Here are my thoughts.
Offer something like an extra grand for deadlines being met. When I set up the scope of work I'm going to ask them to date when each phase of the project should be completed. I'm thinking for any deadline that's missed they forfeit a certain $ amount.
Investor · Chandler, AZ · Member since 2012 · 69 posts · 55 votes
11y
I would have a discussion with the contractor and ask them what they think is a fair resolution if they don't meet the deadline. If they come up with the penalty, then it is their own reputation and word at stake and it is easier to get it into the contract. Most contractors start other jobs before they finish the one they are on, which always causes time issues for investors. Like I said, if your business was at the level that you kept them busy all the time, they pretty much would be working exclusively for you and you would have more control. As a new flipper, you are hit and miss as you come across a property to rehab, so the contractors pretty much have more control as they don't know when and if you will have more work for them. At least this has been my experience. Build the relationship and get to the point you are giving them work consistently and you will have more control and negotiation over time.
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
11y
It all depends on how you phrase it.
I would add a bonus as an incentive to complete before the deadline. Of course you only want to tell them that after they give you the timeline first.
Investor · Chandler, AZ · Member since 2012 · 69 posts · 55 votes
11y
Remember it is hard to find good contractors that you can trust to get the job done without babysitting. If you are not able to keep the contractor busy from one job to the next and there is time in between your flips, that contractor still has a family to feed just like you do and has to line up jobs to keep working. Contractors make more money generally working for retail homeowners and not investors, so it is a fine line to how much pressure you can put on them. I am assuming you have been setting a time line on the past two jobs this contractor has done for you and he has met the time that you both agreed to? Also, speed is good but not at the cost of quality of the work. I have used contractors that are faster, but that usually means they cut ALOT of corners.
Good luck finding a contractor that will agree to a penalty for not meeting a set time. If you do, I can guarantee you they will increase the timeline to make sure it never happens. I would agree to just doing some kind of bonus for meeting the completion date would be a better incentive.
Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
11y
Thanks for the thoughts. The contractor has not met deadlines. They get pushed back over and over again. That's my only problem. Seems like the first few weeks they don't make it a priority then the last few they cram.
Investor · Chandler, AZ · Member since 2012 · 69 posts · 55 votes
11y
I would have a discussion with the contractor and ask them what they think is a fair resolution if they don't meet the deadline. If they come up with the penalty, then it is their own reputation and word at stake and it is easier to get it into the contract. Most contractors start other jobs before they finish the one they are on, which always causes time issues for investors. Like I said, if your business was at the level that you kept them busy all the time, they pretty much would be working exclusively for you and you would have more control. As a new flipper, you are hit and miss as you come across a property to rehab, so the contractors pretty much have more control as they don't know when and if you will have more work for them. At least this has been my experience. Build the relationship and get to the point you are giving them work consistently and you will have more control and negotiation over time.
Rental Property Investor · Providence, RI · Member since 2015 · 1k+ posts · 594 votes
11y
Commercial companies bidding large jobs have penalties per day of a job is not completed by a certain date. However, I think on a residential scale, a good, reputable builder, etc generally has enough steady work. Personally, I think they would take a number of jobs available before taking one that could cost them money. However, adding x amount of dollars of completed by a certain date may work.
I really like the idea. I just haven't been able to implement myself. Like where your head it at though.
Commercial companies bidding large jobs have penalties per day of a job is not completed by a certain date. However, I think on a residential scale, a good, reputable builder, etc generally has enough steady work. Personally, I think they would take a number of jobs available before taking one that could cost them money. However, adding x amount of dollars of completed by a certain date may work.
I really like the idea. I just haven't been able to implement myself. Like where your head it at though.
Thank you very much! This contractor is creative, underbid the job yet still honored their estimate, and came up with solutions I wouldn't have. But they weren't good with time management. The first three weeks they pulled out the kitchen/bath. That's about it. Then the last three they worked like crazy.