Rehab and Contractor Tips
I see a lot of stories about how rehab typically takes a lot longer and is more costly than people anticipated. I work for a very large contractor (commercial restoration and strengthening) and wanted to share some things that I think people need to do when hiring a contractor to help prevent some of this:
1. Read the contract. You’d be surprised how many people don’t even take this step. Remember that during contract negotiation is when you have the most leverage if they want the job so here is your chance to put in terms you want.
2. Have an agreed upon schedule beforehand, not just a duration. Make them give you an actual schedule and include it as part of the contract.
3. Include liquidated damages in the contract. This should be enough to cover your daily holding costs for any delays. Should the schedule extend as a result of the contractor falling behind you can charge them a daily fee. That way you don’t lose money on holding it for delays.
4. Make them give you an itemized schedule of values prior to starting. This is a line by line list of each major work item with a value. This way you can confirm what they are billing for is complete.
5. Don’t pay upfront!!!
6. Make sure they are required to get your approval on any finishes or fixtures prior to installation.
7. If you are local or have a local person that can inspect the work, make payment contingent upon approval of your inspection.
8. Require weekly project updates and how their progress compares to the original schedule.
9. If there are change orders, request backup and a breakdown of how they arrived at the costs. Remember, you can always negotiate.
10. Always, always include at least a 20% contingency on your budget. Things do come up in rehab.
I hope this helps some people!
Can you send me an example of a contract? About to start a rehab would love to see what your ideal contract looks like. This is a smaller 30k rehab for a unit but terms, expectations, late fees, etc. Thank you!
@Jason Crowe what’s your email? We typically use a standard AIA contract that addresses most of these items. I can send you the standard terms and conditions from that. Typically a contractor will try to use their own contract or just have you sign their proposal. Usually it favors them so read it carefully and don’t be afraid to negotiate and cross out or add terms to theirs. Or better yet, ask to use the standard AIA. It’s pretty neutral to both parties.
Another item to add here is don't always go with the cheapest guy. He's cheap probably for a reason and you may end us spending more in the long run that way.
@Cale Delaney Thank you for the great material. Very detailed!
@David Silver glad to help!