using contractors properly
One of my biggest fears is getting ripped off by contractors, them stealing my money, rehab cost exceeding budget . However, I realized to maximize my returns I need to consider distressed properties as an out of state investor.
Here are the ways I am using to mitigate those risks:
1. Asking my agent for contractors they can recommend to me. I also ask people who work in the market/ city if they ever heard of the contractors and what they think of them.
2. I need to check contractor is properly licensed. Where do I check this?
3. I told contractors I have been interviewing that I want to buy/pay the materials myself. Contractor saiid that's fine, but they will pick out the material and quantity and store will call me to approve purchase / process payment? Is that ok since I don't know myself what kind of material they. use or quantity needed. The worst thing that could happen is contractors dont pick the best priced ,materials (excess expense), or they order too much material and they keep the extra material for another customer.
4. I'm going to ask for itemized breakdown or scope of work
5. I'm going to pay deposit and installments as portion of job is completed
6. Like what David Greene said, I'm going to pay a bonus if job is completed early, and impose penalties if job is not completed by deadline
7. I'm trying to avoid jobs that have potential foundation, roof, furnace, plumbing, and electrical problems. One of my contractors have a service where they an visit a property and determine if there are any major foundation, roof, plumbing, electrical, and roof for $100. I'm going to use this service right before we make formal offer because buying inspection for all those properties for $400 just to find out we have to walk away because of major repairs needed wouldn't be feasible.
8. My contractors said rehabs that dont involve foundation, roof, furnace, plumbing, and electrical problems in Indianapolis should be under $10k.Does that sound about right?
9. Should I be concerned about subcontractors not getting paid and going after a mechanics lien ? If yes, how do I avoid this?
10. What other questions should I ask contractors?
11. What else could go wrong when using contractors?
12. Have you guys ever used CREW or Indiana Residential? If yes, would you recommend them?
Thank you,
Jason