Dealing with contractors
One of the most common questions I get from my clients is, "What do I do when my contractor doesn't call me back, and doesn't show up to finish the job." I did an entire webinar series on how to deal with contractors. Just wondering from the BP community, what questions do you have about contractors? How do you deal with contractors when they don't show up for the job?
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Broker Washington (#108050)
- Podcast Guest on Show Seeing Greene: Paying Off Rentals, Partnerships Splits, & Using Home Equity
no show for bids or first day is an instant fire. Always and forever.
biggest mistake people make with contractors is they OVERestimate them. you think you're just going to interview one contractor and then they will show up on time , do the work, and make your life easy. GET REAL ROOKIE. Contractors are treacherous, and beginners need to spend a lot of time finding, vetting, and investing in good people.
Alex, I think what he is asking is what does your process of "finding, vetting, and investing in good people" look like?
@Alexander Felice I agree, you have to be diligent in vetting people, I rely heavily on referrals, and I try to refer good contractors whenever I can. One of the biggest issues my clients have been having, is contractors who don't do a job well. Then, the contractors disappear when it's time to come back and fix bad workmanship. Essentially, these guys are stealing, by taking off with money before the job is done to completion. I encourage my clients to give smaller down payments and withhold final payment until the job is complete.
@Account Closed I am curious what everyone's process is for finding good contractors!
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Broker Washington (#108050)
- Podcast Guest on Show Seeing Greene: Paying Off Rentals, Partnerships Splits, & Using Home Equity
Generally referrals. Once you have a good sub, you start asking for names. Good people are usually reluctant to give out names of people that they're either unfamiliar with or think they do shoddy work. All of my best people came as referrals, except the first guy (HVAC) who was new in the market and I decided to give him a shot. He worked out well, became my HVAC guy for all my properties, and his referrals have generally worked out well.
Guys usually know other guys (guys is gender-neutral where I'm from NYC area ;) ) that do a good job because they're working along side them or behind them, and get to hear the scuttlebutt regarding how they were as workers.
Referrals are great. Not always possible if you are new or doing your first project and don't have the connections. I completely agree with @James Dainard regarding a small deposit. I would add that retainage is another important safeguard which can be utilized. Retainage is a % of fee held until after job completion and owner/architect approval. It essentially helps to cover any come back work required from the contractor or to hire another to fix the deficiencies if necessary. Additionally, incremental payments coinciding with the % of work complete adds another layer of security for the owner. This is very important as many contractors will want to front end the fees leaving no money for the back end(which is when they could potentially disappear or ask for more $ to finish.) If your using an architect, the contractor payment requests should go through him/her for review. This allows for general confirmation that everything is on the up and up prior to payment. All of these together creates a strong process to protect the owner and keep the contractor in line.
Quote from @Alex Furini:Do you both sign invoices at each stage of completion to verify and track stages of completion? If so, Ever had pushback with getting invoices for each stage and how did you handle it?
Referrals are great. Not always possible if you are new or doing your first project and don't have the connections. I completely agree with @James Dainard regarding a small deposit. I would add that retainage is another important safeguard which can be utilized. Retainage is a % of fee held until after job completion and owner/architect approval. It essentially helps to cover any come back work required from the contractor or to hire another to fix the deficiencies if necessary. Additionally, incremental payments coinciding with the % of work complete adds another layer of security for the owner. This is very important as many contractors will want to front end the fees leaving no money for the back end(which is when they could potentially disappear or ask for more $ to finish.) If your using an architect, the contractor payment requests should go through him/her for review. This allows for general confirmation that everything is on the up and up prior to payment. All of these together creates a strong process to protect the owner and keep the contractor in line.