This contractor horror story could save you thousands of dollars.
I’ve renovated a lot of houses, and the hardest part of the real estate business is dealing with contractors.
More money is lost in this one area of real estate than any other mistakes.
Here are some tips for you to…keep in mind when you work with contractors on your next real estate project.
1.You MUST have everything in writing. And you MUST use a SCOPE of WORK written agreement that spells out exactly what your expectations are for the project.
A. What is the schedule for each phase of work and when will project be completed.
B. Cleaning to be done – and when.
C. Progress payments to be made and by what standard of completion.
D. What debris will be removed and when.
E. Will there be a penalty for not meeting the deadline of the project’s completion.
I buy houses in foreclosure and they have junk left in them when I buy them. I want my scope of work order to make it clear that ALL junk must be removed NOT just the construction debris.
2. It is not a good idea to hire contractors based on TIME and MATERIALS cost. I want every thing to be bid up front in writing.
steven kozmary (kozmary@kozmary.com)
If unforeseen issues are possible, you can allow them to be added to the FIXED BID as time and materials to be APPROVED by you in WRITING.
A contractor may tell you how you will save money if he bills for time and material instead of a fixed bid. DON’T DO IT. Get a bid, you will pay less than letting them work on time and materials.
3. Don’t always take their word for it. I mean just because a licensed contractor tells you your hot water heater needs to be replaced does NOT make it so.
I had a hot water heater that just needed a $50 thermal couple install so that it would make hot water again.
Try the simplest solution first. Most times your car won’t start, it just needs a jump – NOT a new engine.
I have had 3 contractors bid from $3000 to $6000 to fix a code issue in a house. And the 4th contractor I met with BID it for $700 total and it passed inspections with flying colors!
4. Pay contractors quickly when the work is done and the job is clean. You get the best service when you pay FAST.
Don’t ask them if they offer a CASH discount. Most contractors have accountants doing their books and they pay more taxes than any other business person I know.
And don’t make the mistake of investing in real estate without a CASH based system to give you unsecured lines of credit for all your money needs. You can get my trademarked money system @
www.Cashflowexperts.biz/ultimate
