Avoid hiring the wrong contractor – When you Can!

January 5, 2021

Hello – thanks for joining my Missteps as areal estate investor.  You know, it isgreat when we have success as a real estate investor, and social media is fullof the wonderful accomplishments, properties under contract, profits made andall of that is amazing.  But what aboutwhen things do not go so perfect?  What happenswhen you blow the deal even before you have seen the property, OR you havemissteps with the property that you just did not think about or anticipate.

I have had some great success and somegreat missteps – so I am putting it all out there, so you can learn not onlyfrom what went right, but also what went wrong!

Hiring the right contractor, but then theyturn out to the be wrong manager!

As a former property manager and currentreal estate investor for over 15 years, here is a tip I can share withyou:  All contractors have a shelflife!  Meaning, you can have a greatrelationship for years, which I have had, and then something in the contractor’slife changes.  Usually, one of two thingsimpact the quality of work from a contractor: 1. They are so good, they getmore business than they can handle, they start hiring subs, and lack the skillto manage their workforce when they are not around.  2. Greed:  meaning, there is so muchwork to be had, they are collecting deposits, and moving onto to the nextopportunity to bid and collect the down payment, never to be seen again.  I know you know what I am talking about.

From my experience, what I have learnedabout contractors, is that you must make time to make sure you are overseeingeach and everyone of your own projects. Whether that is you individually, or your team, and that you all haveyour eye on the same outcome:  Qualitywork for a fair price.  If you are intoflipping houses, think about the end buyer: how could you sleep at night knowing a young family with small childrenpurchased your house, and you skimped on the electrical work being done on thehouse.  If the house catches fire dueyour contractor’s shoddy workmanship, and someone gets hurts or worse caseperishes in the fire, not only are you at fault, but you have now just openedyourself up to a legal nightmare.  Wassaving that additional $2500 worth it at that point?  I think not.

This scenario actually happened on one ofour properties.  A contractor I hired,put a substandard worker to replace an electrical panel.  I am not an electrician, so on the outside,all looked good.  When my end buyer didan inspection, it was found the electrical panel was “cobbled” together withnon-working parts. I allowed the contract to “correct” his mistake, but as aprecaution, I followed up and checked up on his work by hiring a third-partylicensed electrician to check the work AND found out that the contractor’s newsub he hired did not remedy the problem.

The long and the short of hiring contractors– do not skimp on the really important life impacting welfare of your end buyerand/or tenant.  Hire contractors thatstand behind their work give warranties and when in doubt of the work beingdone, don’t’ feel intimidated to hire a third party to substantiate the qualityof work you paid for!

My three tips for hiring a contractor:

1.      Check their references – wheredid you get their name?

2.      See Pictures or when possible,go check out their work – for a similar project

3.      Don’t give them 50% down – ifthey want a bunch of money up front - go find another contractor