Updated: Dec 27, 2020
One of our biggest fears regarding repair, cosmetic or preventive work done on our home by general contractors, plumbers, electricians, etc. is not receiving a quality service yet paying quality money for the job. I completely understand this anxiety-filled dilemma, so much so that on some small repair jobs, I have decided to do them myself to save money and the headache. Doing projects yourself cannot be the case all of the time, so below, I have ten things I learned that could help protect you and the contractor from any misunderstandings on your expectations for jobs in your primary home or your rental properties.
1. Seek Big Companies for Big Projects and A One Man Business for Small Projects
My definition of big projects is anything that will take over a week to complete. When it comes to having projects that take multiple weeks, this requires a lot of follow up and sometimes, especially if expectations are not clear, rework. I like to call a company that has multiple individuals I can get in contact with. Why, you ask? Because imagine the frustration of having two-thirds of the work done on a $5,000 job, and you can no longer get in contact with your "one-man show" contractor. You've already given this contractor a 50% down payment. With a more prominent company, I do not have to worry about this issue. If there is a job that isn't complete, I can call a manager or someone in charge to hold the person who completed a poor job accountable and send someone who can finish the job correctly. Now usually, these larger companies are more expensive (they also provide warranties usually), but I rather have the job done right on a big project the first time than to fumble around with a cheaper option with someone who is the single point of failure. When it comes to one-person contractor businesses, I'm not against hiring them for small projects you could probably do yourself (painting is a good example). You either do not have the time or just prefer not to. You lessen the chance of risk hiring "one man show" contractors on
2. Make Sure Your Quotes Are Itemized
Sometimes when you get a quote, it will be very vague. Details are essential when working with contractors. If you have a selection that does not entirely break down how much materials cost for each request (i.e., repair leaking toilet: $25 for materials, $35 for labor), then I recommend you request for that breakdown. This allows you to do a couple of things I am about to explain in this blog.
3. Never Take The First Quote. Shop Around
It's ok to not take the first quote with the first contractor you communicate with. I recommend getting three quotes before making your decision. The lowest quote may be so low in price that it makes you question their quality, and the highest selection may be too high for your budget. In situations like this, pick the middle quote so you can have a happy medium. If you want to do profitable business by the contractor that you know going in, you may or may not use I suggest paying them $50-100 for their time.
4. Buy Your Materials To Minimize Cost
As I mentioned earlier, when you have your quote itemized with the contractor's material cost inputs, compare them to your local Home Depot, Lowes, or specialized store. If you see that some or all of the materials at these stores are cheaper, let your contractor know that you will be purchasing the materials for the project. This has saved me hundreds of dollars.
5. Minimize The Cost By Doing It Yourself
Not only can you use the itemized quote as a tool to price compare with materials, but you can also use this as a way to determine if you should just do the job yourself. For example, I bought a new toilet for $99 in one of my rental properties, and to fix a leak; a contractor wanted to charge me $200. Now, why would I pay twice the amount of the toilet to fix a leak in it? I got on Youtube and started figuring out how I could do it myself. I was able to fix the bathroom myself, saving $200. I suggest you review your quote and see what you are better off doing yourself to save a few hundred dollars.
6. Do Not Pay More Than 50% For A Down Payment (With The "One Man Show")
I believe in a healthy work relationship between the contractor and myself. Trust is the number one factor when dealing with a project. Skin in the game on your part as the hirer is understandable, but I do not agree with providing 50% or more as a deposit (down payment). Worse case scenario the contractor quotes you for $3000 on a job and you give them $1500 as a down payment. He/she drives off and you never hear from them again without a single thing down. Best case scenario you provide the $1500 and they do half the job with half the money. I recommend on short projects (less than a week) you offer the contractor to pay for all materials and you will pay for labor at the end of the job. This provides reassurance to the contractor that you are willing to put skin in the game and this saves you from paying labor on a job that is not complete nor has been inspected to verify it meets your standards. For long projects I suggest paying the contractor in milestones. Break up the job into four sections. To incentivize the contractor from not losing motivation in the end leave 40% of the work as the last milestone. The only way i would suggest putting more than 50% down is if you draft up a contract which binds you and the contractor. If things go south then of course you will have to take legal actions and that could be a long process but at least you will be covered.
7. Have a Due Date
Your contractor's time is just as valuable as yours. Be clear on when you want the job to be done and the contractor needs to be transparent on if he/she can meet that deadline. Identify if the contractor is trying to juggle multiple jobs at once. This could affect the quality and timeliness of the job you are paying them for.
8. Be Clear On Direction of Project
This may be one of the most important tips I can provide. Clear communication between your contractor and yourself will save a lot of time, energy, materials and most of all stress. Never agree to terms if you or your contractor are not clear on what is expected.
9. Periodically Check Up On The Project
During the project it is ok to verify the progress to ensure it is being done correctly. In the past I have identified a discrepancy early so before the contractor could continue he addressed the issue. This saved time and waste of materials.
10. Inspect Before You Pay
I've made the huge mistake by paying a contractor before PHYSICALLY inspecting the work that was done. I erroneously was content with pictures sent to my phone of what was done only to be disappointed when I reviewed the job in person. I could never get the contractor to come back and do the job because he was already paid in full. There was no incentive to return outside of having integrity and being a good business man.
Overall this is not to scare you from working with contractors; this is to help you be as professional as possible while protecting your interests and as always keeping more money in your pockets.
For the audio version of this blog please listen to Episode 14 of the Rich State of Mind Podcast : https://www.richstateofmind.com/podcast-1/episode/3246c5b3/episode-14-10-things-to-know-when-working-with-a-contractor
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