4 Tips for Working Successfully With a Building Contractor When You Are New in Real Estate Investment
In the field of real estate investment, and particularly when you want to earn money with real estate, choosing your building contractor will be important.
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Having a trusted contractor who will follow you in your real estate project is a great asset. However, you must be very careful, because the quality of the working relationship with this contractor will also depend on the professionalism you demonstrate from the beginning of this connection.
Although some reality shows often show that it is possible to delegate the work to the contractors and to come back once the renovation of a property is complete, the reality is quite different. In practice, you will indeed have to manage them and monitor the work from start to finish. It is very important to keep in mind that for the contractor, your project is just one of many investor customers projects, and that they can let you down at any time. To avoid this situation, here are four tips to help you square things away from the start and ensure that the contractor will complete the project:
1. Understand how the contractor works
The contractor is the company to whom you will entrust your work. It is necessary to start on the right footing with this professional. From the moment you contact them, you should be very clear about your intentions, and you should also set out your objectives so that the contractor understands them. Unfortunately, there are no labels on contractors. You do not know in advance whether they are trustworthy or not. But, in spite of everything, there are few clues that can give you a hint. These include:
If the contractors do not possess a license or insurance
If they ask to be paid in cash and that they refuse to be paid in stages
If they refuse to give an estimate, which clearly distinguishes between the cost of labor
By the way, on this last point, you can buy yourself some of the materials, and if they are paid for by the contractor, you can see the receipts and check that they are your materials. Generally, a contractor who is not serious is also reluctant to give an estimate in two steps.
Related: 4 Undeniable Truths You Should Know Before Investing in Real Estate
2. Make the payment in stages
This technique of making the payment in stages ensures that the contractor finishes the job. Do not take the risk of paying for everything up front. You need to find the right balance so that neither party feels cheated. On the one hand, you need to be reassured that the work will be done as agreed. On the other hand, the contractor cannot wait for the work to be done in full before being paid. The technique of payment in stages is a suitable solution for both parties. Thus, it is necessary to study every detail and to pace the work so that the final amount in the last stage of these works is quite substantial. In the contrary case, the contractor will not have the motivation to finish the work, and they may abandon your project along the way.
3. Put everything in writing
This means being as specific as possible about the responsibilities and the tasks of each party. It is necessary to put everything in writing. You must keep in mind that the written words remain, while what is said verbally can be forgotten very quickly. Entrepreneurs like the ambiguity. They may change their version and tell you that if they knew you would ask for this or for that, they would have changed the estimate. Thus, it is very important to write down all the details accurately and send emails demanding answers so that you have the same level of understanding.
Even if you are not a professional in the field, you should be able to describe the outcome you want from them. For example, you can specify whether the cleaning of the site after their visit is included or not in their service. The goal of this process is to avoid as much as possible the misunderstandings, because it is in a misunderstanding that a bad interlocutor finds excuses to ask you for more money. In the field of real estate investment, such misunderstandings can be very costly.
Related: How to Find Good Help in Real Estate
4. Remaining intransigent on the contract
Some contractors may think that there can be exceptions to the contract, and they may ask to be paid in advance for certain tasks. However, if you want them to take you seriously and stay within the terms of the contract, you must remain faithful to the terms of this contract yourself. A slip-up on your part will have a significant impact on the rest of your relationship with the contractor. In response to their request, you can tell the contractor that you cannot change the terms of the contract. Similarly, before any payment is made, you should check the state of the work and whether the job has been carried out as agreed. This shows that you are meticulous and committed. If you are not careful on this subject, you will be responsible for any small omissions.
But what if the terms of the contract are not respected? If, despite all the precautions you have taken, the contractor does not respect the terms of the contract and the work is dragging on, the first thing to do is to contact them. An amicable agreement can often settle matters. If not, the law protects you, and you can lodge a complaint against the contractor.
So, if you're new to real estate investment or if you've had trouble with contractors in the past, follow the four tips above to avoid trouble. Understanding how the contractor works, making payments in stages, putting everything in writing and respecting the contract are all important factors for success in your real estate project.
Related: 5 Tips for New Investors Who Want to Make Money With Real Estate