The Irreverent Guide to a House Flip: Avoiding Labor Problems

When it comes to any kind of construction work, you can’t be too careful. Remember, it’s far less expensive, time consuming, and stressful to avoid a problem than it is to fix it. Horror stories like Jack’s abound. In Jack’s case, it was stubborn stupidity that caused his problems, but for many people it’s ignorance. Unfortunately, ignorance about labor can launch you into some serious financial problems. To avoid that there are some precautions you can take. So, don’t be ignorant or stupid if you plan to make money with a flip. The following guidelines will help.

1. Get references. Find out who the person you plan to hire has worked for in the past. If you’re hiring a general contractor, that would be customers. If you’re acting as your own general contractor and hiring subcontractors or skilled labor, such as a framing carpenter, finish carpenter, plumber, etc. get the names of contractors he or she has worked for in the past.

2. Check the references. References aren’t worth squat if you don’t check them.

3. Watch the bid. If the bid is too low, you better know why. That’s a giant red flag. If, on the other hands, the bid is too high, the laborer, or sub is either in great demand or just charges too much. You better know which.

4. Be willing to pay a reasonable price. People who try and ding others out of a fair price for their labor usually end up regretting it. Remember, the guy or gal you’re hiring also has bills to pay and groceries to buy.

5. Listen to those in the know. In other words, don’t be stupid and let your all knowing ego get into your wallet.

6. Make sure you have a contract. These are as much for the other guy as they are for you. A contract clearly outlines what work is to be done, when it should be completed, and the costs. This avoids confusion on your part and that of who you hire.

7. Check the bond. If you hire a licensed, bonded contractor you can seek a remedy for unfinished or poor workmanship. (Remedy here is the money you get when a contractor does not fulfill his or her end of the bargain. The contractor bond is a type of insurance contractors buy guaranteeing their customers a remedy if the contract is not fulfilled. Licenses and bonds cost contractors lots of extra money and is one of the reasons a licensed and bonded contractor is more expensive than one who is not.

8. Casual labor. If you hire casual labor, you will have no bond for remedies. This type of labor you need to stay on top of like a fly to stink unless it’s a relative or friend who really gives a whit how much their time is costing you. One thing to keep in mind, if you are using a friend or relative it can really strain a relationship if they don’t work out. Imagine having to tell your father-in-law that he’s fired.

9. Don’t assume anything. In the case of Jack, the guy he hired to do his framing convinced him he was a pro. That bit of self aggrandizement on the part of his framer is now costing Jack a ton of money. You also may have difficulty claiming this labor as a cost of your flip. If you get audited, the IRS frowns on anyone you hire as an independent contractor (Someone who works for him/herself) when they should be treated as an employee (Works for you as their employer).

10. Put your ego on the shelf and listen to those in the know. Yes, I know I repeated myself, but this needs to be said twice.

To see everything so far on flipping houses, read the following hubs.

http://hubpages.com/hub/The_Irreverent_Guide_to_a_House_Flip

http://hubpages.com/hub/The_Irreverent_Guide_to_a_House_Flip_2

http://hubpages.com/hub/The_Irreverent_Guide_to_House_Flip__Labor_and_Stupidity

The next time we’ll cover the best ways to determine how much work you’re flip will require.