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Working with Contractors

Updated on June 8, 2020
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Larry Miller has been a real estate investor for a number of years and has worked with single-family homes as well as condos.

Unless you are one of these all knowing TV construction wizards, sooner or later you will need to hire someone to do some work on your home or investment property. For some of the smaller or less technical projects a local handyman can do nicely. However, as Clint Eastwood once told us, “a man's gotta know his limitations.” The same applies to the people you hire.

Licensed and Insured

When you need them, the place to start is licensed AND insured contractors. This should just be the minimum to get them in your door. Don't be afraid of offending them by asking to see their certificates – and check the dates to be sure the policies are still in force. Legitimate guys have these things handy and expect to produce them.


There are at least two types of insurance to look for. One is workers comp to be sure anyone injured on your property is covered and not your responsibility. The second is liability coverage in case the clumsy new guy falls off the roof onto your classic '58 Ford station wagon with simulated wood trim and chrome reversed rims. The repairs on both would be covered.


I am not a lawyer and I never played one on TV so I don't want any of the esquires reading this to think I'm giving legal advice. It's just some things I learned over the years and am passing them on for what it is worth. Generally it is not an issue, but let the contractor pick up the materials. Some property owners have supplied the materials on jobs that ended with tragic accidents and ended losing everything since in some states this alters the relationship between the owner and the worker This can also apply to your handyman changing your window screens.


Where to Find Them

Often the best contractors are found by word of mouth. If they treated someone else well, there is a good chance they will treat you well. It's not assured, but it's a good place to start. Investors that are part of a Real Estate Investors Association (REIA) often have an advantage here, as often there is a ready supply of recommendations available. Most have their favorite plumbers, electricians or general contractors, along with other tradesmen with unique skills. However, if a hurricane just blew through the area, you probably won't get a roofer recommendation from them – until their own work in finished.


If you're not part of an investor group, what then? Ask people you trust that in related trades. They tend to know who the good guys are and who the pretenders are... just like nurses know who the good doctors are in their hospital. Sometimes realtors can be helpful.


When all else fails, you can look at the ads. Check their length of time in business. This is not always a good indicator as I have had good results with a young electrician who had just gone out on his own. He was hungry and did an excellent job – at a reasonable price. However, he was recommended by someone I trusted who knew him.


With any contractor, don't forget to check with the Better Business Bureau to see if they have records of complaints. If there are any it's not necessarily a disqualification. Check out how they were resolved. As with other checks, the BBB is not fool proof and not everyone who gets a bad deal reports it.


One more thing, sometimes a guy will knock on your door telling you they are working in the neighborhood trimming trees, paving driveways, or something like that. They are not necessarily crooks – usually just guys trying to make a living, but it puts you in the position of not comparing prices to know if you are really getting a good deal and if they are on the up and up. Knowing what makes a good job and about what it should cost is essential to getting the best deal.


Inspecting the Work

On permitted work, the city or county will usually do a decent job of ensuring that the work is technically correct. That doesn't mean that you will be happy with the job. That means you need to keep an eye on the project. Just because the bureaucrat thinks the job is done well, doesn't mean you will.


However, don't be a jerk about it. Many years ago I was working with a large computer dealer with a repair department. They had a sign that said their rate was $25 an hour, $35 an hour if you watched, $45 an hour if you laughed and $55 an hour if you helped. Check out what they are doing, but let them do their job. An occasional question or two is not a problem but don't be a pest.

Paying the Bill

On big jobs you will be asked for a payment up front. A deposit is reasonable. A quarter or a little more may be right – sometimes up to half if they check out very well. An excessive deposit is often an indication they are on thin ice financially and don't have the cash or credit to get the materials. For example, on a $15,000 roofing job I recently gave a $3000 check the day before they started work, and the balance after the job was approved by the county inspector.


There is another tip, the job is not completed until the permit is closed out. You don't want open permits to explain and handle when you sell the property. The job is not done until the paperwork is done, in the construction business as with any other business.

A Good Contractor

A good contractor will get the job done right. They will get the job done on time. And they won't over charge you. Just be aware that sometimes when a job is opened up, unexpected problems do legitimately arise. That is why you need to deal with people you trust to give you the straight story.

© 2020 Larry Miller

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