Investor Mistakes that Can Really Bite - Contractors
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors
I thought I would start a series of articles that if they only help one real estate Investor or just one Hemet homeowner than I will be satisfied. The series will document mistakes that I have made and mistakes that I have seen my Real Estate Investor clients make when purchasing real estate in Hemet California and other parts of the state as well.
This first article is inspired by a recent event that I choose not to get into. Let's just say that communication is a critical element to any...scratch that EVERY real estate investment deal. Without effective communication, it is a case of the blind leading the blind...or worse yet a "He said - She Said" scenario.
In this case, I am referring to hiring a contractor and having the contractor put in writing exactly what they are planning on doing; what materials they are planning on using; and how much they plan on charging you when the job is done.
Lets examine this one step at a time.
What Will the Contractor Do?
Each step is just as critical as the next, so lets just say that it is extremely important that both you and the contractor know exactly what needs to be done. Describe in detail each phase of the project and avoid ambiguous words when negotiating with a contractor just as you avoid ambiguous words when negotiating the purchase of a home from the home seller - be precipice.
What does it mean to refinish an antique claw foot bathtub? Is it paint on surface? Is it a one step, two step, three step or more process? How will nicks be handled - painted over or filled and sanded to a flush surface?
You can see how ambiguous a term like "refinish" is and how much one method over another can have a dramatic reflection on both the finished product as well as the finished price!
What Material Will Your Contractor Use?
Again, just as critical as each of the other negotiating steps -without a clear call out of parts and materials you are leaving yourself wide open for cheep and shoddy work.
You shouldn't need an example, but what the heck... The work order calls to tile the kitchen floor. Does it call out the size of the tile? The tile material? Designer brand? Color? Grout color? Layout pattern? . . And how much overage do you need to buy and then who gets to keep the extra materials at the end of the job?
It is more than common to talk about different scenarios when discussing a bid. It is not uncommon for many of those scenarios to be just that, "talk". When you agree on an action - write it down. When you agree on a particular product - write it down.
This Will Cost "HOW MUCH"?
There is nothing worse than a job coming to an end and the contractor wants to be paid and he gives you your invoice for a bit more than you expected. You tell him this is not what you discussed and planned on.
This happens when the work exceeds your greatest expectations or when the contractor is lucky you don't turn him in to the State Contractors Board for shoddy work- he wants more than you thought you agreed on.
If you consider yourself a successful Real Estate Investor or even just a good business person you should definitely know that any agreement for money needs to be in writing. This is why each of these three areas is so critical and interdependent on one another.
So, the best way to avoid these costly and time consuming mistakes (not to mention the energy they suck right out of you) what you agree to with a contractor needs to be put in writing and make sure you include exactly what will be done and exactly what materials the contractor will use in your real estate investment project. Then, make sure you both agree on a price and then why don't you both sign it and avoid the heartache and confusion down the line.
Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,
John Occhi, Hemet CA REALTOR