Investor Mistakes that Can Really Bite - Contractor's Fees
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors
Don't get me wrong, contractors earn their money, especially if you negotiate fairly and have a clear understanding of what will be done with what materials and how much you will pay.
The problem that I have fallen victim of and seen on many occasions is allowing a contractor to be paid in full before the job is done. I don't know what it is about these guys, but they always seem to have a reason why they need to get paid, as the job is nearing the completion.
It is typically some hard luck story. They will usually come in and work really hard for a day or two and then say that they need some more money because... maybe it's one of their guys or their wife or ... who cares - it's an excuse.
What will undoubtedly happen is the contractor will get your final payment and then never come back. Maybe, all they have to do is the job clean up. Maybe they just need to put up the finish trim. Who knows? Really, who cares?
So do yourself a favor and NEVER pay a contractor until the job is finished - 100% satisfied. Don't ever pay a licensed contractor in cash. When you cut the last check, wait a day after completion and then put it in the mail. This way you are sure you are satisfied with everything.
If the final payment is no less than 5% or 10% or even 20% of the job, it is enough to make sure the contractor is there - after all, you are holding his profit!
There is not much more to say on this topic - just be careful in your negotiations and job management and the cost of the contractor should be nothing more than a legitimate business expense for your real estate investment.
Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,
John Occhi, Hemet CA REALTOR