Ahhhh working with contractors, one of my favorite aspects of being a real estate investor (insert sarcasm font).

Working with contractors can make you feel like a proud parent when work goes according to a plan and a stunning result is produced.

Then there are the projects that don’t at all go according to that plan you so carefully crafted, those too can make you feel like a parent… but the kind of parent that eats their young.

A few years ago when I was primarily flipping I got a project under contract that should have been a slam-dunk deal needing about $90,000 in renovation work.

We went through our normal vetting procedures which included creating a very detailed scope of work which laid out exactly what we wanted done, bidding the scope of work to several contractors, and eventually agreeing on a proposal and signing all of our contractor documents.

The contractor that we went with for the project had some signs of disorganization but had done work with us in the past and we wanted to believe we could help him improve.

The project seemed to start off strong.  The contractor told us he submitted for the permits and moved forward with demolition while he was waiting for permits.

After a few weeks, our architect informed us that the permit application and plans still had not been submitted to the city.  Confused we reached out to our contractor and that is when the stories began; “my office manager is working on that,” “there is an application I need from a subcontractor,” “the City didn’t tell me what I needed to submit,” “I have a small tax issue so my license is frozen with the city but I will clear it up,” “the architect didn’t do what I asked him.”

We could have filled a book with the stories this guy gave us for the delays and miraculously he was not responsible for one of them.

As something like this occurs your instinct is to want to believe the storyteller.  This was the trap we fell into, we kept hearing that everything would soon be taken care of and we would soon be able to move forward with the project and we so badly wanted to believe the lies… I mean stories.

The problem is that each day you own a rehab project as a real estate investor, that project is costing you money in taxes, utilities, interest expense, and most importantly the lost opportunity of not having your time and money invested in a different property that is creating profit.

So when is the perfect time to fire a contractor and move on?

The single defining factor that almost always dictates whether it is worth your time to continue working with the contractor or give him the axe and hire someone new, always boils down to his willingness to personally take responsibility for the problems on the job!

He signed the contract and agreed to a specific result and any issues that arise on the path to achieving that result are solely his responsibility to communicate and handle.

If the first issue arises and he blames someone else, you need to know that the rest of his actions will follow suit.

Unexpected situations happen in construction – it’s just part of the game – but when they do, your contractor should come to you, explain the situation, takes responsibility, and executes a plan to rectify it.

If they do this you know you are working with a rare commodity who is worth his weight in gold, treasure him and don’t let him go.

Regardless of contract, simply doing what you agree to is the most important standard that a person must hold themselves and those you work with to.  If you can hold yourself to that standard always, and ferociously eliminate anyone from your circle that doesn’t live by the same standard then your business will thrive!

Now you know the standard, go do what you have to do!

Sharing is caring!