Solutions to Common Concerns About Contractors

As a real estate investor, a large part of your success depends on your contractor and subcontractors. Unfortunately, it’s not uncommon for investors to run into problems with contractors. Here are some of the most common issues—and some useful suggestions for solving them.

The contractor is unreliable

When your contractor doesn’t turn up on time, only works for a couple of hours, or even takes days off without running it by you first, your entire project gets derailed. That inevitably eats into your budget and diminishes your profits. The best way to approach this issue is to email the contractor asking for an explanation. Note that written communications are always the best option, since you’ll have documentation of your efforts to resolve the problem in the event the situation gets out of hand. When the contractor responds, evaluate whether his or her reasons are valid. If they are, propose a new schedule that works for both parties and amend your existing contract. Remember again to get everything in writing, and have the contractor sign the amendment.

The contractor goes over budget

A contractor should never go over budget without first consulting you. In some cases, unforeseen issues (such as mold or a wiring problem) will require additional work—but the contractor shouldn’t assume this can be done without your permission. Review the terms of your contract, which should limit the contractor’s ability to incur additional costs without your written authorization. Send the contractor an email highlighting this fact and requesting an explanation. While you’re well within your rights to simply hold the contractor liable, it’s advisable to try to find a way past this issue if the extra costs were crucial to the success of the project. Make sure to obtain an itemized list of expenses for your records.

The contractor delivers sub-par work

Shoddy workmanship will compromise your ability to sell a property at the projected profit—plus, it can have an adverse impact on your brand. A good contractor will never want to deliver subpar work. Nevertheless, there are situations in which it can happen, such as when working with a new subcontractor. To resolve this kind of issue, never sign off on poorly executed work. Instead, take photographs, and email the contractor about your concerns. Most contractors will rectify the situation free of charge because they want to maintain a good reputation.

What to do in worst-case scenarios

If a contractor doesn’t respond to your attempts to rectify an issue or fails to live up to the new agreement, then you’re best advised to get legal assistance. You should also report the contractor to the Better Business Bureau. If you paid any money upfront and the contractor simply disappears, report him or her to your local police department.
When you’re in the real estate investment business, any issues you encounter with contractors can—and probably will—compromise your ability to turn a profit. Keep the above tips in mind, and you’ll know how to protect your investment and business by taking effective action in a timely manner.