Protecting yourself from potential bad contractors

[Ivan Chavez]

I’m currently in the middle of having a construction loan completed for a single family home that will become a rental. I’ve got my general contractor set in place and have signed all the documents needed but am always just afraid of getting scammed or burned :/.  Wondering what’re some things to keep in mind or if there’s documents that can help protect my investment. Any advise helps!

[Bruce Lynn]

Pay for progress.  Every contractor wants 1/3 up front or more.   You negotiate something different....where you pay for work completed....I don't care if that is every week.  If they need to pay employees or subs....you pay for work done.   Don't ever deviate from this no matter what the story...and there are great stories...there are great salespeople.  You don't want promises, you want performance.   That way your money doesn't disappear, that way it keeps them coming back when they get super busy.   Get lien waivers for materials and work from the subs as you pay.  No wavier, no pay....and that is on the GC to get.

There are plenty of contractors here and others you will meet that just won't work this way....and when you deviate at some point you will get burned.  Happens to everyone who is active and deviates from the plan.  Of course contractors will tell you over and over they want money up front and they've been burned too many times from owners/investors.  So you have to move on to the next guy who is hungrier.  They're out there.