How do you protect yourself from unethical contractors?

[Nick Macklin]

I haven't personally encountered any issues yet but I was reading some stories of people that have gotten ripped off by contractors and began to wonder how some of you protect yourself from unethical contractors?  This is especially important when you are an out of state investor like me and so many of you.  While I was reading the stories of people putting the initial payment down and contractors essentially asking for more right away after doing nothing and/or just walking away with a large chunk of capital.  

I have pretty much only signed the estimate and then come to some kind of agreement on the draw structure.  Should I be doing more?  I've only used 2 contractors and I have had good experiences with both even though 1 was far too expensive.

[Frank Geiger]

As an investor that manages projects out-of-state, I would say the best way to protect yourself is to keep as much money in your wallet as you can (until the rehab is complete) and word the contract so you can break it if certain milestones are met. The scope of work is so important. Understanding the different contract types can help you understand who holds more of the risk.

Everyone makes it sound easy. But it's super difficult and I've been burned a few times.