Real Estate "HACK" Of the Week - August 22 - How to Deal With Contractors & Avoid Costly Delays

[Wendell De Guzman]

I was inspired by @Brandon Turner 's landlord's "hack" list. SO I've decided that every week, I will share my real estate "hack" with BP Nation. Here's my first real estate "hack" of the week:

Issue with Some Contractors (not all of them, but some of them): DELAYS in finishing their work on time

My "Hack": I ask them what their deadline is for a particular job and I add 1 week to their deadline. Then I tell them that I will penalize them $100/day per every day they are late on their deadline (+ 1 week padding). I put this penalty clause in my contract with all my contractors. If they finish their job ahead of schedule, I give them $100/day BONUS.

The result of this "Hack": all of my rehab jobs are finished ON TIME. The only time I have delays are during "Acts of God" situations. 

What about you rehabbers out there? How do you avoid delays in your rehab projects?

[J Scott]

Originally posted by @Wendell De Guzman:

@J Scott, other than the above, do you have other "hacks" to avoid costly delays in rehab projects? 

Here's a suggestion when you have a contractor who isn't getting the job done in a timely manner...I use a recent example with a plumber I was using...

Plumber wasn't getting stuff done very quickly.  I wasn't ready to fire him (he wasn't that bad), but I also wasn't willing to wait much longer.  I have a penalty in the contract for not finishing by the deadline, but it got a little muddied because the project slipped earlier and knocked him behind schedule.

Anyway, I said to the plumber, "Hey John, do you have any plumbers you can recommend?"

He looked at me and laughed a bit.

I said, "I'm serious.  I have two projects coming up, and need some guys to cover them."

He said, "Why wouldn't you give me the job?"

I said, "This job that you're working on right now is the highest priority, and I'm not pulling you off this one until it's done...but I want to get started on the other ones ASAP."

As you can expect, the job he wasn't finishing suddenly became his #1 priority.

And btw, if you don't plan to use the contractors again, this works even if you don't have any other jobs (you can just lie about them)...