My Beginning with Contractors
Well, it has been a very frustrating couple of weeks! I feel like I'm on an emotional roller coaster, and about to be tossed out of the seat. In this blog post I'll tell you the story of my first contractor experience, lesson's learned, and give you the opportunity to critique my actions and decisions. After all, we can't get better with out an honest critique!
In 2011 I contracted a good friend for the entire year, and kept him busy full time. When time permitted I worked beside him, and when duties called I was free to take care of business. Life was good, but not completely drama free. As I'm beginning to learn, everyone comes with a certain amount of drama! Well, my good friend was not from this area, and missing his former home he decided to move. So, I've lost a very trustworthy and reliable contractor. 2012 has been pretty frustrating trying to pick up the pieces and get open projects finished on time and under budget.
My first thought was to replace him with someone equally talented and motivated to work and start payroll. However, after trying several people as contractors-to-be-employee it became immediately obvious that I would not be able to find such a person. Whenever I would leave the site to take care of things, progress would come to a grinding halt. When I would return and look displeased, I would encounter a lot of talk about what needed done…. but nothing was getting done.
So, I found a cheapish contractor that came with 2 other guys. Being a newb in the world of contracting, I didn't use the proper forms that are recommended by the experienced folk at BP (J Scott). I also trusted this person to act as the GC and get quotes for a roof replacement. Well, it turned out that he altered lower quotes to steer me into his friends roofing company. Can you say FRAUD? After discovering this, I immediately changed the locks on the site, removed all the GC's tools, and waited to confront him about the situation. When he showed up at 8:20, (not the 8AM as promised) he was shocked to see his things outside. When I gave him a copy of the documentation I received that implies he altered a quote that was presented to me by him, he got defensive. I told him I have no problem paying him what I owe him, up to this point and I consider him innocent until proven guilty. Because I mistakenly paid HIM for the roof job, and he then paid the roofer (giving him the opportunity to skim). I simply asked to see the cleared check(s) that went to the roofer, to confirm that it was indeed paid for, and that is was for the correct amount. Well, of course he refused to do anything like that, like a dog with his tail between his legs he drove off with his gear. Making himself seem very very very guilty to me, after all people with honor and integrity will defend it if needed. I immediately went to an attorney, who advised me not to pay anything until I receive a paid receipt from the roofer. Otherwise, the roofer is able to put a lien if he wasn't in fact paid by the contractor! What a MESS!
Now the GC claims I owe even more, and threatens to take me to small claims court & put a mechanics lien on my property. Since we're holding this property the lien is not an issue, let him have at it. I would actually get a chuckle out of him wasting his time and (MY) money on that! There is no paperwork for any of claims he is making either. This is all just more headache that I don't want to deal with. Kind of like when you get some bad tenants. As things progressed he then started to threaten to turn me in to the DOS, claiming he was an hourly employee! Can you believe this guy? Anyway, I offered him a settlement, but of course he wanted a few dollars of PVC that were still on site. Are you KIDDING me? I showed up to his house, had him sign a document stating I'm paid in full, gave him certified funds made out to his business (if you can call it that) XXX Con - Struction, and I made sure the bank clerk put that hyphen in!
Yay! It is OVER. And moving forward, I have all my ducks in a row.
Many, Many, Thanks to J Scott for all his help in my transition. Now I can protect myself from CONtractors, and try to find some real honest folk that value steady business to grow their company as I grow mine!
Comments (11)
Mark, I feel badly about your experience but, to some degree, you set yourself up for that. Hopefully it is a learning experience for you. You must clearly define your structure, the role you play, and how that affects others; you may need some professional advice. When you acquire a property, how do you take title? This has personal, as well as tax, consequences. If you find the properties, secure the financing, and flip or retain for your own account, then you are the investor/principal/Emperor of all. Everyone else serves at the pleasure of you. Do not hire contractors as employees; retain them as independent contractors and issue 1099s if YOU pay them; if the bank pays them, then you don't have to issue 1099. See your tax adviser for clarification. If you ask a general contractor to find a roofer for you, he will markup the bid; that is the nature of the game. You were wrong attacking him for that; he gets paid for his resources. Otherwise, you get your own roofer and spend your time vetting them. I'm a general contractor and I'll admit that the old adage that applies to attorneys applies to contractors: "99% give 1% a bad name". All of us are tradespeople; few of us are businesspeople. You've dealt with specialty contractors who are mechanics who don't understand how to run a business; we call 'em, "Chuck in his Truck". "Chuck" runs his business from his home; doesn't have employees, no worker's comp or liability insurance. As GC's we know what we're getting and what we're paying for. KNOW THIS: In the trades the cheapest deal is NEVER the best deal. The contractor who is your low-ball bid will be your worst nightmare! Lastly, be aware of EPA RRP certification for any contractor who works on properties built before 1977. This is way longer than I intended. Tom
Tom Caruthers, almost 13 years ago
Thanks for sharing your experience. Finding good contractors is tough. I'm going to be looking for contractors or employees in the coming months as well. Having worked with and in the construction industry for decades I know that good contractors are hard to find.
Account Closed, almost 13 years ago
1099 my friend. Don't hire these guys under your name or company. Fix the price and make them be responsible for time and quality. If they want to pay guys to sit around then they can. Also, it is so important to make sure you're dealing wth licensed and insured professionals. Every single time I've dealt with a contractor who cuts corners on his paperwork and compliance... well, he goes right ahead and cuts corners on my jobs. Get references and write a good solid contract for the work to be done. Once you have a few jobs under your belt you may build enought trust with a guy that you don't need quite as fat of a contract.
Justin Pierce, almost 13 years ago
Do I have to 1099? I'm using a contract on a roof job now. I have their FIN number. I wasn't aware that this would require a 1099... Thanks! Mark
Mark Updegraff, almost 13 years ago
3 things I look for in contractors are: speed, quality and price. I also expect them to be licensed, insured and reputable but those are a given for me. It is hard to get speed, quality and price in one package but keep looking and you will find them. Jim
Jim Ingersoll, about 13 years ago
Thanks Jim, Speed is a huge factor. A lot of talk upfront and then when the work starts "It's too cold today" or "It's too rainy" - I know I cannot control when contractors work, but I'm taking notes on their excuses, and the reality of the situation. Using J Scott's material, there are consequences for taking too long. I give ample time to complete tasks, so hopefully the contractors will keep their end of the bargain on completion dates.
Mark Updegraff, almost 13 years ago
Yeah, it makes a lot of sense to talk about completion date and benchmarks in the contract. You can do something like $100 per day penalty for going beyond agreed upon completion date, and on the other hand, add $100 a day bonus for finishing early. Here in Dallas there was a huge highway project where the contractor finished over a year early because of the big incentives for speed.
Jon Klaus, almost 13 years ago
I would worry about incentives for early work as they may result in sloppy work!
Mark Updegraff, almost 13 years ago
I've always heard in most aspects of ANY kind of work, you can only expect 2 out of the 3 with any given person/company. So far in my experience with contractors in my business (AV freelancers and commercial electricians), this has proven to be true.
Shane Woods, almost 13 years ago
Keep looking and find that contractor you can work with. Lesson learned. Cheap is not always best
David Wedemire, about 13 years ago
Thanks David, Cheap is not always best, nor expensive. I'm putting another contractor through the ropes now, I'll let you know how I make out!
Mark Updegraff, almost 13 years ago