MY CONTRACTOR IS KILLING ALL MY PROFITS | MUST KNOW STRATEGIES

One of the biggest things that you have in a flip project or even a buy and hold project is your contractors. A lot of times one of the things that people will say is, “I'll just go do the work myself,” well you got a few problems when you do it, go and do the work yourself when you're doing flips and the reason why is because if you do the work yourself it's going to take you longer to get it done also your quality will not be as good as a professional who does it.

And so you have issues with doing it yourself is where you're going to get killed on time. One of the things that you have to focus on when you're renovating the home is you have to focus on your burn rate. Your burn rate is extremely critical and the reason why is because the amount of money that you spend daily to carry that asset or that home can eat away your profits so as an example if you factor in your monthly payment on interest, your utility bills, your internet bills if you're monitoring via camera if you factor in taxes and insurance HOA fees these are all things that add to your burn rate. So if your monthly payment is a thousand dollars a month and your taxes and your insurance and your utility bills all add up to another eight hundred dollars a month as they do in texas because you have our high taxes you can get into a burn rate. That's easily two thousand a month.

What we do is we go and we break the burn rate down so we go and we say okay you got 30 days in a month um what's that 2000 divided by 7 or divided by 4.3 which would give you your month and that's going to give you your weekly burn rate and then we go into a daily burn rate. So if you're running 2,000 a month in your burn rate every month that it takes you longer to get that house done the more it's going to cost you. Now it also compounds pounds too so this is one of the things you got to look at if you're renovating a property slower then your burn rate can eat you alive so if you go do the work yourself as an example where it would take a professional day to hang all the drywall in your home with a large crew if you did it yourself it could take you a month or two and where you saved money on your labor where you would get killed is on your burn rate and so it's very common for people to not pay attention to how much the burn rate is on a home when renovating it whether they're going to flip or hold it. At the end of the day, it's extremely critical that you monitor your burn rate as you monitor your burn rate it's going to make you more focused on how long it's going to take you to get the job done right? So you can think oh I'm going to save money doing it myself when in actuality it will cost you more than it would in the labor that you'll save or the cost that you'd save for that labor the same thing is true if you hire a contractor.

Let me give you an example of that I have a guest house that's in the back of my property I hired a contractor to get that guest house done and he and I decided to trade work. The original thing was he was supposed to start in October of 2020 and that building was supposed to take him roughly two weeks to get done beginning to finish and the reason why is it was an 800 square foot guest house it was already framed up the only thing he had to do was get the electrical done put the drywall in floors trim roll it on out and be done within two weeks if he was taking a long time it might take him a month. To this day I still don't have a guest house that's finished, it's been over nine months okay because we're currently in June almost into July and the guest house has been over nine months I've heard everything from oh I'll get it done this time to I had something come up to you know I've got other things that are more important because it's a trade for me right it's a trade job so I'm always last on the list and everyone else is more important than I am and that's clear by the fact of how long it's taken nine months. 

The amount of time that that contractor has taken for me or stole from me is insane. I've sent so many pictures so many videos so many reminders so many times I've said you got to get this and you got to get that I had a text from this guy the other day and he said to me hey listen can you give me the list again as to what needs to be done I'm about ready to strangle this contract right and the reason why is because there's always another excuse why the job didn't get done. Oh there's an extra here there's an extra there uh I'm busy this week I had to change up it didn't work right I had to fire that guy he's been through three drywallers just to get the drywall home and guys this is on an 800 square foot guest house and granted I'm in a position where I'm trading out the work he's got me leveraged he says to me hey listen I don't care when you want it done that's really what he's saying to me I don't care when you want this done I'm going to do it on my time and my way and I don't care about you a lick right because at the end of the day he's trading it I can't go find another contractor because I've already traded the money for him he's eleven thousand dollars into me on deals that I've had or money that he's owed me and so now I'm stuck into an asset that I cannot get out properly. Now I'm not going to flip my guest house and I'm not buying and holding it's a part of my property but at the end of the day the principles are still the same right and that's what just burns me up about a contractor that doesn't respect what it is he's supposed to do so your contractors can literally kill you financially.

I talked first about doing it yourself try to work with contractors who at the end of the day don't get your job done support like they're supposed to write and then you have to resort to listening I'm gonna fire you okay the last text I sent my contractor was this, okay I can tell you what I sent him it's real simple I said I don't need you any longer pay me my money he actually has a house that he's making payments on uh to buy it eventually from me okay he came to me nine months ago I need a place to live I had a house I went ahead and put him in it right did his family a huge favor put him in a nice three-story condominium with the community pool the whole nine yards thing will rent out for at least two grand a month I told him hey pay me 1500 cash every month or we'll trade for 2 000 a month, of course, he takes the trade route and now I'm SOL I'm completely out of luck with this guy. So I finally told him because he's almost done with this thing got a little bit of painting to do and a few little touch-up items talking I finally told him the other day I sent him a text and I said listen I don't want you to come over and do my renovations anymore you're done I don't want you to touch any of my other projects all I want is I want my money that you owe me and I want you out here.

Okay, this is what contractors can do to you. I got another contract he built my deck this is once again on my own home but it's because it's what's happening right now he built my deck we came in with agreed upon a price of fifteen hundred dollars i did a trade with him once again he stayed at my mansion for two days cost him 1500 bucks a night three thousand dollars I added some extras I was going to trade him on that he comes back and says no wait the job is at 1500 it's 5000 plus those extras are seven thousand dollars and i'm like what what are you doing what do you think do you think i'm brain dead or i'm stupid you agreed to do the work for fifteen hundred dollars and now you you have some extra so i give you another 15 but it's a trade right and so here i am stuck so what does he do he walks off the job my porch is no longer a big deal i'm sitting here at a month and a half later still no porch done and you know what he has the goal to tell me later on he has the goal to come back and say to me you know what i need another 700 bucks or I need more money and I just simply say to him i'm sorry bro i'm not in a hurry to fix my porch so you know what go ahead and get it when you can go feed yourself and then come back and do my porch later on.

But what does this do to the contractor okay this is where it just ticks me off because the contractor burns you on time right but what do you get in return you never want to use that contractor again they killed the reputation with you what I always say is I say this if you're going to hire a contractor get one who actually gives you the price sets it firm looks at the issues that might arise.

This is the other big thing about contractors, okay their goal is they come in and they'll give you a price to hang the drywall as an example they come in and they say we're gonna hang the drywall it's gonna cost you three thousand dollars as an example right and then in the middle of the job they come back to you and they say well the framing's bowed there's a problem with this wall this corner isn't good it's taking me more drywall they'll come up with every excuse under the sun as to why they need an extra for you from you. Builders and contractors our contractors are hugely known for coming in and bidding on a job and then telling you that there are extras to that job so you go out to your investors and you go get funding for that project and your budget is 50,000 and every time a contractor comes back and tells you that it's going to cost you a thousand or 2,000 more by the time you get through 10 contractors your budget went up ten to twenty thousand dollars so what you thought you were going to make you've eaten through about twenty thousand dollars of profits due to contractors who are hitting you up with extras.

These are just a few of the nightmares the contractors can cause you so let me bring this thing around for you not only is your burn rate critical but if your contractor messes you over they increase your burn rates if you have a contract that runs you over an extra month you just lost two thousand dollars on his him running you over and if he did a five thousand dollar job for you he got into your pocket another two thousand with the extras that he found and now your job went from 5000 to 9000. Now you'll catch the extra and oftentimes what you'll do is you'll think oh it's an extra thousand or two no big deal. So you'll accept that charge and then about the seventh person who does it you start to get hot or angry because what you do is you go and you run the math which most people don't run their math until the end of a project that's the other thing is critical if you're watching your burn rate monthly and you're doing the math on what it's costing you if you do that very consistently.

So we have an account manager that's monitoring your site and if it's taking you too long or it's costing you more then the manager can come in and say look here's your numbers. like the other day I had my accounting staff they sent me an email and they said this is how much you're spending on advertising, okay and I had put ads out to find people to employ and hire and I thought it was going to cost you know ten dollars a day they sent me the bill back five months later and they said I'd spent twelve thousand dollars in advertising. I had no clue I'd spent that much right because what happens is is that you start out thinking oh that's a hundred thousand or that's a thousand and then the time goes by pretty soon you got this big bill you're not focused on it right so the key thing is you got to watch your burn rate whenever you do a property you got to sit down and go up and add up all the carry costs that are going to run you monthly not the things that you buy once but the things that burn on a consistent consistent basis right you're flushing those dollars down the toilet every day your project doesn't get done right. So what is that burn rate but the other thing is is you got to have your accounting looked at on a weekly basis and the reason why is your contractors will run up on you so now you got the burn rate that's hitting you for 2,000 a month and your contractors start to run upon you and every extra that you have they're hitting you for more money. And these contractors are so good the ones that have been in the industry forever they will play you like a violin like a fiddle or whatever you want to call it they're going to play you like a violin or a fiddle and the reason why is because they know the game come in give them a price that's low and then go in afterwards and find all the things that are wrong and then they're going to kill you on extras and then they're going to tell you they've got to leave your job.

I remember I had this guest house right guy shows up says he's going to do the drywall here's what he does to me get this okay he walks in here and he hangs all the easy stuff so any board that's uh that's that he can hang quickly he hangs it okay then he calculates the material and he finds out that you're going to be short on material does he know what he's doing here oh yeah it's like clockwork this guy knew exactly what he was doing right he walks in and he says hey listen you're gonna need more material.

So what I do because I know he's playing me like a violin right i jump in my my vehicle take my trailer go load it up with drywall get it back over to him within an hour when i got here he was wrapping up and was leaving you know that I never saw that contractor again why because he ran out the easy stuff. He told me I needed more material thinking that he could get away with it and then he left and went to his next job because he didn't want to do all the hard cut up stuff because that cut his wages down. I looked at my contractor that was managing the job and I said are you brain dead did you see how this guy played you and he was like oh no no it's no big deal who does it end up hurting right because my contractor that's running the job says to me oh it's no big deal i'll have someone else come in and do it then the next thing that happens is he comes in and he says oh the next guy's gonna charge him more because the cut up stuff is left right and soIi jumped in my car drove got that stuff turned around and came back and he was headed out the door. And I said you don't need to leave anywhere you got all the material right here and he says oh it's the end of the day let me come back tomorrow. Never shows up again so who gets hit with it if you're not managing your job appropriately and you're not watching exactly what's happening?

If you don't know all the tricks to the trade that your contractors are gonna pull on you you're gonna end up getting burned and if you get burned it's gonna be bad because they don't just get you on extras okay they'll show up to your job and then they push it off another week and then they start killing you on burn rate and all of these things combined. You can have one trade just a drywaller and he can cost you two to four grand by postponing it without having the materials ordered right. And he can cost you two to four grand in burn rate and extra cost that he's going to charge you because he didn't see what he was doing okay so these are just a few of thousands of things that these contractors do knowing they're going to get you.

Now you would think that a contractor has a reputation for the kind of work they do you got to be extremely careful these contractors are used to playing people like a fiddle or violin all day long in fact it's gotten so bad in the industries that the contractors actually expect you to do it and if you don't they're mad at you get that they hit you with an extra that they should have seen and they're mad at you because you're the one that caused the problem. That's the world we live in today. It's a world where everything is always your fault and not their fault. When you deal with construction it is critical that the guys that you have it coming in are set up and they know what they're doing.

So let's talk about the right way to run a job number one is this is what i always tell my contractors get it in writing and make sure that they understand what you're saying because this is the other thing that happens that they're not going to tell you about or they're not going to listen. Another thing is I’m constantly reminding them of the same thing over and over again so when it comes time for them to pull that doozy on me I can look them right in the face and say bro not on my shift okay. At the end of the day I told you this this is where it is and this is how it's gonna go okay gotta remember something the way that you get a deal done is you have to know the way to leverage them so that they get where you need them to go.

You can have them sign a contract i'll tell you this I used to have contractors sign contracts i had a 15-page contract you'll hear someone say this they'll say well give them a bonus if they finish early or hit them with a penalty, if they take too long okay i did that for many years I'd have them write up a 15 page contract they'd sign it i'd even go to them and say this I'd say listen you tell me how long the job is going to take right constantly that i would say that to him and every contractor I've seen them literally tell me every time that the job was going to be done quicker than what it was ever done. I have rarely seen someone finish a job on time. So the contractors come in they'll tell me it's gonna take three weeks I say listen i'll tell you what you said it's gonna take three weeks i'll add another week on to it so i add another week on to their deal and I basically say to them i'll give you four weeks and i'll give you bonuses. If you find a bonus if you finish early every day early I'll give you a bonus because I know my burn rate is hitting me right so my burn rate is at a hundred dollars a day I can give a bonus of 50 and still be ahead. If I looked at it that way but I can give them a bonus if I give them a bonus of fifty dollars a day I'm still ahead right. Your burn rate could be a hundred dollars a day and if you're bonusing them fifty dollars then that's you're winning at that point.

But the fact of the matter is that these contractors are going to give you short time you can add a week and you can give them bonuses and penalties doesn't work okay let me tell you what does work and this is where the battle really comes because these contractors are so good that they know exactly what it is that to leverage you and to keep you on the downside in them on the hub side upside. Now don't get me wrong there has been contractors that haven't burned and so what they've learned is they need to stay ahead of you whether you stand ahead of them there's a battle that goes on a job site between you and the contractor because at the end of the day they're going to do everything they can to get everything the way they want it and you have to basically be on a chess board with that battle doing everything you can to get what you want.

So let's talk about that a little bit, number one is the more money you give them up front the worse leverage you have okay where your leverage position changes in a job is based on the money you pay them and a contractor will always try to get as much money as they can up front, here's how I do it if i'm a contractor and I have a reputation I walk in and I hand you a bit and I say listen this job's going to cost you five thousand dollars it's gonna take a week to get it done and I need my check for five grand. At the end when you're done, okay i'm gonna have you pay for the materials because what I don't want to do as a contractor is I don't want to get into materials and then you not pay me because then you're going to burn me from my material or my labor.

So a lot of contractors know this all too well it depends on the state. In Texas you've got to have them paid for materials and as an example in North Carolina you can buy the materials and there are legal reasons why you have them buy the materials and if they're going to buy the materials then you go to the store with them you purchase the materials and you make sure they get back to your job that's another thing to keep in mind.

By the way in my site if they're running right what you do is you set up a wireless camera in the garage and you set up a material staging area and the material staging area what you do is you bring all your materials into the garage and the cameras are right there monitoring 24/7. We can track that material in and out as they use it because it's really easy for someone to pull up a van and over order the materials and tell you it's going to cost this when they know it's going to be less and pull up the van and take 10 boxes of flooring and throw it inside their van and down the road and you didn't even know that flooring was gone or missing. And that's if you're paying for the materials and you're just giving them labor.

Now if they've got it figured in theirs then that's not going to be an issue right but at the end of the day what we set up is a material staging area with a camera on it and when the material is delivered it's dropped that place and then when it's dropped to that place we have 24/7 camera monitoring. Basically what happens is they're tracking that materials that comes in and out on the job okay that also is critical we use cameras on our sites and the reason why is because if a contractor tells you they're going to be there at 8 o'clock in the morning and they show up at 12 and leave at 2 then you know that they're playing again because the other thing the contractors do is they'll do three jobs at once and they'll bounce from the jobs. So they'll show up at your job for one day and then give you some kind of an excuse and then go to the next guys the next day. The reason they do this is because a contractor's goal is to keep as many of their jobs busy as they can so they don't have a gap in time so the way they strategically do that is they come in and they get your job first you you hire them and they come and hit your job real hard for two days and or three days or whatever and they get you rolling and now that they got you committed on the job then they're going to shift and go to the next job.

They're going to spend two to three days doing that one and then they're going to shift and go to the next job for two to three days all the while they're going to have an excuse of oh I had to do this johnny's sick, susie's having problems my wife is my job this my tools this right and so what they'll do is they'll go two days on this one two days on their and then when you're heating up and you're getting fine and you've now lost. You know four or six days on a burn rate and you just know that they just hit you for 750 and burn then they'll come back to your job.

So the strategy I have to do is this if i was a contractor, I did it the way i was supposed to what i would do is i'd come in and i'd say job's gonna cost you five grand i'll have it done in seven days but give me ten just in case any problems are here. And then what i do is i'd uh go in knock that job out get you to pay me and be on to the next one did you just hear how easy i made that sound a contractor who knows what they are doing goes in gets the job done no extras makes it happen and heads down the road and gets paid and goes to the next one. Those guys I don't even know if they exist to be frank with you anymore. Now I get it they're out there but you know what i'm saying it takes a lot to find them.

The common mistake that people make is they get three bids and pay the cheapest guy and he's the one that's running the racket. He knows exactly how to get your job and he knows how to run the racket on you, so at the end of the day that's what you're looking for.

Right now the next thing i hear people say is well i hired three people and i went with the most expensive one or i went with the middle one here's the deal guys money that you pay them in contract the contract price you pay them does not determine how good of a contractor they're going to be and most people associate money with that so they will come in and they will say listen i'm gonna pay this guy this guy was at five this guy was at seven grand and this guy was at 10 grand so i picked the middle guy and he's going to do my best or i paid 10 and he's going to do my best. I can tell you I have had guys that have come in and bid my job that have been the most expensive and i've hired them thinking i'm going to get a better job and they still play all the tricks to the trade so a lot of times what you think i was going to tell you is don't hire the cheap guy. That doesn't matter, it doesn't matter how much they're charging whether it's five, seven or ten. That doesn't mean that guy is going to get it done any quicker for you.

So what you gotta do is you got to sit down and interview that contractor before you hire him so here's what you say when you hire the first thing you say is you say listen when you come on my job i want you here every day until the job is done and then i'll pay you okay i don't pay you during the job production unless it's a big job and then i'm going to break it down into phases. And if I break it down into phases, what they're going to do is front end and load the job. It's so funny i hear people say this all the time they pick up the phone and they call me and they say i'm 80 done right because they've hung all the easy stuff and they say i need 80 of my money because they've hung all the easy stuff well what they didn't tell you or what you don't know is the easy stuff hangs in a day and the hard stuff hangs in two more days after that so they're about a third of the way done right so they're going to come in and they're going to say i'm 80 done when they're 33 done.

Okay so what you gotta do is you got to build a scope that shows exactly what has to be done to get this amount of money and what time frame it's got to be. So listen joe okay the job cost you five grand when all your easy runs are done you get 33 percent okay because we know it's going to take you an extra two days on the hard stuff and then you get paid on the hard stuff at the end so we're going to give you fifteen hundred dollars half of a third of the way in when all your easy runs are done so we're gonna give you fifteen hundred dollars on the easy ones and then the balance ,the thirty three hundred dollars or the thirty five hundred dollars that comes to you at the end.

You've got to stay ahead of your contractors in payment because if they get the thirty five hundred dollars up front your SOL you're done you're toast and the reason why is because the minute they get the 3,500 they can go in and do the easy runs and then bounce to the other jobs and then come back and give you all the excuses known to god and man right so you've got to control them by the money you fill out a scope and and a timeline with these guys.

You sit down and interview them and tell them what you're going to do first. Well i'm going to get all the easy ones to them first and i'm going to tell it to you they're not going to call it easy runs they're going to say listen i'm going to hang all the boards in the on the on the lower side first and then i'll get up and i'll get the upper side what's going to take you more time as you start to walk him through this job a contractor will educate you can interview three drywallers and by the time you interview all three and you ask them enough questions you're going to be able to tell who's lying to you and who's not or who's giving you a story and who's not.

Notice the way i'm saying this i'm treating my contractors as though they are an enemy check that one out why am i doing that because at the end of the day if you do this business and you think you can trust everyone and you think life is great and the world is lovely you're out to lunch bro or sister hands down you're out to lunch because you have to look at your job from the perspective always of worst case scenario because if you don't they will hand you your lunch you'll end up with burn rates out the yin yang and you'll also end up with extras on every one of your projects and your twenty thousand dollars over budget. The end of the day you have to be the one that's in control of your job.

So number one make sure you set up your timelines right and that you do not allow your contractor to front and load the job okay you light you pay them light on the front side and keep your money heavy on the back side and they will battle with you on this so the way you do it is you set it up that way upfront because if it's that way up front you'll get your end result with no matter which contractor you hire. Because when the first guy does it wrong he's out if you're front and loaded and you paid him 1500 and he walks off the job you still have enough money to fix it kick him off the job send him packing and go find the guy that's going to do it right. And if he knows you're going to kick him off the job he's going to think twice about what he's doing. Sounds pretty rough and tough doesn't it so you need to make sure that you set your scope right your timeline right on that trade get your budget right make sure you have three two or three contractors that educate you and then you control them by the release of money.

This is the number one fundamental mistake that contractors or people renovating a home make is they let the contractor get ahead of them on the money absolutely critical okay second thing and this is really important, the word you tell the contractor is if you cover it up you own it okay and this has to be in your contract. You can write it down, you can have them initially, you can have them understand it.

Here's what often happens with the contractor they come in they look at your job and they say oh yeah that drywall is great we'll get it done yadda yadda and then when they start running your drywall there will be a stud that's out of line or the the proper or the uh the walls won't be square or plumb very common things that happen. Studs are all tweaked out they didn't straight edge the wall the corners aren't plumb and square so your walls are all out that throws your tile off it's a nightmare it's a food it's a chain reaction if your framing is not plumb and square and your walls are bumped out then everything you do after that is going to be a mess okay because you're going to drywall and finish it and then when you go to put your trim in, your trim is going to match up because your walls aren't square plumb.

And then once you do your trim then you go to put your tile floors down and now your tile floors are out of whack because your walls are square and so now you're narrowing one end and wide on the other right and so it all starts with the foundation you got to start that that renovation right or that construction job right because as you go out and i've seen this i had a framer i had him do a job and i went to him and i said listen i want you to walk this entire framing and make sure everything's right before you even start to hang the drywall okay they said oh yeah i walked it it's all good do you think i'm gonna believe a contractor no at the end of the day i walk my hat my chops i make sure that they're all the walls are plumb i make sure all the walls are square and i straight edge those walls to make sure that they are there's no studs bumping out of the walls so i make sure my job the quality is there because if you leave it to the other guy to check it he's going to tell you that he's going to mess it up and he's going to come and hit you with an extra so what i say to them is if you cover it up you own it and you fix it so as an example if a drywaller comes on to my job here's what i say to him go walk the entire job plumb every wall square every corner run a straight edge on every wall make sure your backing is there for all of your drywall so that at the end of the day when you get my when you do my job you don't have any excuse of an extra right because if the if the surface that your contractor is applying to is done right then you can't get hit with an extra as easily and this is what they always do you can have a flooring guy they'll come in and look at your floors and say yeah i can lay all your floors it's two bucks a foot it's gonna cost you six thousand dollars for material and labor or whatever his number is and then what does he do he can see your floor.

These guys are professionals remember that when they walk your job they see all the problems before they even start the job what they do is they figure this look i can see that his studs are out i can see that his floor is not prepped so the minute i go in to lay those floors i'm going to come back to them and point right at that floor right there right that stood on that wall right there and i'm going to say to them look i got to fix this it's taken time it's an extra so a contractor will literally walk through your house and know the problems and not tell you right he won't tell you what the problems are because that's his money. So what you gotta do is you got to walk your floors you got to straight edge those floors you got to have them walk through and tell you hey listen do you see any problems with this floor and you walk every inch of the floor you watch every inch of the walls and you make sure it's right now here's the common thing that happens to people when they do that what they say in their mind is oh that's going to take me too long to do that that's their comment it's going to take me too long to do it let me tell you how crazy that comment is the minute you go to a laziness in your mind and you think it's going to take you too long to do it you step back and think about the last time that contractor burned you what's going to cost you money and it's going to take you longer by far is the fact that that contractor is going to come and tell you it's an extra and then you're going to negotiate that price and then it's going to take you even longer because he's not going to do it right or this can be an argument it's going to cost you money.

The way you save time is by getting the job prepped and checked right the first time do you hear me on this wake up and listen to me i'm telling you that when you do a job the minute your mind says this is gonna waste me time you need to do an about face and go do it because it's actually going to save you time that's huge so coming back to this basically what you're talking about is you have to make your contractors accountable for the surface that they're applying to so that what you say is you say this if you cover it up you bought it.

So now what you'll do is you'll have a drywaller who will come and i can tell you right here in my own guesthouse because i'm not perfect at this either there's too many ways these guys can get around you even the best of us can't control them all the time everywhere it's a battle hands down so i'm telling you how to do this it's not perfect for me either. I have to run my jobs as quickly as i can as effectively as i can obviously on the guest house i don't have a burn rate but if it's a job then i'm going to be a lot more serious about it but i can tell you i'm just looking right now at the baseboard in this this room i'm in and there's a bow in the wall so the drywaller hung it over bad framing and the finished guy hung the finish trim over bad framing and drywall so the problem started at the framing.

What you have to do in these projects is you have to walk your jobs you have to have your contractors walk your job so what you say to that drywaller is you say listen i want you to watch walk every wall that's framed i want you to check for backing i want you to straight edge it i want you to plum it and i want to make sure i want you to make sure it's square and the reason why and he's going to say but that's the framers job and i'll say no it's your job and the reason it's your job because remember the minute you cover it up you bought it. That's the key, that's the statement so the minute you cover it up the minute you cover it up you buy it okay your contractor will have this statement if he covers it up it's on you because it's not his fault and it's the framers fault so therefore it's now an extra on you.

So basically what we're going to do is we're going to look at the fundamentals here or protocols that are critical to this whole scenario. So number one is what you're going to do is you're going to go in and you're saying going to say to the contractor if you cover it up you fix it or you own it so if you cover it up you want to remember an ounce of prevention is better than a pound of cure right so you're going to go to that contractor and you're going to walk him through the job you're going to make sure he gets everything done right and you're going to make sure that he knows that.

The second principle is you don't pay extras, okay the way you get around the extras you go walk the job you make sure all that's right it's alright you make sure that there are no extras. You have the contractors come in and if you're interviewing three of them you make sure that you have every single one of them come in and look at that job right and you have them point out to you all the things that are wrong. Walk them through it. Hey listen this floor tell me about this floor what's the process what's the manufacture recommendations okay you sand it then you put stain how long does the stain say it has to sit or be in the wood before you can go to the next step how long is each substrate gonna take so after you stain it what's that first coat of finish what's that second quota finish what's the standards.

In the industry when you ask people that question three contractors three times they'll give you all the applications all the way through remember this is the key.

My wife when she goes and she stages a home what she does and she's good at what she does she knows that what she's going to do is she's going to go into that property and let's say she's going to stage a bedroom she doesn't use a footboard she doesn't use side rails she uses a headboard and she uses a platform. The reason is because the headboard is easy to carry up there are no rails to scuff up, no end board to scuff up, you carry that headboard up, you set it up, you take the platform, it's metal. So what do you do you unfold it lay it out once that platform is down you throw the you carry that mattress up drop it on right as soon as that mattress is on you then put your skirting around the bed then what do you do for your nightstands you don't use wood heavy nightstands with drawers in them you get a metal nightstand that has some fancy looking application on the bottom or some design with the table that goes on the top so that that's that nightstand you grab the top of it carry it up you put the little holder up you don't need drawers if it's going to be staged you don't need if it's airbnb at the end of the day that thing can be carried up in two pieces it's lightweight bam that thing's set up right then you have your lights you have your shade right boom both sides that's done very simple okay then you have all your linens they come out of the boxes because you have the same size box all the way through so all your linens come out of those boxes all your little pictures come out that you have wrapped up all your little appliques or your little potted plants or whatever you got to make it look fancy and then your dresser.

Aas an example what my wife does is she goes in and she takes that bedroom and she puts it all into boxes has it organized and says this is bedroom one okay every single time she needs to stage something she goes right in there there's four bedrooms let me get four bedrooms of boxes they're set up in their little their increments right she goes in bedroom one boom it's there bedroom two is there bedroom three is there.

You do the exact same way with your contractors. What you do is you build in your scope and you interview the flooring guys to figure out exactly how it's going to be done. You interview the drywall guys you figure out exactly how it's going to be done.

You look for the problems hey listen tell me all the common things that's going to happen as you do this as a contractor right so tell me all those common things. What are the normal things that you see people do wrong because you blame it on the person that's the flipper. You say to them what are the extras that you normally charge a flipper that you see happen all the time right and then what you do is you go in and you line everything out like that cubicle or that that set bedroom right so when you do a floor you do these things you walk it you go to the contractor.

You lay out that whole spec or scope of work where you know exactly what the flooring guy needs. Every time you do the same thing with the walls the trim the plumbing the electrical right on out you use the same ceiling fan every time i use a 52 inch fan it's a brushed nickel and costs 50 of those right and i get a 10 discount when i go to cheaplowes.net right yep that's right i use cheaplowes.net because i can get a 10 coupon every single time so i'm gonna get my 10 percent discount right so at the end of the day you go in and you have a model a standard that you do with every single trade and you replicate it and you put it in cubicles.

So when i do floors this is what i do every time when I finish on my drywall, this is what i do when i do cabinets or this is what i do when i do the plumbing.

It's like with me i use a company called e-builder direct to order all my hardware. What i do is I go in and Ii order that stuff online it's drop shipped to the house. I send the guy over there he removes all the hardware after the paint is done. Don't put your hardware on before and then he puts his hinges his door stops his door handles you name it your bathroom hardware right all that stuff all that goes in in one day four hours bam it's done.

So you have a scope and then you have a set time you know it takes and you have a set crew that does it right and you know what the extras are or not and you lay that package in right remember you're doing reps so your goal is to buy renovate and flip every time you buy renovate and flip or every time you buy renovate and hold that's one rep. So if you're doing four houses a month then that's four reps a month if you're doing one house every three months then that's one rep every three months your goal is to get a system down to where you are buying renovating and flipping and it's like clockwork exactly how you're going to do that every time.

So at the end of the day your goal is to basically make it so that it's like work. It's the same every time. The quicker you perfect that renovation system the more you can get those reps in, the quicker you can flip, the tighter turn times you get.

Remember renovation risk rate of return turn time. The more that you do those same reps and you get them down the the tighter your turn times become the quicker your flips happen the quicker you make money the quicker you're on to the next thing.

So you got to get those reps down one two three four five six seven eight nine ten. So you got to get those things down to where you're doing it so what are the things that we're looking at here so let me backup to go over what exactly we're talking about here, first you got to build your scope then you got to interview your contractors and find out all the issues that are going to come.It's kind of your precursor your protocol is this what you cover up you own.

Two, so if they cover it up they own it they better tell you ahead of time or it's on them. You don't pay extras right. That's critical. How do you do that? Make sure you know ahead of time everything that could be an extra, have them educate you so that it's not an extra to you.

Three, you control it with money. Remember you pay them one third up front when they're halfway done and two-thirds at the end when they're all the way done. You stay ahead of your contractors on the money and never let them get ahead of you because the minute they go ahead of you you're gonna have problems.

Number four this is critical time have them commit to a time how long's this job gonna take remember on my jobs when you start a job you complete a job you cannot leave my job and go to another job. So if you're going to work for me you start a job and you complete a job you don't bounce from job to job to job and how do you stop that from happening you make sure that you have them give you a clean material list that the job is locked is double triple check so that when you go to get the materials if it's the drywall or the flooring that you make sure that you're getting the right amount of drywall needed.

For the square footage of the home the right flooring that's needed for the square footage of that home don't let them over order you because if they do they can walk off with those extra six boxes of wood flooring. Don't let them under order you because if you do you've got another trip to the store and that gives them a break to go to the next job so you got to make sure your materials are right.

The better your jobs are prepped the more efficient and systemized you are the better off you're going to be. Remember that it's critical that if you think it's going to save you time or that's what comes in your mind or your contractor says it's going to save his time that's a red flag that it's really not and it's going to double or triple or quadruple your time. Okay these are the protocols right burn rate got to pay attention to that burn rate Remember how you can get burned with extras and burn rate and a bad contractor or a bad flipper or buy an old investor which is you and the mistakes that you can make that'll cost you literally thousands if not tens of thousands of dollars due to your contractors and how you're running your job.

MY CONTRACTOR IS KILLING ALL MY PROFITS | MUST KNOW STRATEGIES TO SUCCESFULLY COMBAT THEIR GAMES