All Forum Posts by: Scott B.

Some interesting input on here so far.

A technique we have used to ensure our money goes towards our materials is to use a "joint check". The check is made out by you to BOTH the contractor and his supplier so they have to endorse the check, then hand it directly to the supplier for materials.

It requires a lot of transparency, and usually an awkward conversation.. but it adds security.

If I'm concerned I just tell them we got burned recently and are now requireing all our contractors to do this for large purchases.. that way it's not like your insulting them.

I never said anything about blind trust. Life and businss is all about systems. You need systems for your accountant, for your bookeeper, for your contractor, and for anyone who controls any part of your business.

A lot of contractors get into the business by default of they weren't qualified to do anything else. This gives the whole industry a bad reputation.

However, there are a lot of people who are extremely talented and truly love building.

If you insist on buying your own materials, and micro-managing your contractor you are severely limiting your opportunities for growth.

Treat your contractor like a member of your team. Trust has to be earned, and put systems in place that control and track expenses. But one house you micro-manage equals at least 4 houses your team could manage. Do the math.

I have had contractors save my butt on more than one occasion because I have a good team.

Beyond that, the fact that you wrote the check for the materials doesn't mean your contractor, or one of his guys can't steal them. Possession is 9/10ths of the law and you'll face the same battle either way.

The position I take is the contractor is responsible for the entire job untill it is signed off. If stuff goes missing, it's on him to replace.

In the future I may make a specific post about evaluating and hiring contractors. Like anything, experience goes a long way.

While trying to be nice, and not offend the origial poster, I couldn't disagree more.

The reason most people have problems is simply because they take the wrong approach. You should view your contractor like you would any other memeber of your team. If you hired an attorney, accountant, banker, etc, you would check references and find somebody worth their salt.

Many people assume they are going to somehow get a better deal by finding bottom-of-the-barrel guys to do the work. They wind up with guys tweaked out on drugs, not showing up, stealing stuff, and doing crappy work.

Although we area bigger shop, we can do everything "turn-key" better, faster, and often CHEAPER than if you tried to piecemeal it yourself.

A few pointers:

1) If you don't trust someone, you shouldn't be working with them. Period. Check references, do your due diligence, make sure they are licensed and bonded. If they are bonded, and leave you hanging, you will be compensated for your damages. You can also go after their license.. assuming you hire a licensed contractor.

I've been very fortunate and have never been burned. I just don't work with people I don't trust.

2) Buying your own material doesn't save you money. Licensed contrators get better pricing on virtually everything. If your trying to avoid their "mark-up".. I've got news for you. Your still paying it - just to Home Depot instead.

We don't mark up most of our materials.

3) Insisting on going with your contractor everywhere is a waste of both of your time. If your job is hourly, your paying him instead of a $10-per-hour laborer to go shopping. If it's fixed fee - EVERY contractor will build the PITA factor into their price.

4) As stated above: ALWAYS get lein releases. EVERY TIME YOU WRITE A CHECK.

Your GC's invoice should inclued lein releases, or "partial" lein releases from each sub he is paying. The "partial" is for jobs that aren't complete yet, but they are acknowledging that you paid them so far.

Don't pay in cash, you have no recourse, and if you have a contractor that is okay with tax evasion.. what else is he okay with?

5) Yes, any contractor can put a lein on your property for $15. Actually, its worse. They don't even have to have done work on your property to file a lein. That's right, I could walk downtown and file a lein on your property even though we have never met.

That said, the last place I ever want to waste a few hours is at the County Recorders Office. And it wouldn't hold up once it was challenged.


I guess the whole point is you shouldn't have issues if you work with good people. Good people aren't any more expensive than bad people. But bad people will cost you time, frustration, money, and the color of your hair.

My name is Scott, I'm a part-time real estate investor, full time contractor.

Basically my life goals are to use real estate to generate enough passive income to achieve real financial independence. For now, construction is a fun way to pay the bills, and connects REALLY well with investing.

I'd like to network with a few investors in the greater Sacramento area. I'm available to help you with any construction needs you may have.. and advice is always free. :D

I understand your needs as an investor, and if you've got a great project, we can work something out.

See you on the forums!
Scott