All Forum Posts by: Steven M.

Not a bad idea RE: gravel/stone. Thanks.

Thanks, that's what I kind of figured. In a way I'd rather give someone a credit and let them do it so I wouldn;t have to bother in the first place regardless of season. Maybe when I go to sell there will be 10 feet of snow on the ground and let mother nature contribute her own 'curb appeal.'

I am going to be doing rehab flips starting in a few weeks in the New England. What do you do you if you're project is all done say in February, ready to sell and market HOWEVER the landscaping still needs to be done? Obviously you're not laying sod, redoing shrubs etc in the dead of winter, yet maybe you have a sale in hand in Feb,? Do you give the buyer a landscaping a certain credit amount in the sale and let them do it later in the Spring?

I don't think you want to make a deal that you'll come back in May in for the landscape while they own the place. You want to move on. You then have to answer to the new owner's as to what they want until they are happy etc (rather than had you done it on your own before a sale without the interference, or say from others).

So what do you do in this case?

Thanks,
Steven

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.

MY OPPORTUNITIES ARE NOT LIMITED BECAUSE I'VE NEVER ALLOWED MYSELF TO GET BURNED BY BEING AS YOU SAY 'MICRO-MANAGER' I'M DOING JUST FINE AND FOR 10 YEARS IT'S WORKED FOR ME. I DID THE MATH: I'VE NEVER LOST A DIME BY HOW I DO BUSINESS.

WHAT YOUR EXPERIENCES SOUND LIKE ARE AN ANOMALY TO THE BUSINESS IN GENERAL. GLAD TO KNOW THERE ARE RARITIES LIKE YOURS STILLOUT THERE.


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.

IF HE STEALS THEM THEN HE'S JUST ELEVATED HIS PROBLEMS TO NOW A CRIMINAL OFFENSE, DINGED HIS LICENSE AND HIS BUSINESS WITH A CRIMINAL ACTION AGAINST HIMSELF AND BUSINESS. NOT SURE HE WOULD WANT TO SUBJECT HIMSELF/LIVELIHOOD TO THAT. HENCE BUYING THIS STUFF YOURSELF IS A GREAT PROTECTIVE MEASURE IN CASE THIS HAPPENS,

I also want to own that stuff and return any worthwhile leftovers. If I pay for materials it is then legally mine and there at least won't be any disputes about THAT issue. If a contractor buys materials himself, and say, walks off the job or something it's another layer of muck in disputes. He legally owns it and could take it off site at anytime, put a mechanics lien on your property for failure to pay for it, or whatever. Hey, you could have half your cabinets installed and then he walks off the job with the rest of them...you really want to go around shopping again and look for the ones he took...esp. if they are special order) while you try to track him down. Good luck!! No thank you!! Unfortunately this is not a business swarming with Saints and Mother Theresas'.

If you aren't willing to pay for materials directly out of your own pocket (whether you actually go with the contractor or not to shop) you are waiting for a legal problem to happen. Blanket blind trust in this biz is fools gold. All the due dilligence in the world is no gaurentee. Your trusty contractor of 5 years maybe great but you have no clue 365/24/7 about his personal business or month to month financial strength or maybe lawsuits against him going on.

Lastly, $5k, $10k or $20k I save from his mark up is money in MY pocket not his. I'm not in the charity business (I give in my personal life because my biz life is is successful). Maybe that extra allows me to add something else of value to my project.

If it's all too much for then perhaps one shouldn't be in this line of work. You got to watch EVERYTHING like a Hawk with a bit of circumspect. It's YOUR money. It's YOUR profit all at stake. No one elses. I trust and believe no one except my wife and dog! It's served me well: I never lost a dime in 10 years in RE. 24/7 blanket blind faith is a receipe for eventual a problems. It will happen. The odds are certainly there...unfortunately.

Steven

Read the original first thread.

"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. "

That's all great in a perfect world, But unfortunately the nature of the beast is that the majority of contractor/subs are typically living hand-mouth--or close to it. Attorneys, accountants, bankers don't typically fall into this catagory and furthermore these people aren't in control of your say, %$200k investment. No offense, but it's not a comprable analogy, You can check all the refs, bonding etc.all you want but you never know if your contractor is one paycheck away or one day away from the street. It's the nature of the business. I can't say that about many attorneys, accountants or banks that I can walk into.

My suggestion of buying materials was not to so much focused to save money as it is for legal ownership and possession. If I got a $250k investment on the line, I am going with my contractor or have my contractor order what he needs but it will be paid by me directly. Not him. I mitigate potential problems this way. I also want to know that I can return any unused materials of worth.

I have had a great people work for me for a long time but on a dime they became unreliable and soon enough they had money problems as I suspected, and went out of business. Unless you are a well healed big contractor, or live in ones back pocket 24/7 a reliable contractor is a as reliable and trusting as the day he shows up and finshes the work. It's the nature of the beast. Not all contractors are like, but the majority are unfortunately. I suspect I'm not alone in this line of thinking and experiences.

Anyone, and I really mean anyone that is doing any form of construction/rehab, a word of warning: Always buy whatever materials (lumber, cabinets, flooring, sheetrock, plumbing, tile, sprinkler system, lighting, etc., etc) you need for a project seperately with your own credit card/checkbook. You own it. Not the contractor. In all due respect to contractors/subs, never ever let a contractor or anyone else purchase materials other than yourself, esp. if you don't know them well. You can go with the contractor, but the actual register purchase should be with your own credit card/checkbook as the rightful owner.

Reason: If you ever have a falling out or dispute with anyone working on your project who purchased project materials, that they could easily claim it as theirs, take off site (steal??) or whatever, and still they bill you for it even if they never finish the project or left the materials on site, good luck trying to get it back in a dispute or if they walk off the job. Let's say you get into a dispute, you fail to pay them or withhold payment or the contractor/sub fails to show up again or whatever, and you have paid them some monies already, well, technically, until you pay for all materials, under most state laws, those materials are not yours.

If you personally purchased the materials seperately from the contractor/sub, that is your property irrespective of any disputes/claims the parties may have. You want to purchase and own the materials yourself, even if you have to go with the contractor/sub to do so, and it may be a pain, but having rightful ownership will at least mitigate any future disputes that may arise.

On the same note in CA, and likely in most states, any contractor can put a Mechanics Lien on your property's title pretty much at will. Simply filling out a form, and for $15, can go into the County Recorder's Office and record a ML against the title of your property without notice to you (you won't know until you do a title search and see the lien). He/she doesn't need lawyer either in CA. Getting it removed is a whole legal process. Though recording one on title without just cause is fraud, but a lot of good that does you while fixing/flipping your house up quickly.

ALWAYS get a clear Legal ML Waiver and release stating essentially the contractor has been paid and full, and releases all future rights and claims. Furthermore, it is imperative that his/her subs sign a seperate release because if the sub doesn't get paid by the General Contractor, rightly or wrongly, they too can put a lien on your property, I am not sure what other states do, but in CA, there is no policing of ML. If a contractor gets p---sed off randomly, a simple trip to the Recorders/Clerks office for $15 will make him/her feel a lot better.

Never has happened to me but I know others who had nightmares. Watch your title and get waiver releases at the end of each project from anyone who set foot on your property that ever picked up a tool!