I am still a working stiff, so I don't have time to either perform or supervise a project like that.

Your buddy's example is sales tax fraud, and the penalties are quite stiff.

Mortgage fraud conspirators who contributed to the real estate crisis of 2008 are still standing in line for punishment. Six real estate and mortgage professionals in New York are facing charges that could put them aw...

The rate and prepayment penalty are both quite stiff. 

I dont' charge high interest rates, about 8% right now, which is a bargain considering I don't charge points.I do charge stiff late charges, the right to "re-set" the interest rate for multiple lates, and a 6 months interest penalty for prepayment in the first 2 to 4 years.

Most people, books, seminars etc. teach about how great Credit is, and I'm more of the cash and carry type myself.I know investors who have a very hard time collecting rent, and now they all want section 8 so they can get paid.This is a dangerous scenerio to myself:An investor buys multiple properities, then takes out the equity, refi's etc. these properties to the top, or darn close to it.Then plans on the tenants to pay for this with their rents, Ok this will work, the only problem is tenants do not pay on time or they stop paying rent and have to be evicted.This is why the investors want section 8, yet I hear sec. 8 is tightening up their funding, or already has.Then there are people that move from one place to another and stiff the landlord then move on, these people know how to use the system to their advantage and moveing around and stiffing landlords has become a way of life.

And certainly we COULD wait to get paid after everything is done, but this is standard prudent safe practice at least for my industry and certainly there are bad contractors out there that stiff people and don't do good work, but trust me when I say there are homeowners and businesses that can be just as shady (and unfortunately have been at times to my company) in terms of being uber perfectionists and withholding payment for unreasonable expectations. 

I feel like this is giving them all the leverage, so if things go south I wont fire them due to stiff financial penalties. 

Just a working stiff like you trying to make it to retirement.  

The dishwasher won't come out without busting up the tile in front of the dishwasher cavity.This is one of many reasons to dislike the kind of fools who put hardwood floors in kitchens.If the hardwood's nail-in random-length, you can bring the pieces in front of the cavity out slowly with stiff scrapers and pry bars, and then nail them back in, face nailing the last few rows.