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When To Hire A Contractor.
| | Tuesday, September 14, 2004 @ 08:01 AM EDT
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Contributed by: Jeff Haynes
Jeff Haynes Properties
Read more archived articles about Rehabbing
Lately there have been numerous posts about when to hire a contractor when rehabbing.
There are many books, tapes and seminars that one could spend hundreds of dollars in attempting to answer this question.
I’m here to tell you to save your money, sit back and use a little common sense and self analysis in determining if you can take on a Rehab yourself or if you should contract it out.
The first question is this: how much time do you have to take on a project and what is your time worth.
It is very easy to under estimate the time it takes to do a specific task when rehabbing.
I have seen people attempt to hang and finish drywall. They end up with too many seams, too much mud that results in more sanding. They end up sanding too much off including the drywall paper. Now they are back to square one. By then your average drywall contractor doesn’t want touch the mess and if he does you will pay for it.
It is better to pay some one to do the same task for a whole lot less money then what my time is worth. If your time is more valuable then what it takes to hire out, then hire it out.
The second question is this; how much knowledge and skill do you possess for the task you are about to undertake AND can you do it in a timely manner.
Some fields such as painting, landscaping, and even some flooring can be taught fairly quickly. There are numerous hardware stores such as Lowe’s and Home Depot that will conduct free classes………. take advantage of it when possible.
Other items such as electrical, hvac and plumbing should be left to professionals.
While plumbing can be done by your average do-it-yourselfer, I advise
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people not to mess with any plumbing that deals with water lines.
Recently my parents returned to their home from a week long vacation. Upon entering their home they found their house flooded due to a water line that broke. They have over $50,000.00 worth of damage to their home.
A polybutylene pipe broke.
From January of 1978 – July of 1995, PB has been installed in over 6 million homes. If your rehab was built or up fitted during that time you should have it inspected. Unless you have the knowledge, skill and tools to take on plumbing problems, it’s best to call a professional.
For more info on PB as well as other materials, check out: www.hadd.com, click on the building materials section. This website has a wealth of information.
(Side note: cut off your main water supply when you are away from your home more then 24 hrs.)
In all cases I advise people to never do electrical work or deal with hvac issues. I constantly come across electrical violations when I conduct home inspections. Many of these violations are dangerous. I can guarantee you that in every case it was done by Harriet Homeowner or Handyman Harry. It is worth the money to have these systems inspected.
Third question is this; do you know of reliable subcontractors and suppliers that will complete the job in a timely manner.
The majority of subcontractors have steady general contractors (GC) that provide them their bread and butter. While subs will do jobs on the side, rest assure if they are in the middle of your job and their GC calls them to start or finish a job, they will be gone and won’t be back until they have made their GC happy. A good GC knows the importance of surrounding ones self with a good team of dedicated subcontractors. He knows that the cheapest is not always the best. If you are good at something then you should be able to get at least what the going rate is for that business. Rehabbers are notorious for looking for the cheapest workers possible. Forgive me of sinfully laughing at these individuals when it blows up in their face, I’m only human and God is dealing with me on this issue.
While I’m on the topic of subcontractors, many people have friends or relatives in the construction field. If you are relying on them to help do you favors then you are taking a risk on losing a good friendship or causing family problems.
I have seen this happen time and time again. More often then not, the rehabber is expecting a financial favor, usually free services but yet demands a professional job in a timely manner. If you are one of these individuals, then contact out to someone that you don’t mind taking to court if things go wrong.
Forth question; do you know how to ACCURATELY estimate a job.
I don’t know how many posts I have seen asking for some method or program in determining how to estimate a rehab. THERE ISN’T ONE….so put your money back in your pocket.
With new construction and additions you can make up your own spreadsheets or buy someone else’s, and come up with fairly accurate numbers. Rehabbing is another animal.
To accurately estimate the cost on a rehab job it takes experience which comes with time, trial and error not to mention that rates vary from region to region. I can not stress enough that each rehab is unique.
The best way to learn how to estimate rehabs is to get up with a home inspector that is also a licensed contractor and be willing to pay for their time, service and knowledge.
Depending on which state you are in and licensing requirements, not all contractors are inspectors nor are all inspectors contractors.
The point is that you should find a person that can show you some of the basics in relatively a short period of time. It will be more valuable then any amount of money you spend on books, tapes or seminars.
Fifth and final question is this: do you have the ability to organize and motivate your team in order to complete the job in a timely manner.
While this may be similar to question three, the difference is that it is YOU that is taking responsibility in ensuring the job is complete. While you may want to blame subs and suppliers, ultimately the responsibility lies with you, it is your financial interest that is at stake.
If you objectively answer yes to all of the above questions then you may not need a GC.
But with that said, you should check local and state laws in regards to general contracting.
In NC if you take on a job more then $35,000.00 you must have a GC license, exception is if it’s your own abode, not to be confused with investment. Also in NC you must live in the abode for at least 1 year. Again check local and state laws.
Free tidbit of information about unlicensed contractor’s in NC. There is case law in NC that states that anyone that takes on a job more then $35,000.00 who is not licensed as a general contractor, can not recover any money that is due them from their client. (An unlicensed contractor lost over $87,000.00 on a job……excuse me for laughing again.)
This does not give you reason to hire such, more often then not the homeowner is the loser.
Let me also point out as I have done in many of my posts, if you hire someone to perform work for you, you may be liable if they are injured on your property. I can not stress enough the need for you to ensure that anyone that works for you has applicable licenses and insurance - including general liability and workers compensation. While worker comp laws state that such insurance is only required if you have more then 3 employee’s, that does not negate you from being responsible to that person or their workers if they get injured on your property.
Good people, you are here at TCI to find out the best and wisest ways to be good investors, being cheap and taking short cuts is not wise nor is it cheap.
One last thing when dealing with contractors, being a contractor and inspector myself, I detest dishonest people,……….gc’s, subs or clients it doesn’t matter. If you are bidding out the work then let them know upfront. Most GC’s are busy and don’t have time to waste. While you may not like it you should at least respect their forth rightness.
When picking out a contractor check reference as well as contacting the BBB in your area. You can even go to the local court house in which that contractor does business and look up any civil actions that have been filed against them. This should be done BEFORE having the contractor submit any bids.
You should be impressed by the GC’s knowledge, not price when determining who to go with.
When going into a contract make sure everything is spelled out including financial arrangements. In all my contracts I let my clients know that I am not their bank.
If they need me to finance such then that is in a different contract.
I give my clients 5 business days to pay me when I present them with an invoice. I also speak with their lender and advise them the same thing. After 5 days then penalty fees and interest is assessed. A the same time I also give my clients a realistic date in which I expect to complete the job, excluding weather, material delays and acts of God. Again read all contracts carefully.
Most subcontractors use a generic proposal that is basically worthless. All parties should understand what they are signing.
In a recent post it was brought about up front money / deposits. On my custom work I do not request up front deposits,………on rehab, remodel and additions I do.
A close contractor friend of mine that specializes in rehabbing and such requires a 10% deposit plus the actual price of material once it is dropped on the site.
The 10% is not up front labor but a scheduling fee if you will. He is often booked up 6 months in advance. If for some reason he starts a job but shortly thereafter the work stops due to the homeowner, he retains the 10% in addition to any additional monies owed.
The logic is that there is now a void in his schedule, caused by the homeowner, and he should be compensated for his loss of wages and time. I whole heartedly agree. While the homeowner may not like it, from a business stand point it is wise.
Most problems between contractors and homeowners are due to lack of communication, under bidding from an inexperienced or dishonest contractor, homeowner trying to get something or additional work for nothing, and contracts that are not detailed.
If you feel you can not work with a contractor once work begins then I would strongly advise you to seek legal consultation before going any further. You should also check with your local building officials to see what other recourse there might be including any recovery fund that is available through the state contractor’s board, as is the case in NC.
I hope this article can assist you in determining when to hire work out or get a GC.
If you have any questions then feel free to contact me via email or you can find me hanging out in the Rehab section or Commercial section of the forums.
Regards……….
NC_Yank
Note: NC_Yank is a licensed building contractor and home inspector in the state from which he derives his name and while he had no say so in his birth place, he was smart enough to move south of the Mason Dixon line once he had the means.
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