If you’ve followed my stories about “The Saga of Jean’s Traveling Contractor” Part 1 and Part 2, you’ll be interested in this final blog post.

I originally wasn’t going to post a final, but decided that positive or negative, a learning experience happened for everyone involved, and my purpose of this blog is to share as I learn as a real estate investor.

One Benefit of Having a Traveling Contractor

Clearly I was being setup for a big unexpected expense with the discovery of mold.  Several people had been in the unit and nobody told me about mold.  I got 2 contractors quote (through a real estate agent) and oddly enough, their quote was within my budget.  But what they didn’t know is that budget was to include “surprises”.  The biggest warning sign was a line item: $900 to install a kitchen sink.

The best think about sending my contractor is the verification of someone I could trust that I was being setup.  He verified that a 3 year old would have known mold existed.  It really makes me wonder about these contractors – quoting exactly to my budget, knowing they were going to hit me up for mold removal later.  What were they thinking?  Do contractors think we have a never ending supply of money?  Sorry guys, a budget is a budget.  That means “not to exceed”.

I felt like they viewed me as fresh meat – new prey.  I rehab properties all over the country and I still haven’t decided if these issues happen because of geographical cultural issues, or if I just find bad seeds in certain locations.  I rehabbed a property outside of Washington DC – another location that wasn’t kind to me (read the post here and here).  In Maryland, getting anything done required an up-front payment.  In Virginia, it was outright deception.

What I’m sharing with you is in no way to reflect badly on the contractor I chose, but includes what I learned and what he learned too.

Here is what I’ve learned:

Lesson # 1: Never, Ever, Ever, Ever, Even When it Surprises You, EVER, Pay a Contractor on a Time and Materials Basis.

I went into this agreement thinking this was a fixed price project for the contractor’s time, plus any additional services or materials required to get the job done in the time allotted.  Yes, I had to put him up in a hotel for longer that was anticipated, yes weather got in the way of progress, yes there were surprises that took more time than anticipated.

This is when I knew I was in trouble: We were at the end of the 2 week project, me still thinking I had a fixed price that I would not exceed.  We had a Facebook conversation discussing the delays, and he said, “I don’t mind the extra time here as long as I’m getting paid lol. a little extra time is not gonna hurt”.  Uh-Oh.  That’s when I realized we didn’t have a “meeting of the minds” regarding this contract.  Trying to push things, I said, “Just trying to get you home” with my best urgent tone I could convey in a Facebook conversation.  His response, “I need to work. I am behind in my personnel bills going home wouldn’t help matters at this point. gotta do what I gotta do”.  Double Uh-Oh.

At that point, I COULD have said: “OK, give me a fixed price to get everything done”.  But did I? No.  One more week was what I had thought…no big deal.  Big mistake.  A 2 week project, then extended to 3 weeks, turned out to be 6 weeks.

Lesson #2: Never, Ever, Ever, Ever Help a Friend in Need, or Allow Your Contractor to Help a Friend In Need

I have to admit that as I write this, I feel like I’ve got “Sucker” written over my forehead.  I hope you benefit from my mistakes, as there should be some good come from this.

Upon receipt of my first invoice, there was an extra $400 charge for the “helper”.  Shocked at that amount, I scrolled back at our agreements, and yes, I did say I would pay for a helper.  My thinking was he needed a strong back every now and then at minimum wage – not a full time worker.  As it turned out, my contractor was able to stop in Alabama where his daughter had just had a baby.  What a nice thing to be able to find benefits with work.  In the process, he decided to help a friend’s son get on this feet.  He thought this guy could be his “helper”, made the decision as to his pay, and took this kid to Virginia Beach with him.  This guy had never left Alabama in his life, and the experience he received by traveling through the states, learning about new locations, was invaluable.  In hindsight, I should have never allowed such a thing.  However, I looked at the opportunities and benefits for everyone, including that kid.  I had still projected this to come in under budget, so it was OK.

I challenged the $400 fee and my contractor assured me this kid was working his butt off.  As time went on, it became apparent that the progress with the project was way to slow – and I questioned the value of the “helper”.  The contractor finally agreed and sent this kid home.

Lesson #3: The Second Benefit of Having the Traveling Contractor

At this point it was obvious I was going to be over budget on this process.  The contractor trying to remind me that I got him at a discounted rate, me reminding him that my weekly costs were outrageous, we were into week 6 of a 2 week project, him reminding me that it got delayed to 3 weeks, me reminding him that we were at 6 weeks.  Yes, the shit hit the fan at this point.  I was pissed and didn’t hold back. Then I experienced the all to familiar comment from a contractor, “I’ve had it, I quit”.

Here is when there is a benefit to having a traveling contractor: He can quit, but he still needs to get back home.

Luckily he came to his senses and we were able to discuss how to finish this project.  He hired a helper at $15/hour, stayed an extra week to get to a point that he was comfortable leaving the project, at no charge to me, and is now finally on his way back home.

Final

All in all this was a good experience for me.  Yes, I went over budget, but I would have been over budget regardless due to the unscrupulous characters in play.  An associate I know has a saying, he’s said it before and said it again, “an Investor’s priority is time; a Contractors priority is money”.  Yes, he got on the phone with me an properly scolded me.  I feel duly scolded, and I also feel like a fool for not seeing and responding quicker to the warning signs.  Now I know:

1. When faced with delays, get a fixed price quote to resolve the delay.
2. Be more involved with the contractor’s daily activities – get pictures, demand progress.
3. Don’t be afraid to explain time management principles to contractors.  (I was spoiled with my early contractors – all projects were done within 10 days – 2 weeks – he was an investor himself and understood time management.)  Don’t be afraid to insult the contractor, even though most contractors could be viewed as a professional, he may not understand the urgency of time.
4. When agreeing to pay for a “helper” put boundaries around that dollar amount.
5. Do your own shopping when possible (actually I did most of the shopping for the big ticket items, and he was great at negotiating discounts at Home Depot for me, but this is still a valuable task).

Project management is a subject common in the High -Tech world, my background.  As a worker, I always appreciated the comment “You can’t put 9 woman in a room for a month and come out with a baby”.  There are many tasks that must be streamlined and there’s nothing you can do about that.  However, as an investor, it’s our job to help the contractor understand how to speed up a project.  I remember questioning one contractor on why he couldn’t have 2 tile guys for the bathrooms since there are 2 bathrooms.  He had his answer, and I accepted it unfortunately being a new investor.  Now I know it’s OK to be bolder and to insist on helping contractors do a better job for me.  Another lesson learned the hard way.