How to Successfully Work with Contractors

“A great contractor partnership is built on clear communication, mutual respect, and realistic expectations.” - Jake Baker

Introduction:

Managing contractors effectively is a crucial part of real estate investing, especially when undertaking property rehabs. While contractors bring valuable expertise to the table, challenges like delays or miscommunication can often arise. Here’s a guide to building strong working relationships and keeping your projects on track.

1. Define a Clear Scope of Work (SOW)

A detailed Scope of Work (SOW) is essential for aligning expectations. It should include:

• A breakdown of all rehab tasks.

• Costs for labor and materials.

• Detailed specifications for finishes and materials (e.g., paint colors, flooring types).

This document helps avoid misunderstandings and provides a solid foundation for the project.

2. Secure a Written Contract

2. Secure a Written Contract

Never start a project without a signed contract. It should cover:

• Payment terms (e.g., deposit, milestone payments).

• Responsibilities of both parties.

• Project timelines and deliverables.

A formal contract protects both you and the contractor, ensuring everyone is accountable.

3. Verify Insurance and Licenses

Before hiring, confirm that the contractor is properly licensed and insured. This protects you from liability if an accident occurs on the job and ensures they meet industry standards.

4. Set Strict Timelines

Establish clear deadlines for each phase of the project, from demolition to finishing touches. Include payment schedules tied to completed milestones to keep progress on track. Regularly check in on the timeline to address potential delays before they escalate.

5. Establish Communication Preferences

Decide upfront how you’ll communicate and how often you expect updates. Whether it’s weekly phone calls, emails, or in-person walkthroughs, consistent communication is key to avoiding surprises and ensuring the project stays aligned with your goals.

6. Offer Incentives for Timely Completion

Consider adding a bonus incentive for meeting deadlines. For example, a 5% bonus upon completion by the agreed-upon date can motivate contractors to prioritize your project. This approach fosters goodwill and encourages timely delivery.

My General Opinion

Contractors often face criticism for missed deadlines or juggling multiple projects, but it’s important to recognize their expertise and the challenges they face. In reality, a contractor who bids perfectly, meets every deadline, and offers the lowest price is a unicorn.

Key Takeaways:

• Prioritize what matters most: price, quality, or speed—and be willing to compromise.

• Build systems to mitigate delays and cost overruns.

• Extend grace when minor challenges arise, as they often do in complex projects.