A great way to build equity is by buying a fixer-upper or remodeling your home but working with the wrong contractor is an easy way to lose money. Here are 5 tips to help you avoid getting screwed over by a contractor.
1. Cheap, Fast or Quality: Choose Two
You’ll have to choose between cheap, fast or quality. Most people want all three but you’ll likely only get two. Decide which is more important, particularly when it comes to hiring for crucial parts of the homes: Plumbing, Electricity, foundation, etc.
2. Not Getting Multiple Bids
Get at least 3 bids from different contractors to see if the pricing you’re getting is accurate.
3. Not Having a Clear Scope
Know specifically what work needs to be done. How? Get an inspector, other investors, agents, etc. who know what they’re doing. TIP: Get one contractor to give you a line item bid. This is a scope of work that you can then shop or compare to another contractor.
4. Not Having Clear Contract
How to get them paid (having a clear draw schedule). Do not pay 5-% upfront on a big job. Give smaller deposits. Ex. 10K out of 50K.
5. Not Having Change Orders
Will additional work to be done based on unforeseen damage? Many contractors will do the work and charge you afterwards. Put it in writing that you must approve all work at any time. Contracts are your friend.
Stay informed and ask questions so that you know what’s going on every step of the way.