Keep up the great work, Brian!

Congrats on your day in court. These contractors can be a mess to deal with, but it sounds like you really learned your lesson.

Never pay a contractor up front for anything. This is so true, but here is what most people don’t know.

Good, honest, ethical, hardworking contractors don’t require a down payment. They understand that they have to invest themselves into the project as well. This way everyone has a real interest in getting the project done in a timely manner.

One more thing to add to your contract, payout phases. Use phases to determine when the contractor is going to get paid.

Say you are going to rehab a home. Break it down into four parts and let the contractor know that they will get paid X amount of dollars when each phase is completed.

As you said, thoroughly inspect the property before cutting a check for payment. Make sure every alteration is completed to your satisfaction before the payment is made. After you make payment, you give up all your leverage and you end of hoping people have high business morals.

I say your business is far too important to run it that way. Besides, you don’t want to build bad habits because you want to come across as a nice person. You can be nice, but save that until the business is done.

You don’t have to be a prick, but be professional. Get the work done, have a beer, and then focus on being a good guy.

Lesson learned, Brian is the man. He brought home the bacon!

I make it a practice to NEVER hire a contractor who does not have the money to purchase materials. If he runs his business such that he has no short-term line of credit, then he is too murky to rip up my bathroom.

I also typically accept the contractor with the highest, or second-highest bid. I want a contractor who is interested in competing based on quality, not lowest price. :) Has saved me money multiple times, because they don’t go over bid. Course it also may help that I always make sure to reference the fact that my husband and I are both attorneys. :)

~ Elizabeth

I just found your site and read this post. It hits home with me. I hired a contractor last year off a recommendation and it was a total nightmare. After beginning work he turned into a Bad weasel just like you mentioned. Hopefully all contractors aren’t like this but I have a bad taste in my mouth for all of them now.

Next I will be triple checking everything on the contract.

I am business partners with my Dad and his first investment was through a crooked guy who was supposedly and expert and it ended up costing him $50K and a trip to court. Now the court day was very educational and the judge was initially ready to tear my dad the “evil investor” apart. But he laid things out logically and explained everything that happened and he got judgments for all the money owed. The problem is, with the people involved being as dead-beat as they are, we will probably never be able collect the money. We could if we went after it and spent a lot more to get wages garnished and such, but spending good money after bad just isn’t worth it.

We have made so many mistakes in our real estate investing business that it finally doesn’t bother us that much anymore. We are looking at it like the Thomas Edison way to success.