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Shoddy Work And Liens: How To Protect Yourself From Bad Contractors

Do you fear being ripped off by bad contractors? You're not alone. 

That's why it's important to learn how to protect yourself from bad contractors early on in your real estate investing business before something goes wrong. 

 


In fact, if you buy and fix up homes, you will inevitably come across people who don't have your best interest at heart. This is common when dealing with unprofessional contractors.

It's important to understand that not all contractors are bad. The great majority of them are amazing at what they do and are very professional!  They will provide great work and beautifully finished products while you, in turn, help them by providing them a steady stream of projects and on time payments for great work! 

We are talking about the few bad apples that can cause you and your business a great deal of heartache. 

That's why it's important to take certain precautions to protect you and your business in the event that you have one of these unfortunate experiences. 

Investor, JoAnna Anderson, had one of these experiences while she was still working full time as a biology teacher. She tells her story in the video above. 

The Right Contracts

The first and most important step is to have the right contracts in place. These documents help protect you in the event that you have a bad experience with a less than honest contractor.

These documents include the following: 

  1. W-9
  2. Independent Contractor Agreement 
  3. Scope of Work
  4. Payment Schedule
  5. Insurance Indemnification
  6. Final Lien Waiver

Once you track these documents down, you should have a local qualified real estate attorney review them. 

After you get these documents signed, it's important to get them scanned and uploaded into a secure place. Realeflow's documents section is a great place to upload documents to keep them organized, secure, and accessible anywhere you have an internet connection. 

To learn more about all these documents, get a copy of our Contractor Survival Guide here. 

Download Your Contractor Survival Guide Here >>

 

Document Everything

The next step you should take to protect yourself in the event that a contractor performs sub-par work, is to document everything. This way you are prepared in case anything goes wrong. 

In JoAnna's case, she took photos every time she visited the property that she was rehabbing. This showed how much work was being done ,or not done, and at what quality. Then she uploaded them into Realeflow. 

These photos came in handy in her court case and allowed her to show the court the work that the contractor had and hadn't completed. 

With Realeflow's latest January Product Update you now have the ability to upload photos from your phone. This way you can simply open up your browser on your phone, and then upload photos into Realeflow's 'Property File' > 'Photo/Videos' section directly from your rehab. 

In Conclusion

It's the small percentage of contractors that you have to look out for, but with the right contracts, signed and stored away, and all your documentation in place, you can protect yourself in the event that something goes wrong. 

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