7 Things to NEVER say to a Contractor

seven things to never say to a contractor or I could call this video seven common ways that contractors can screw you take advantage of you get the best of you if you are looking to hire a contractor big or small job you need to watch this video because I'm gonna share with you insight street-smart signal truth wisdom that can help you against this mighty mighty giant contractors because they are the source of so much anxiety stress problems in the world of real estate they are masters at being able to extract the maximum amount of profit and of materials and resources from you and giving the least amount back because this is what they do all day they negotiate deals whereby they're the ones that are ahead so what I'm hoping to do in this video is to educate you and put you into a position not so you can take advantage of contractors I'm a huge fan of people making a profit but instead to make sure you don't get screwed this is almost like a defensive training as opposed to an offensive training and as you can tell I'm probably gonna offend some contractors that's a small price to pay to share the truth with you you see I've been a part of transactions with literally hundreds and hundreds of contractors I've been screwed by a ton of them I know just about every trick they got in the book because I've learned it the hard way but also indirectly through mentoring and coaching those across North America I've been a part of thousands of other contractors worlds and so I've seen their tricks and so I'm uniquely qualified to educate you on how to avoid getting screwed by a contractor I'm Phil oski by the way I'm a real estate investor but also as I just mentioned the mint were in coach does all across North America miss sign author of a couple of books my first book had a be a real estate investor I give away for free in the top right corner of these videos my second book more for intermediate and experts is called real estate investing gone bad where I share with you what not to do in fact I have a story or two about contractors in there and this is the number one you Tube channel on real estate investing in the world and the reason is because I share with you wisdom and knowledge they'll hear nowhere else and partially the reason why I can do that is because I have as much or more experience than literally any human being alive in this particular niche of working with residential real estate investing and the work of contractors plays an enormous role in our business as a real estate investor and also as a real estate professional so learning how to work with contractors is as important of a skill as just about anything else you'll ever learn as a real estate professional so these are seven things to never say to a contractor and when you follow these rules you will be far better off and ensuring you don't get screwed number one to tell a contractor you're the only one bidding the job always always always get a minimum minimum of three but see the more the merrier five seven twelve make sure that they are apples to apples comparisons that in and of itself can be a challenge because each contractor will present a maybe a little all one number or the next one will break it all out you need to at least separate materials from labor and that alone will help tremendously and you being able to compare apples to apples but always get three bits minimum and just when you think you've got it all figured out and you've got the perfect electrician the perfect HVAC still get three bids minimum I prefer you get more but don't ever tell a contractor they're the only one on a job you do that you have just given up a whole lot of power in a whole lot of position you tell them hey there's no other contractors out here that do what you do don't ever say that they need to think that there's always a few others you could hire always that will keep them held accountable don't ever give them this inkling that they're the only one out there number two my budget is and you tell them what the budget is don't ever tell a contractor what your budget is don't say hey I'm hoping to get this job done for a total of twenty thousand dollars no they're gonna figure out how to make their bill twenty thousand dollars this is basic stuff I know I can't tell you how many times I have worked with people that have done this keep your mouth shut about what you want the budget to be instead what you tell them is this I have hired you to give me a bid because I need to know what it's gonna cost to do these things and you want them like I said to break up materials and labor now on the subject of materials this is a huge huge screwin point for many contractors they will up charge you for the cost of materials so when you do get a bid back you want to independently verify the cost of materials I've had contractors even in the past couple of weeks stare me right in the eye and tell me the cost of materials is 850 and I pull it up on my phone when I show them it's 550 and I say you can get out of here right now for lying to me don't ever lie to me about material because I can verify that it's a lot harder to verify labor you have to sit there and you know clock them so either way if you could tell you a little intense about this I don't put up with this crap with contractors and they try to pull this crap on me I can't imagine what they try to do the rest of this world because they know who I am most the ones I work with okay so don't ever tell them the budget have them come back to you and make sure it's in such a way where you can independently verify certain things like materials as well as be able to compare that to to the other bids you've gotten number three u.s. can I get a discount if I pay you the entire amount upfront oh that is a dumb dumb thing to say because if you pay a contractor upfront they're just not gonna do a good job if they do any job at all they'll just take your money and disappear that's how it works in the world of contracting they just laugh about deals like that I've seen real estate traders on YouTube teach this what I feel Dumber for even having told you that that's so stupid so you have to be very careful about the payments yes you have to pay some money upfront usually I want the money upfront to buy the materials and they want some money just to put it on their calendar now I try to buy the materials directly because I never trust them in buying materials there are so many material scams that these these contractors do whether it be that they they use materials from a previous job that were extra where they buy cheaper materials then then you and Rosie talked about whether they steal the materials which has happen and all those things in between so I like to be one to buy the materials and I know that there are some attorneys watching that would argue that the moment you buy the materials you cross the line and now all of a sudden that contractor could be considered employee but that to me is completely bogus because the contractor has owned contractor's license they have other clients that are working with I have the right to buy my own materials and I've never been stunned by that before so I like to buy my own materials because then I know it's been purchased correctly it's the right kind of materials they try to pull off a lie oh we can get a bigger discount than you can fill bull I can get just as good of a discount as they can just call it the material supplier you can work it out so if I give them a little bit of money up front not the entire amount then I do it and then I pay them over the course of the job being complete and they don't get the rest of the money until the very end and so this actually snuggly a few weeks ago during the the latest hurricane we had to evacuate and we decided to leave a little bit early because we wanted to get ahead of some of the traffic and so the person that was putting up all the hurricane shutters around our house his huge house right hurricane there's like 50 hurricane shutters done he was about 3/4 of the way done and we have to leave and so all the doors are locked and I said all right here man hi here's the money please finish this job don't screw me because if you do I'll come find you you better believe he screwed me little twerp he didn't put up any more shutters as soon as we left the driveway it's least that was I I guess when I came home and half the shuttered three quarters and the shutters Ron another quarter was not on I did get my money back for the extra stuff I pay him that did work out but that was because I got a real serious with him and so yeah you pay somebody upfront they won't finish the job make sure you don't give them the entire amount until they are finished other they won't finish it's that simple it's how contractors work I know you're thinking yeah that Phil what about reviews on Angie's List and homeadvisor don't they want to serve the customer well that's funny contractors serve the customer no no they usually can't look past Friday afternoon and so typically what they're doing is they're going from job to job they don't think through all the consequences of screwing people they just do it I know that probably offended a lot of people but that's the real world I've worked with hundreds and hundreds of contractors this is how they operate and I'm jaded because this is the real world this is not Fantasyland this is what happens when you pay upfront you don't get the job done the job doesn't get finished number four you tell them I'm not in a hurry never tell a contractor you're not in a hurry because you know what they won't be in any hurry and you'll discover that they'll be in less of a hurry than even you are they'll go grab a bunch of jobs in between yours they'll go fishing they'll go doing whatever they're doing besides helping and getting your job done sure you do have to communicate timelines you have to say look all right we're gonna have to get chart this thing out and we're at right now is you can't get involved until about three weeks from now all right that's reasonable but you gotta set dates and deadlines you always got to set deadlines and I always Drive it into my contract with my contractors now what's gonna happen is if they miss this deadline they start to lose money now I do give them a buffer zone and so I don't set too sharp of a deadline but I set a deadline and if they're not finished by that time then they start to lose money it's the only way to get them to get their butts out of bed fast enough to actually get the job done chances are you as a real estate investor work infinitely harder day in day out month in month out than they do now they're gonna go out and they're gonna put their three to four hours and then they're gonna be wrapped up so I when I was living in Tennessee I was going to get some materials at this material supplier and these material suppliers hang out with contractors so they're pretty much I guess in the same realm it was it was a Friday at one o'clock and I walk in the office and I'm waiting for the materials to you know come down from the forklift and you put on the truck and the phone rings and then it rings again and nobody's picking it up but there are people in the office so at some point when I'm signing the invoice and giving my payment I asked the person I said why is this phone continue to ring and nobody's picking it up and they said well Phil that's a Tennessee tradition we we knock off at 1 o'clock on Fridays and I said but you the phone still ringing why don't you pick it up oh well yeah because then that could put some more work on us this afternoon in fact you're kind of holding this up we got to get moving one o'clock Tennessee tradition so if you don't tell contractors they're in a hurry they ain't gonna be in a hurry and then that's gonna ultimately piss you off at some point even if it's not some deadline investment you're doing even if it's a remodel on your own home nothing is more frustrating that a construction project that gets delayed and delayed and delayed so set timelines and hold it to them number five you tell the contractor oh you go ahead you choose the materials you take care of me you're the professional oh boy you do that and just expect a screw in so I've been talking about materials throughout these other four but this fifth one I'm talking about the choice of the exact materials themselves it is so important that you dictate now you get education from them on what the differences are and there's typically gonna buy a high end there's gonna be a low end there's gonna be in the middle you need to educate yourself even if it takes time even if it's a bit of a hassle to educate yourself on what needs to be done with those particular materials figure it out and you choose it specifically the manufacturer and everything in between because if you don't they will cheat they will use materials from other job materials they have sitting in their house they will change it all the sudden on you and so in my contract with my contractors I specify the material they are to use you know it's sometimes I pay a little bit extra because I'm so anal about the materials as you can see from this video but you know what it makes all the difference in the world that they don't put the wrong materials in because sometimes if they do it wrong in the beginning it never gets better in the end it's because I use the wrong materials in the in the beginning so you've got to be on point with this you I know that seems a bit counterintuitive you telling them they can choose but I guess I should put they I need you to choose the materials you need to be specific on what it is that they're getting where they're getting it from in the prices that they're getting it from because they will mark those things up and they'll laugh about it I've talked to many contractors and say oh yeah oh yeah that cost me 250 but I charge to 500 for hahaha yeah these are real conversations I have with contractors they think it's funny I think it's horrible alright so that's number five you need to choose the materials number six so the general contractor says to you hey I've got this group that they can come into a great job they're they're not legal and they'll just kind of come in and out but what do you think and you say the phrase I don't care who doesn't work as long as it gets done alright yeah you don't want to be a part of that not just because of the patriotism and legal alien kind of talk but also because of the gigantic amount of liability that could be on your shoulders if one of these people gets hurt you need to be very diligent that anytime a contractor does work on your job that they have evidence of an insurance policy it's usually says a co Rd at the top like a cord and then at the bottom you have additionally insured and your company name is in there you need to be named as additionally insured or whoever the owner of the property is in case anybody gets hurt and you need to be very diligent about if it is a general contractor which subs they're bringing on to make sure that they're all covered as well or at least they're covered underneath that that blanket umbrella g c-- policy you need to be diligent especially on dangerous jobs like roof work like painting with ladders anything where there's a huge amount of risk that could potentially go into what happens tree work you've got to be careful here and you may pay a couple of extra dollars because you're working with someone who's ensuring that it's worth every penny because it helps you from a liability standpoint that also brings up this point in working with general contractors you have to be critically critically careful about making sure that the sub are getting paid me personally I always pay the subs directly if I am gonna have a GC I pay them but I always pay the subs directly because if you pay the GC and they don't pay the underlined subs now you have two bills you paid the same work twice happens every day of the week or GCS get the money and they don't pay the subs and they call it they're always on the phone I'm so sorry I'm working on it all that subs crazy oh he's he drinks a lot oh you have no idea his coke habit Phil uh no none of that crap I work directly with the subs and directly with the GC that way there's no way the sub comes back and says I'm following a lien against this property because I understood $3,000 electrical work and didn't you pay that's very serious so you do care who does the work and you need to be very diligent about how they get paid my vote is that you pay each contractor separately even if you have a GC that will ensure that there's no way that they don't get up pay and by the way sometimes the GC is gonna say all which you're too busy to pay I Got News for you I have several companies I make an enormous amount of money I have a very large large asset base I pay all of my bills on all of my companies because that way there is absolutely no way that bookkeepers can go in and steal from me I know you think I'm just being paranoid no it's real-world go go look in the annals of history the oldest trick in the book is the bookkeeper the one guy you know watching the books stealing the money that's like that was happening back in 3,000 BC that's just so old-school so I pay all the bills now I automate a lot of it using Bill Pay and those other features with the online banking but I always have time to pay a subcontractor always have time for that so that's an important feature as well making sure that you are working directly with the right people and you're paying them directly and they're insured correctly number seven a gentleman's agreement aka a handshake deal don't ever do that always always always put it in writing I don't care if it's a simple one-page little piece of paper it doesn't have to be complicated doesn't have to be long and drawn-out in fact I've got a link to where you can download a copy of a contract that I use with contractors real simple real easy that you can use to be able to ensure that at least it's put in writing what your understanding was if for nothing else so that you both don't forget what you agreed to I tell that to contractors allies this is nothing to do with trust although I don't trust contractors but it's really because I want to make sure that you and I on the same page we know do two months down the road or a month down the road and you and I are bickering over what we agreed to in the beginning so be detailed put it in writing what it is that they're agreeing to do what the cost of materials are what the cost of labor is estimated and all that stuff in between and by the way a little tip if the contractor is gonna buy the materials then just have them provide receipts to prove each material cost they can still screw you there by faking receipts but it's a little bit harder and it's a little bit more lying in writing which obviously that becomes more of a criminal activity but if you get it in writing you at least know a starting point and you can always add an addendum if things change but keep it in writing no handshake deals with contractors you do that you're looking for a screw in so those are seven things to never say to a contractor and although I got a little bit of detailed in a way this that's kind of simple right it's a lot more difficult in the real world to do all this because it takes time and oftentimes we're in a hurry in life when we try to take shortcuts don't take shortcuts with contractors you will regret it you've got to take the time to do this right my mentor was great at this he instilled this into me you've got to be very very careful when you hire contractors believe it or not a lot of contractors have a criminal background I know that doesn't mean they're a bad person there's plenty of wonderful criminals but when it comes to doing business transactions it's at least important for you to know the kind of history they have from an ethics perspective you know from their morals and from their actions and so oftentimes when people get out of prison there's not a lot of job opportunities for them but they can all become contractors you wouldn't believe how often this happens how often I ask a contractor I hire hey have you ever been in jail yeah but that was like four years ago that was a DUI I'm totally clean now filling them much better so this is very very real I often uh you have a Freudian slip and as I'm trying to refer to a contractor's I call them criminals they're not all that bad but you've got to understand how serious this really is that if you don't take this as serious as you should you are in at least you get taken advantage of they'll get the best of you and again I'm not looking for you to try to screw them either they need to make a profit I have a great video on why making a profit such a good thing in business so I encourage them to make a profit but not to do so at the expense of you where they go so far above and beyond I just got a bill from my electrician for example ninety-five dollars an hour dude has time it takes me pictures or the latest monster fish he just called him his fly rod and then he sends me that invoice this morning 95 he's been $75 an hour for at least the last two years so as you can see even the people you work with they're always trying to get at you so you got to be on your toes all right well this is the not so fun part about being a real estate investor deal with contractors yeah you're gonna have some thick skin I used to be a whole lot nicer in kinder until I got screwed a bunch and now I'm tough now I don't put up with it and that's what I want you to be from the end of this video on I want you to be tough I don't want you to put up with this crap I want you to say the least amount possible to make sure you get these deals done and that they follow through on their promises all right well I'm Phil bustillos feel free to mentor a little more intense than usual I hope you learn quite a bit if you have any questions comments put them down here I'm all ears I love talking about contractors it's a big part of our business you want to learn more about how you can become a first-class real estate investor and so that you you can leapfrog all of those years of headaches and heartaches of making mistakes and you want to have that fast track to success feel free to look into our apprentice program where we're my team and I work with people one-on-one and we transform them into money making real estate machines many of my apprentices out there these days Ramon the best in America I mean they're leading their respective markets and they are done right now and you can be one of those too so thanks again for watching this video I'll see you the next one

Channel: Phil Pustejovsky

Views: 683,239

Rating: 4.4891167 out of 5

Keywords: Contractors, Dealing with Contractors, Working with Contractors, General Contractors, Phil Pustejovsky, Freedom Mentor, Hiring Contractors

Id: j7zVv_rbLnI

Length: 22min 0sec (1320 seconds)

Published: Tue Oct 10 2017