It’s been said over and over again, that the most puzzling part for an investor in flipping real estate or renovating a property is working with contractors to guarantee the completion of the project within the planned timeframe and certain budget. Although there are several reasons for a project to run overtime or over-budget, the two major factors are
1) Poor communication between investor and contractor about quality and type of materials or workmanship and
2) Mishandling of funds by investor or contractor.
Starting with the problem of communication (or lack thereof), as an investors, we usually ask for one thing even though the contractor hears something totally different. While the reason for this is likely to be that the contractors may not be listening to us, this isn’t essentially the case. several times, we do not specify or may be not in details exactly what work we want to have completed. Be it the investors is unfamiliar with available materials and contractor jargon or experienced real estate investors battling with time pressures or unfamiliar repair issues, both parties fail to convey their desires in full detail. Relatively, they speak an unfamiliar language to the average contractor and later become disappointed when the scope and quality of work are not what they expected.
More often than not, we investors that deals in flipping real estate, express that the work should be done as cheaply as possible; nevertheless, we flop to converse what we really want? “quality” work and materials for the possible cheapest price. Let me explain.
For instance, we tell a contractor to put in a new surround bathtub. They hear us loud and clear. Afterward, they went to Home Depot and buy the $29 bathtub surround, install it and (rightly so according to our instruction) believe they just did a great job for us. Then the contractor call saying that the work is done and go to the property happy that our project is moving along well. But sadly, total disappointment awaits us when we get there and see the appearance of the tub surround. The walls of the surround are curly, and the edges are unfinished and rough.
In our mind, we had envisioned a much more pleasing tub surround. However, since we didn’t tell the contractor that we wanted a surround that would have cost $129, we got a cheap one that was bought for $29. So quality of materials is one area of poor communication.
Quality of Workmanship
Materials are only half of the equation when we are talking about quality of finished product. Workmanship is the other half.
For example, if you ask a contractor to paint the interior of a house. What the contractor will understood is “paint” and “get it done cheap.” “OK,” they say and go, promising to do so without paying a lot of money. We stop thinking, “This one’s in the bag” and mentally start spending our profits to sell the house as you drive home.
Meanwhile, the contractor did some determined. To complete the work for the quoted price, which cannot afford to contribute a few days of work to painting instead of a week. Therefore, they have to buy the paint and immediately start without a lot of “preparation”.
When the job is done, we received a call and happily drive to inspect the work. Again, however, we are disappointed, this time because of shoddy work. All that is not caulked properly, patches covering holes above are not smooth, and the trim is not “cut” we wanted.
In short, we have received a cheap paint work, which is what the contractor heard us demand. However, we really expected something much better. In this case, the quality of work rather than the quality of materials is poor communication area.
The solutions to quality issues
In most cases, the investor does not know what they want. They do not know the different materials available quality levels for a particular job, and assume that they will manufacture high quality regardless of the price offered by the contractor. The idea that someone can adjust the quality of their work down to meet a budget never crosses their mind.
For these reasons, investors have great difficulty in transmitting a contractor to his idea of a quality finished product. A list of materials (quality of materials) and the scope of work (quality of work) are essential to help investors clarify their ideas and convey their wishes to an effective entrepreneur