I can still remember standing in the kitchen of one of the first real estate investments I bought back in Denver. It was a nice B to A class residence in a nice neighborhood where the other houses selling had granite or quartz countertops, shaker cabinets, stainless steel appliance packages and subway tile backsplashes. This was the biggest project I had done to date and I was going to hire a contractor for the first time and I wanted to build a strong relationship based on trust and I remember saying, as we looked at the oncoming renovation “just do whatever you think fits. You’re the expert.” Well, fast forward to several weeks later when the kitchen was remodeled and I was staring at the same old cabinets with slick paint job, Formica countertops, white appliances and some trimmed down 18x18 inch tiles that were the exact same ones used on the floor.. They happened to be the ones I saw earlier that week on a Home Depot end cap for $.50 per square foot.

You need to realize that what a finished project for a real estate investor looks like versus most of the other types of projects that a contractor does is totally different. In fact, all projects are totally different. Also the vision from one contractor to the next is never the same. If you leave any ambiguity in your plan and expect that the gap will be filled by your contractor you are setting yourself up for disappointment.

You and the contractor have agreed upon a scope of work, you’ve agreed upon a price and now it's game time. You're so pumped about this project that you go to see how the guys are doing a couple days later. But where are they? I thought after I hired them they would be here every day?

That's not how it works. These guys are independent contractors or 1099s. They are not W-2 employees where you tell them where to be and when to do it.

Rewind to that same kitchen back in Denver and that contractor called me a couple weeks into the project to tell me that the GFCI outlets in the kitchen weren't grounded properly and the hot water was not working. One of my first times dealing with a change order, I was livid. “How didn't he see this when he gave me my initial bid?” “ Is this guy trying to screw me over?”

Well the answer is actually yes but not because of those things. See, he's not a home inspector he was giving me a bid based upon the scope of work that we had agreed upon. He's also not a professional estimator, there are companies who do just that, where it is on them to find absolutely everything that possibly needs done on that project.

Now a great contractor will help you see some of the things that you may not have when making your Scope of Work, but understand that there are other services out there that will be more aligned in helping you with a comprehensive scope of work or you can learn to do it better yourself (check out my other content). You see, your contractor is keenly aware that they are bidding against other contractors so it’s not clear that it’s in their best interest to add everything possible to the initial bid.

Note: this applies when you are hiring a crew for multiple jobs inside of a project. If you have hired, for instance, an electrician you can expect a more thorough scope of work.

In the code book there are tables that tell anybody building anything exactly what size headers, beams, or girders should be and what should be holding them up. Those tables only go so far; anything beyond that requires load calculations based on the exact scenario you are in. That is the job of a licensed engineer not a contractor.

If you are doing the type of project that requires large structural changes and/or layout changes you will also need plans to turn in to get your permits. This needs to be done by a licensed Architect. Most likely with an engineer in tandem.

2 Things to Note:

Do you have your spreadsheet that you downloaded online to be able to better manage your contractor? Do you have a hard money loan or a construction loan from the bank that requires a bid in a specific format? Well that's your problem not your contractors. They have their way of doing business and let them do it that way. You want their bandwidth focused on other things than your administrative tasks like delivering a great construction project.

Take all of this with a grain of salt; there's always a balance. Over time you will find contractors who, after a few projects, understand the vision that you have for the properties that you buy. They will start making you aware of issues and potential change orders that they foresee. Heck, they may even change the way they write bids for you so it's more convenient for your processes.

Now the reason that you want to be extra conscientious of those “five things you should NOT expect” is so you can take the things that do matter and should be the responsibility of the contractor and set very clear expectations about them and therefore hold ruthless accountability to them.

 
Remember, this industry is tough and it's just as tough for the contractor. The more you can align, the more both of you can have successful and PROFITABLE organizations. This is how long term relationships are built in business.