Look for these red flags to ensure you aren’t about to waste your time or get ripped off.
Since starting my real estate investing activities in 2005, I have encountered numerous scams and shady contractors, here is only a small list.
I was a full time police officer for 10 years before turning into a real estate investor/flipper, so I can say confidently that I have a knack for detecting lies and potential human malfeasance.
So lets just say that here are the surefire ways to try to hedge yourself against a contractor or tradesman that may try to take advantage of you.
Understand one thing about contractors, they have short term memories, and a “churn and burn” type of mentality, they are in this for the short term money and do not caer or see long term prospecting as a viable business model for them unless it is a major company with millions in reveneus and doing mostly development work and/or commercial properties.
#1 is VIBE
How do you feel when talking to him or her. What does your GUT tell you? Your subconscious pulls when dealing with people seldom lie to you. If something doesn’t seem right do not ignore that. Maybe it is something they said, the way they talk, an apathetic attitude, a promise made but said in a very unsure way, they way they dress, professional appearance, showing up late on the first day, getting mad, etc.
Never return your call, answer phone or respond to you in same day. This pattern is not going to change. They are overwhemled and wont turn down jobs, customers suffer, maybe you.
#3 Invoices and Emails
They cannot print up a computer invoice for your job, hardly ever respond to emails. Tracking jobs is very important, sometimes this can be overlooked but generally I call this a leak that can be indicative of other leaks.
When your contractor says they will do something and then they do a no show no call, immediate fire. Trust me this pattern will repeat and you will lose lots of time. Scheduling is very important in property construction projects, one phase missed or off schedule will mess up your ENTIRE project and delay everything 1-2 months. You can lose a lot of money from this.
Sometimes they will say they completed a repair but it never happened, obviously this is a huge thing and you cannot afford to have such performances on a project when you have hundreds of thousands of dollars on the line.
#5 Background Check and Red Flags
Always do a free background check on contractors by checking the following web sites:
- Local county clerk office for lawsuits and criminal cases (be sure to use their name and company name). You are looking for lawsuits and crimes.
- Check the State secretary of state corporate records to verify their corporation they are operating under.
- Check the local cities clerk of courts for other civil and criminal cases. You are looking for lawsuits and crimes.
- Check the BBB website.
- Check Google Reviews on the map or in a search query.
- Do Google search on their name and company, you may find something interesting
- Check out any social media profiles for unsavory information abut the contractor.
- Check the local cities building and housing departments for their standing with permits, complaints and bond insurance. If they are pulling a permit for your job, ensure they provide YOU with a copy of the permit before you initiate a phased payment, or final payment or make it a contingent item on a contract.
#6 Signed Contracts
Always get something on paper, an itemized list of the scope of repairs and contingencies, make them sign and date it. You will discover most won’t. Why? because they KNOW they probably wont be able to perform so they are looking to avoid working for you, and you just saved yourself from a headache.
This especially applies to small trades.
Sometimes you will encounter a contractor that will sign it anyways to get your money but knows they will not complete or finish on time, these are the liars. They are very good at tricking homeowners and some investors and flippers.