Where do you find a contractor? Ask for references from other investors. You can also go to Home Depot early in the morning where contractors check. Talk to employees about who the repeat customers are and talk to contractors in line. See your work cover to cover and your references. Home Depot is a great place to find a reasonable team that works for builders.
Does the contractor need insurance? You must make sure that you or your contractor have two types of insurance.
The two types are:
A. Workers ‘Compensation Insurance – If you’re doing a lot of remodeling, you’ll want to get minimum workers’ compensation insurance. If your contractor has workers’ compensation insurance, you will want them to give you a copy of your insurance with you as the named additional insured. Then you have proof of coverage. Even if you have a minimum policy that covers you, you will still need proof of coverage from your insurance company or you will be charged for the cost of your own policy. If you hire a contractor who works alone, he can choose to exempt himself from workers’ compensation, but must sign a form that you get from your insurance company.
B. Liability Insurance – Make sure again that you are named as an additional insured on your contractor’s policy or that you have your own policy. You should speak with insurance experts to determine the amount of coverage you need.
C. Builder’s Hazard Insurance – You may want to verify obtaining builder’s hazard insurance for other coverages on your equipment, tools, etc.
How do you pay your contractor?
If you are dealing with new contractors that you do not have a track record for, I recommend that you purchase a small number of materials and make sure they bring the materials to work. Pay only for the work that is done. The question to ask yourself is whether the contractor quits the job if there is enough money to hire someone to finish the job. Even seasoned investors, as well as new investors, make the mistake of paying too much at work all the time. Home Depot has called me and told me that my contractor is bringing in materials for a cash rebate. I have had great contractors that I have had a long relationship with who left the job. It is imperative to retain enough dollars to hire someone to finish the job. I don’t care how long you’ve worked with contractors, you have to inspect the work before you pay. If you don’t inspect the work, don’t go into business. Consider placing a provision in your contract that final payment depends on passing a city certification inspection.
Should you have a contract with your rehab team?
I say yes. At the end of this article there is a model contract. Consult your attorney to find out what you need in your contract.
Should you get the permits? Yes Yes Yes !!! The people I see trying to circumvent the system and city inspectors just end up in trouble and end up doubling their cost. The shortcut to getting the job done is paying for the required permits.
Comments on shared personal experiences. They are not intended to be legal or accounting advice or solutions. You should always consult with the appropriate professional when making decisions.
A sample contract that I have used:
REHAB INDEPENDENT CONTRACTOR AGREEMENT
This agreement is entered into on the day of _________________________. 20, in the city of ___________________, State of Michigan between ____________________, (owner) of 17177 Laurel Park N, Ste. 265, Livonia, MI 48152 and:
Contractor: ________________________________________________________
The contractor is a corporation. (), Ltd Liab Co. () Company () Sole Owner ()
Address: ____________________________________________________
City, State and Zip Code: ___________________________MI___________________
Telephone fax: () _________________________
Pager: () ____________________ Cell Phone: () ____________________
Emp. Fed. Tax identification number (EIN): _________________ Soc. Seco. Do not._____________
Contactor License Number (s): __________________ Type of License: ____________
Person authorized to sign and bind the Contractor: ____________________________
1. Schedule: The Contractor agrees to start work on: __________________, 20. The Contractor agrees to complete all work by: ______________________, 20, subject to justifiable delays such as strikes, unavailability of construction supplies or acts of the nature. The owner reserves the right to cancel this agreement and the contractor agrees to lose the balance due under the contract if the work is not completed by this date. The contract in this document will be void at the option of the owner, if the contractor does not begin work within ___________________________ (____________) days from the date of signature of this contract.
2. Scope of Work: Contractor agrees to provide the labor, materials, and construction described below in accordance with the plans and specifications referenced herein at the property described below:
(A) Workplace address: ___________________________________________________
(B) Job Description (Describe labor, materials, and equipment to be provided. Attach additional pages, estimates, and worksheets if necessary. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Other special provisions: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
The Contractor’s project supervisor / coordinator for this project shall be the Contactor’s designated agent. The person’s name is: ___________________________________
3. The Contractor agrees to perform this work in a professional manner and to comply with applicable building and construction codes for residential and commercial structures. The Contractor guarantees that its work will conform to these codes and will pass all government inspections. (If any drawings or specifications are part of your work, they must be attached and become part of this contract).
4. Price: The owner agrees to pay the contractor for the satisfactory performance of the contractor’s work subject to the terms and conditions of this agreement:
Total amount of the contract: _________________________.
Initial payment amount: _________________ Payable on _________________.
Additional work, if any, will be priced at the agreed upon price.
Payments will be made only for satisfactorily completed work based on progress inspections by owner-approved supervisors. The contractor is responsible for arranging the time for inspections. All check requests must be submitted prior to Wednesday’s procedure for Friday payments. If the work is not performed to the owner’s satisfaction and / or in accordance with the codes and standards in paragraph # 2, the owner will retain a sufficient amount to complete the work as final payment until the contractor brings the work to code and / or the owner. satisfaction.
5. The following are prohibited unless agreed in writing and signed by Owner and Contractor: additional services and work, diversion of work as specified herein, or assignment or subcontracting of work to be performed.
6. The Contractor undertakes to indemnify and hold harmless the Property Owner from any liability or claim arising directly or indirectly from the Contractor’s work under this contract, whether due to the Contractor, its employees, workers and agents or any another person hired by the Contractor. contractor. (This includes Building links (including mechanics and materials)). The Contractor agrees to pay all fees and costs incurred in defense of the Owner or Owner. The Contractor specifically agrees to assume and pay for the links that are filed by its subcontractors.
7. The Contractor undertakes to obtain and pay: Workers’ compensation insurance for disability, personal liability insurance, insurance against errors and omissions and / or contractual insurance, public liability insurance and any other insurance or surety coverage, or to present the Appropriate exemptions that may be necessary or required by the owner, the municipality, and / or the state of Michigan. Copies of such documents, folders, declaration sheets, proofs or exemptions will be presented to the owner before starting work.
8. The Contractor agrees to pay and withhold, when necessary, all federal, state and local taxes on money earned by the Owner for himself or his employees and to file all applicable tax returns. The owner will not withhold any amount for any amount of taxes owed to the Contractor. The Contractor’s relationship with the Corporation will be that of an independent contractor and not that of an officer, employee, or agent of the Owner. This Agreement does not create a partnership, joint venture or similar relationship. The Corporation shall have no liability to the Contractor except to pay his compensation under this contract.
9. Building permits will be withdrawn by: _______________________. Costs will be paid by: __________________________. City certificates will be earned by: ___________
_________________________________.
10. No modification of this contract will be effective unless it is in writing and signed by both parties. This contract binds and benefits both parties, assigns, personal representatives and their successors. Time is of the essence of this Contract. This document, including any attachments, is the entire agreement between the parties. The laws of the State of Michigan govern this contract.
This is a legal contract. If there is something you do not understand about this contract or the language, DO NOT sign it. It is recommended that you consult with a legal or tax advisor of your choice. By signing this contract, it is assumed that you have consulted with your advisors or have decided not to do so.
The parties accept the terms and agree to abide by them.
Owner:
Date ____________________ 20 ___ By: ___________________________ Contractor:
Date____________________20___By: ___________________________
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