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Article > Builders like litigation are best avoided! Part 2


 

Article kindly supplied by Jim Haliburton www.hmodaddy.co.uk

How to choose a builder to start work now.
If you need a builder now instead of waiting you will need to use your land lording skills in selecting tenants to choosing builders but not be so fussy. You will have to get involved and manage them on a day to day basis after all how many GCSE’s does a builder need? Answer, None! Builders, without wishing to be patronizing are often fairly simple people out of their depth with things like quotes, invoicing, sourcing materials etc. Often I find they even have to be told or, better to say, guided in how to do their job and continually reminded what was agreed. You will also have to be very tough with them and not pay until the job or a particular stage of the job is done. You will need to know what the job is going to cost, in other words you are going to have to be better than them at pricing a job. Be very wary of paying day rate. Normally, if a trade’s person wants day rate they are telling you they don’t know what they are doing or are very slow and or they want to be an employee but not be an employee. When they are on day rate they often do not behave as an employee i.e. turn up on time and do as they are told. They want to be free to take time off while being paid by you if they can get away with it to go to another job when it suites them, but still return to your job as if nothing had happened.

Unfortunately, we do not live in a perfect world and I find that you have to do the best you can and try and make the most out of what is available. If you push too hard the tradesmen will just walk off the job and find a less demanding customer. You cannot make people work for you and rarely can enforce contracts against them. Most are known as men of straw they are not worth suing. Unfortunately, you own property which they can and often do damage either deliberately or through incompetence and you guard your credit worthiness carefully. The last thing you want is a CCJ against your name. It is an unfair world and then you die, hopefully very rich as a property investor, while they will ply their trade of ripping people off and getting nowhere. It is a mentality many people have; they would rather waste a day and steal £200 than consistently earn £100 a day.

I am afraid if you are going to survive in this business, unless you do it all yourself, you are going to have to learn to deal with those who call themselves builders and trades people. A good idea is work with them as a laborer or tea person, certainly until you know and can trust them. But never trust them fully, always do occasional checks to see what they have been up to and ask questions. I do not pretend to know all the answers; I am still and in no doubt will continue to be ripped off.

I am surprised at how good and bad builders and trades people can be. To give one example, I used to pay £120 per room for it to be redecorated and had difficulty in getting a good job done or even that price achieved. I now have a decorator that will redecorate and recarpet a room for £40 and he can do two rooms a day. I do not know how he can do it, one day when I get the time I will help him, but probably get in his way. His work is satisfactory, and will do for a HMO. A HMO needs redecorating about every six months or when a tenant leaves if it is longer than that. I have even had to redecorate and recarpet a room after ten days. The tenant used the carpet as an ash tray and smashed holes in the wall to store his stuff! He apparently did not like using the chest of drawers or ashtrays.

The get your trust trick
Be careful of the ‘give a sprat to catch a mackerel’ approach commonly used by the rip off merchants. The builders are very friendly and they want more work and do a good job at a very modest price to start with. As they have done a good job you then give them a bigger job and as they seem friendly, trustworthy so you give them money upfront for materials etc and that is the last you see of your money and them! Often it is not as straight forward as that, there are many variations of the same trick, for example they have a source of very cheap materials, need a new van, too busy to do more work unless you pay upfront, had been mugged, money problems etc.

What are they good at?
Do not assume because someone is good at one thing in the building trade they can do other jobs well. A good painter may not be able to hang wallpaper and yet they call themselves a decorator. A plumber who is fantastic at fitting central heating may be hopeless at fitting a toilet.

Problems of being a project manager
When project managing a job and start employing different trades people watch out for the amount of work which is left undone by various trades people. For example, plumbers and electricians may rip up the floor boards and knock holes in the walls but according to them unless previously agreed, it is a carpenter’s job to refit floor boards and a plasters job to replace plaster.

There is a lot to be said in getting one person to be responsible for the whole project and be able to hand the finished and checked building over to you. Do not underestimate the complexity of renovation work. Each trade may not be that difficult to learn and do yourself but the sum of it all and getting it coordinated is a nightmare. You only need to have bought a new house which is ten times easier to build than renovate an existing building. Look at the problems there are with the average new house and you begin to understand the difficulties there are with renovation work.

The dilemma

In conclusion, what do you do? Do you manage the project, doing a lot of work yourself and get it started now? You may save a lot of money but risk end up spending more than if you employed a competent and trustworthy builder to do the whole project. However, how do you find a competent trustworthy builder and when could they start? The decision is yours but read on!

Use a contract and have plans prepared
Once you have found your builder how do you work together? I would strongly recommend you use a written contract and have fully detailed plans drawn up. In fact this is the starting point, many builders will not even bother to quote unless there are plans done – without plans you stand out as an amateur who is trying to get things done on the cheap by skipping the planning stage. Make sure you have plenty of copies, many builders will take the plans and that is the last you will hear of them and they will not be bothered to return the plans. Giving them a stamped addressed envelope with a note that must be returned by a certain date may make a marginal difference.

Ensure you use a written contract which specifies the terms you have agreed, with a complete schedule of stage payments, if agreed that stage payments are to be made. From your point of view payment on completion is the best approach but you may not find a cost effective or a currently available builder to accept this. Now for the tricky bit, can you get the builder to accept deductions, sometimes called penalty payments for starting and finishing late? The problem with doing this is that most builders will walk at this point or require such a high price it may not be cost effective. Another way of achieving the same thing once everything is nearly agreed is to say I will pay you 10% less but 10% more if you complete on time. For example the price of the job is agreed at £20k you offer to pay him £18k to do it and £22k if he starts and finished on time. I would even offer to go to £25k, it is often worth it.

Most large companies use their own contracts, they are not negotiable, and you either takes it for leave it. Again it is down to you to decide whether to trust their reputation. Do not always assume that large companies are more expensive, they usually are, but not always. I have had first class work at a reasonable price done by a national company in the timber and damp field and their guarantee satisfies all my lenders.

Never pay in advance
Right from the start emphasize you do not pay in advance whatever the reason. Be very firm, be very, very firm on this point. I had better repeat it again, be very, very, very firm on this point! But also emphasize that you will pay on time, say five days after completion and checking the job. The money is waiting even show them the loan agreement from your lender or whatever other proof you have, but make sure they are in no doubt that the work must all be completed before they get a penny. Make sure that payment is only to be made a few days after the job has been completed otherwise they will be bothering you at say 7pm on a Friday night saying they had finished and you have had no time to check the work. To help the builders visit the site a few days before they are due to finish to remind them what they need to do and the standard you want.

Name your price
When you are experienced in building work you should be able to name your price. You know what a reasonable rate is for doing the job and you only need to find a trustworthy competent person. The ability to be able to name your price comes from experience. You need to be able to assess a job, know what is involved and this only comes from having done it or seen it done and understanding what is involved. Take the time now to ask questions, understand, watch and even do the work yourself. With most building work the only difference between the amateur and the professional is speed, accuracy and the tricks of the trade. Very little in the building profession is that difficult. Many DIY people can do better than the so called professionals. Do not be intimidated by it all, learn new skills, you never know when it can come into use.

To be able to name your price you need to make it very easy for the builder to say yes. You must have detailed accurate plans. A clear specification of the work and materials. The contract is already drafted; the only thing that is required is the builder’s signature. Make it perfectly clear the money is there waiting for them say five days after completion. Show proof e.g. a bank statement or a facility letter from the lender. Be prepared to negotiate a bit but ensure payment is only made when the job is complete and checked or a stage is complete and checked. Be prepared to pay more for guarantees in writing, not vague promises. Many builders will be surprised and impressed that everything is ready to go, no time wasted in preparing quotes which may not be accepted.

 

 

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Jim Haliburton HMO Daddy


Jim Haliburton
www.hmodaddy.co.uk

Jim Haliburton began buying property in 1992 and letting them to students, organising or doing the work on the property himself. Jim now owns over 86 HMO's / Multi-Lets with over 500 tenants. On top of this he has about 20 houses and flats which are let as single-lets plus several development projects in progress.

 

 
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