Learn how to build strong foundations for your real estate investing and protect yourself every step of the way. Dive into this latest episode where Peter, Ron, and Wade share their hard-earned wisdom on real estate education and working with contractors. From perspectives on education programs to the importance of experience, vetting contractors to structuring contracts for protection – they cover it all! Whether you're a rookie or a pro, this conversation is packed with insights to help you navigate the real estate industry.
Here are s...
Learn how to build strong foundations for your real estate investing and protect yourself every step of the way. Dive into this latest episode where Peter, Ron, and Wade share their hard-earned wisdom on real estate education and working with contractors. From perspectives on education programs to the importance of experience, vetting contractors to structuring contracts for protection – they cover it all! Whether you're a rookie or a pro, this conversation is packed with insights to help you navigate the real estate industry.
Here are some power takeaways from today’s conversation:
- The concept of learning by doing
- Vetting contractors
- Structuring protection in contracts
- Payment schedules
- Change orders
- More tips for working with general contractors
Episode Highlights:
[10:09] The Concept of Learning by Doing
Peter stressed the importance of hands-on experience for learning, highlighting that consuming content only goes so far without practice. Ron added that risk-taking and learning through doing were pivotal in his 20s, but acknowledged that the feasibility of such an approach varies with life stages and responsibilities, implying that established investors might need a different strategy. Both Ron and Wade acquired extensive knowledge in their field through experiential learning rather than formal education, using trial and error as a vital part of their learning process, despite recognizing it might not suit everyone's temperament. They concluded that a balanced blend of education from others' experiences and personal hands-on learning seems to serve investors best.
[18:37] The Power of Fundamentals in Real Estate Investing
Mastering real estate fundamentals before adopting advanced strategies is helpful. Such grounding in deals, collateral, accounting, and risk management forms a robust platform for continuous skill expansion and adaptability to evolving opportunities and markets. Wade underscored the need to grasp basic concepts such as financing, collateral expectations, general accounting principles, and risk management before venturing into more intricate areas. This foundational knowledge, he argued, facilitated his successful transitions across different asset classes over time.
[33:41] How to Manage General Contractors
When discussing vetting contractors, Wade emphasizes the importance of getting the contractor's general contractor's license, proof of liability insurance, and proof of workers' compensation. He says these three things are crucial from a liability perspective. Not having any one of these should be considered a red flag. He also mentions including a waiver of lien in the contract to help protect yourself, as well as splitting payments into sections with a final payment requiring an executed lien waiver before being paid. This helps ensure the contractor is not able to put a lien on the property.
[37:02] Navigating Contracts: Ron's Recommendations
Ron suggests drafting contracts with a no lien clause to deter contractors from placing a mechanic's lien on the property, even though enforceability might vary. He also advises setting benchmarks for payment schedules to verify work progression before additional payment and clearly outlining permit responsibilities. Furthermore, he emphasizes that contracts should restrict contractors from arbitrarily implementing change orders without sign-off to avoid unanticipated extra costs from unauthorized work.
Resources Mentioned:
www.gsprei.com
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