I take a lot of pictures of nothing
I have tens of thousands of photos of houses. Probably hundreds of thousands. Almost none of them have ever been useful for anything.
Every week, on every project, somebody (if not someone else then me) walks the property and takes 100 to 150 pictures. Even the weeks where nothing changed. And honestly, a lot of the time it feels like a waste of time...
Then a contractor put a lien on one of my houses the other week.
What happened
We had a full GC construction contract on this job. The entire scope of work lined out: who controls what, what materials, what labor, every item. Kitchen plans and cabinet specs. A start date, a completion date the contractor set himself, and a draw schedule we all agreed upon.
Oh and a liquidated damages clause, which is a personal favorite of mine. $125 a day for every day past the completion date he agreed to, and a $125 a day bonus for every day he finishes early. (ask me how many times I've needed to pay a bonus in the last 10 years since adding this clause...)
Per usual the construction went great...until the last 5% (I still don't understand why the last little bit is always the hardest part).
The plans called for 40 inch uppers in the kitchen that go to the ceiling. He put in 30 inch uppers. It looked bad. Every comp in the neighborhood had full height uppers, and in this market a kitchen that looks less than the comps is going to sit. (Maybe it doesn't change the price ARV on paper...but it changes how fast it sells.)
He said he would look at fixing it. He didn't. He wanted to negotiate a buydown instead, we wanted it replaced, and it dragged out for weeks. Then he walked off the job, said he was done, asked for final payment, and filed a lien on the property.
The lien said the project was complete on July 15th.
We had over 150 photos from that week showing it wasn't. I decided to send him pictures from August 9th instead, where the kitchen wasn't even finished yet. Electrical trim wasn't in throughout the house. Drywall repairs still going. Contractors on site working. And the liquidated damages clock had been running the whole time.
Cherry on the cake was we also had communications from him coordinating the 'final walk through' for the property on August 20th (plus more pictures). Liquidated damages at that point was close to $4000.
Now, do we actually charge the liquidated damages? Rarely, but we for sure have used that clause more than once. Usually, it's a way to discourage arguments, and more importantly use as leverage when needed...like we did on this one.
We came to terms pretty much right away after that. The final payment came down a lot, he released the lien, and the money I saved paid to get the uppers done right.
Instead of he-said, she-said, I just showed him the pictures.
Don't get me wrong...I would 100% rather the job had just been finished the way we agreed, without any of this.
'But Tarl, do you really do all of this on every job....'
Nope. I wish, but we aren't that perfect. Absolutely not.
Smaller subs and smaller scopes, usually it's just an invoice and we move on. But any sizable scope with one contractor, I guarantee you we have the full contract, especially with contractors we have never used before.
No matter what though, the photos happen every week. Small, medium, big. Every week.
What we actually do
On any sizable scope:
- The full scope of work, with plans and specs attached
- A completion date the contractor sets himself (I usually give them a little extra cushion on top)
- Liquidated damages and a bonus, same daily amount both ways (making sure contract is written so we can legally enforce in that state, important).
- A draw schedule tied to completed work, not the calendar
- Contract language built for your state. Get an attorney who knows construction where you are.
On every job, every week:
- 100 to 150 photos, even if nothing changed
- Same order every time. Outside first, all the way around the house, then in the front door and room by room
- Straight into Dropbox or Google Drive, never left sitting on somebody's phone
- One folder per property, then a subfolder for each visit with the date and the phase in the name
- If it isn't somebody on your team or yourself, pay someone. We pay $50 a visit. That's a $200 a month insurance policy per property
Almost every one of my rules and processes came out of a failure. Money, a loss, a fight, blood, whatever. Mess up enough and you do what it takes to not repeat it.
The photos are boring 99% of the time. That's fine. You aren't taking them for the 99%.
Deal Teardown: Wednesday, October 21st
Three weeks out. Registration links are coming.
If you have something going on right now...a construction problem, a property you can't get out of, a contractor situation like this one, or just a concern...send it my way. Email me. There will be an intake form coming your way soon too.
Good luck, it's that sort of market right now.
- Tarl Yarber
(Once again, I personally write these...)
PS: Rates are going up. The 30 year hit a high this week according to Freddie Mac, the highest since late 2023 and the biggest one week jump since then too. If you have something that needs a DSCR refinance, get quoted now and lock it in. We are actively lending on single family deals, Hard money, DSCR loans, plus small multifamily, in 40 plus states. Go to www.fixatedfunding.com, or just email me and it comes straight to me.
