18 Rules for Managing Contractors (Plus the One That Rules Them All)

TLDR
Contractor problems are almost always investor problems. These 18 rules, broken into bidding, etiquette, management, and strategy, are the lazy project management playbook. Follow them and you’ll bleed less money, waste less time, and build the kind of reputation that makes contractors want to work for you.

Table of Contents

Bidding

Rule 1: A Confused Bid Gets a Confused Price

You wonder why contractors are so hard to deal with? It’s not them. It’s you.

Think about what it’s like from the contractor’s side. They walk in to give a bid and the investor is saying things like, “Well, we’re going to paint the walls. I think we’re going to do a couple different colors. We’ll do like a dark accent wall over here, and then we’ll do an off-white on the body walls. And then, well, I’m not sure. Maybe we’ll do like a lighter accent wall. And then the trim, we’re definitely going to do white. Well, actually, we saw some pictures of like black trim. What do you think about black trim? Do you think that’s cool or do you like white better?”

That contractor is thinking: “That’s just a sign of things to come. This whole project is going to be a disaster.” So what do they do? Bid it really high, or maybe not bid at all. They’d rather go do a job for somebody who knows what they want.

Simplify. Know what you want. Be clear about what you want. I want an off-white wall. Agreeable Gray is the color we use on our projects. White semi-gloss on the doors and the trim. LVP floors, same product every time. Basic quarter round. No problems.

I’m always making it no problem. Simple. Easy. Not confusing.

Rule 2: Dirty Jobs Get Dirty Bids

A lot of you expect contractors to have vision. Most people don’t have vision at all. It’s not on them. It’s just human nature.

I got a bid back for $12,000 to do a tenant turnover just recently. I walked into that house because I was like, “There’s no way they wrecked it that bad. I just turned this thing over a couple years ago.” I walk in. The storm door was pulled off the hinges. There were literally bullet holes all over the place, like some kind of indoor-outdoor shootout situation. The laundry room had pet waste everywhere. You could smell the urine. You could see it on the ground.

Of course a contractor walked in there and thought, “This is disgusting. This is going to get a disgusting bid to go with it.”

So what did I do? I hired a cleaner. Paid good money for it because it was a disgusting job. Put an ozone machine in there for a few days to get the main smell out. Sprayed some stuff to make it smell a little better. Brought a new contractor over, made some jokes about the shootout to lighten the mood. Got a bid back for $2,600.

$12,000 to $2,600. Same house. Same work. The only difference was presentation.

Rule 3: Three Bids Are for Bureaucrats

This one’s going to be controversial. Everybody thinks you need to get three bids for every job. Bring three contractors in and compare.

That’s because you don’t know what you’re doing. Here’s what three bids actually does: it wastes the time of two of the three contractors. You burn the bridge with two of them. I’m not in the business of wasting people’s time. I want to build relationship capital.

I need to know what I want on a project, and I need to know about what it’s going to cost. Then I bring somebody in and work with them to get within my budget. I do the work on the front end.

Pro Tip
If you’re a beginner and genuinely don’t know how to price things, find a consultative contractor. Tell them upfront: “I’m going to pay you $500 to give me a bid. Nobody really likes doing bids, and I’m telling you right now, I’m not going to give you this job. That’s why I’m paying you. I want the most honest opinion you’ve ever given anybody.” Now you have a real budget to work from.

Rule 4: Get a Costco Bid

What does Costco do? They package things up in bulk to get a lower price. I use the same concept with contractor bids.

I don’t want them to just do the LVP floors or just do the paint. I want to give them a sub-chunk: drywall repairs, paint, LVP, trim, cabinets, and bathrooms. The more I give them, the better price I get. And it means fewer decision points for me as a lazy project manager.

I give them this bulk of jobs, we set checkpoints, and I don’t have to be on the job site managing. We set a scope of work. These are all the things you’re going to do. Call me when you’re done.

More jobs for them, better price for me, less management for both of us.

Etiquette

Rule 5: Be the Mayor, Not the Foreman

The contractor you hire is likely not going to be on site every single day. They’ll have a crew. You’re going to meet their crew. Here’s the big mistake everyone makes, and I made this one too: talking to the crew as if they were the contractor.

Whatever you say to the crew member, you think it’ll get passed along. It won’t. Here’s what the contractor actually hears: you’re trying to jack their employees. You’re scheming behind their back to steal their best people. Because that is what a lot of people do.

Shake hands and kiss babies. Have a conversation about their weekend. But not about the job. “Hey, you guys are doing a phenomenal job here. I’m going to go talk to your boss about any of the other things.”

Be a politician. You don’t talk to the crew about work. Period.

Rule 6: Pulling a Job Is Burning a Bridge

Pulling a job means you dangled a carrot and then snatched it back. You said, “Hey, will you give me a bid for this job and this job and this job?” and then you pulled one of them.

In the white collar world, people bid on things and lose all the time. That’s not how it works with contractors. Every job is food on their plate. You have to respect that.

If I’m going to have a conversation about a job, it’s because I’m most likely going to give that person the job. And if I’ve already awarded it, I’m going to let them complete it unless something really bad happens.

Don’t dangle a carrot unless you’re going to let them eat it.

Rule 7: Loose Lips Ruin Ships

When people are on job sites, they start thinking out loud. “Oh man, I’d really love to do a herringbone in the bathroom. Have you ever done epoxy on the countertop? I saw it online. It was really cool.”

You think you’re building rapport. Here’s what the contractor hears: is this guy trying to get free work? We agreed on Formica countertops and now he’s talking about epoxy. Does he think that’s the same price?

Relationship capital going down, and you don’t even know it’s happening. That’s the problem. Most relationship capital is lost unknowingly. Little conversations you think are innocent, but they’re interpreting as you trying to steal food off their plate.

The conversations that destroy contractor relationships aren’t fights or arguments. They’re the casual ones where you think out loud about upgrades, future ideas, or “what ifs.” Every word you say near a contractor is either building or burning relationship capital. There’s no such thing as a throwaway comment.

Management

Rule 8: Be Ironclad, But Don’t Write a Contract

I know all the gurus tell you to have the perfectly written contract. But here’s the reality: what happens if they walk off a job? Are you going to sue them? Do you think they have the money to pay if you win? What are you going to do with the job while you’re waiting for the lawsuit?

This is a look-you-in-the-eyes and handshake type of business. Make sure your handshake means something.

What “ironclad” means is: before anybody grabs a hammer, you need three things. A scope of work that is clear and agreed upon. A price that is clear and agreed upon. A pay schedule that is clear and agreed upon. If you don’t have those three things, don’t let work start.

Do I sometimes break this rule? Absolutely. “Go ahead and get started, I’ve worked with you 10 times. I know your prices are going to be good. Get me a bid right away though.” And it almost always bites me.

But I never write a contract. Never. Not once in 14+ years, except for one hotel job. Never again.

Rule 9: Be the Bank

One of my contractors just came to my office to pick up $50,000 worth of checks from four different projects. I asked him why he waited so long. He said, “I’m saving up for something. I was using you as a savings account.”

That’s because he trusts me absolutely with his money. He knows when he comes to me, there’s money for him. Because I always hold up my end. Everywhere else, contractors have to worry about getting paid. If you can be the guy who for sure is going to pay, they’re going to keep coming back.

Common Mistake
The moment they smell weakness, contractors will ask for payment in advance. “I’ll definitely have this done by Friday, can you just pay me now?” If you give in, there will be a next time. And a next time. Until it becomes the every time. It’s not malicious. Running a construction company is hard. They’re constantly robbing Peter to pay Paul. But their cash management problems can’t become yours.

You can lack in a lot of other ways as long as you take care of putting food on their plate.

Rule 10: The Law of Power

The power is in the payment. If you give up the power, you will not get your job done the way you want it done.

Go back to Rule 9: always pay when it’s time to pay, and do it quickly. Be better than anybody else at paying. But never pay before it’s time to pay.

Be the bank AND hold the power. Those aren’t contradictions. One is about reliability, the other is about timing.

Rule 11: The Butterfly Effect

It is amazing how what you say is not what somebody else hears. Then they go communicate it to someone else who hears something different. And it goes on until you show up for the LVP floors you wanted installed and you have glue-down linoleum.

I literally told you we’re putting in LVP. I showed you online the exact product. How did we end up with linoleum?

Communication is hard. After all these years, I still haven’t figured it out. But here’s what helps: three channels for every expectation that has payment attached to it.

  1. Verbal. Talk through it. Discuss. Iron out details.
  2. Written. Put it in a text or email. “Here’s what you said. LVP through the rooms, no transition strips between doorways. White semi-gloss on hinges. Paint on my hinges and I will make you buy me new ones.”
  3. Media. Walk the house together on video. Send them the video. “I’m going to send you this so we both have it. I forget things constantly. This is for both of us.”

Focus on being a phenomenal communicator. Verbal, written, media. Every single time.

Rule 12: Control Material, But Don’t Be the Delivery Boy

I made a video a few years ago saying you should never buy materials because it steals your bandwidth. I was wrong.

You should absolutely control the materials. It’s the ultimate lazy project management tool. You can do it right from your phone.

Here’s how it works. I’m a Home Depot Pro member. The contractor wins a bid, we discuss materials, and they go to Home Depot to get what they need. Home Depot Pro has a text-to-confirm feature. They send me a text: “This person wants to buy $800 of material. Here’s the link.” I click it and see everything they’re trying to check out.

When there’s a Power Aid on there, I say, “That’s not part of the scope of work, man. Put that on your own card.” But bigger: if we agreed on LVP with no transition strips and I see four transition strips on the phone sale, I catch it before it becomes a problem. If I see linoleum with glue, I catch it before it becomes linoleum on my floors.

Don’t go to the store yourself. You become the bottleneck. Let them shop, you approve.

Rule 13: Always Inspect Before You Pay

With the lazy project management approach, it’s easy to get actually lazy. Someone says, “Hey, I’m done. Here are a couple pictures. Can you pay me?” And you think, “Those pictures look pretty good. I was doing cool stuff. I don’t want to drive out there.”

No. It’s never done the way you wanted. There’s always a punch list.

And here’s the thing about punch lists: they have a half-life. You give a list of 20 items. They say they fixed them. You go back and 8 are “almost” done. You send them back. They fix those. You go back and 3.75 of them are still not right.

When I was a kid, my dad would tell me to clean my room. I’d move everything off the walls to the middle. He’d come back: “This isn’t clean. You just moved everything.” So I’d stuff it all in the closet. He’d look in the closet: “This isn’t clean.” Eventually he’d get tired and say, “Whatever, that’s clean enough.”

Never get tired. Just never get tired. It sucks. But it’s the job. It’s why you get paid the big bucks.

Strategy

Rule 14: Lynchpins Are Not Lazy

A lynchpin is a bottleneck. And being a bottleneck feels good. It feels powerful to be relied upon, to be needed. Especially when you’re new to managing.

Don’t be that. You don’t need every decision to go through you. Mitigate decision points through inspections and clear scopes of work.

Group jobs together with all-arounders, the guys who’ll take out the trash, do the floors, do the paint, handle cabinets and countertops. Like two-in-one shampoo and conditioner: neither one is perfect, but it gets the job done. Those guys are the meat and potatoes of your operation.

If you have a specific-job contractor for every single thing, you might get a slightly nicer house. But you’ll spend all your time coordinating. The 80/20 rule applies. Going 120% all the time doesn’t get you that much further.

Give them the sub-chunk. Set the checkpoints. Go live your life.

Rule 15: Keep Them on Their Toes

We talked a lot about relationship capital. Don’t get three bids, don’t do contracts, respect their time. But don’t be soft.

Sometimes I flat out deny a bid. No rebidding, no questions. “I’m sorry, that doesn’t work for me.” Generally it’s because the price is too high. We run a property management company with over 1,500 properties, and those are breeding grounds for price creep. HVAC units that used to be maintainable suddenly “need replacement.” Bids slowly inflating when nobody’s watching.

There are two sides to this coin. One side: don’t waste people’s time with three bids. Relationship capital. The other side: sometimes get three bids so they know they have competition.

Keep the hunters hunting. That’s the beauty of subcontracting versus having a crew. They have to work for what they eat.

Rule 16: Seven Photos Equals One Countertop

I was talking to a newer investor who couldn’t get his contractor to send job site photos. He kept asking and asking. I told him: maybe for you the phone thing is natural. But some of these guys use notepads with pencils. Some don’t even have unlimited data plans.

The bandwidth it takes for certain contractors to send seven photos feels to them like you’re trying to make them your secretary. That amount of relationship capital could have gotten you a free countertop instead.

Text message is the universal app. Don’t make them use your super cool custom-made project management software. Don’t put them on Slack or monday.com or Airtable. If you want that system, hire a secretary to translate. Take whatever they give you in whatever form they can give it, and put it in your fancy system yourself.

Pro Tip
I’ve tried getting every contractor on Slack, on monday.com, on Airtable. “It’s just a relational database, no problem, you just press a couple buttons.” It never works. Meet them where they are: text messages and phone calls.

Rule 17: Show, Don’t Tell

Let contractors know they have runway. That there’s safety with you. That you have more jobs coming up.

When I first started and didn’t even have a live project, I would go to other job sites in town. I knew there was a project going on down the street, so I’d have the contractor meet me there. Just standing on the street talking through the scope, it looked like I was running that job site. It looked like a lot of things were going on.

You probably don’t need to go that far. But the point is: give them confidence that you know what you’re doing and you’re not a one-and-done. Don’t say, “I’m going to do 10 projects this year! I’m going to be the biggest investor in town!” They’ve heard that story. That’s telling.

Show them through action. Have another project. Have another bid ready. Let the evidence speak.

The 19th Rule

There is a 19th rule that rules them all.

Don’t be scared. Don’t be fragile.

Things are tough. You’re going to have tough conversations on a regular basis. It’s going to be mentally challenging, emotionally challenging. You might feel like all is lost. And you just have to step up and get through it.

Every time you have one of these failures, every time you deal with a tough situation, you get a little bit better. And a little bit better. People who look like they blew up overnight? It was a long night for all of them.

You need persistence and you need guts. That’s all you need.

FAQ

Do I really not need contracts with contractors? Not written legal contracts, no. What you need is crystal clear agreement on three things before work starts: scope of work, price, and pay schedule. Verbal, written, and on video. If a contractor walks off a job, a contract isn’t going to save you. Your relationship capital is.

How do I find these “all-arounder” contractors? Start with any handyman-type contractor who can do multiple trades. Give them a small sub-chunk: drywall repairs, paint, and trim on one project. If they perform, give them a bigger chunk next time. Over time, they become your go-to. I cover the full recruiting process in recruiting-contractors.

What if I’m just starting out and don’t know what anything should cost? Use the consultative contractor approach from Rule 3. Pay someone $500 for an honest bid that you tell them upfront they won’t get the job from. Now you have a real baseline. Do that a few times across different trades and you’ll start to develop your own pricing instincts.

How do I handle a contractor who keeps asking for advance payment? Say no. Every time. “I get it, man, I know things are tight. But I pay when the work is done, and I pay fast. You know that.” Reference Rule 9: be the bank. They’ll respect the consistency more than the occasional advance.

What’s the biggest rule most beginners break? Rule 11, the butterfly effect. New investors think they communicated clearly because they said it out loud. They didn’t write it down, didn’t film a walkthrough, didn’t confirm in text. Then they’re stunned when the work doesn’t match what they “said.” Three channels: verbal, written, media. Every single time.