How Do I Work With Contractors Without Getting Burned?

October 13, 2025 | Kristi Kandel

ASK:

What’s the safest way to manage contractors as a first-time developer?

ANSWER:

Working with contractors can be the most stressful part of development, but it doesn’t have to be. The secret isn’t finding a “perfect” contractor (they don’t exist), it’s setting up a system that protects you both and keeps expectations crystal clear.

Here’s how:

1. Get Everything in Writing
   1. A handshake deal may feel easy in the moment, but it’s a recipe for disaster.
   2. A detailed scope of work should outline exactly what’s included in the materials, finishes, labor, deadlines, and warranties.
2. Structure Your Payments Wisely (& check with your lender for their requirements)
   1. Typically, you wouldn't pay more than 10% upfront, and only to secure materials or lock in the project start.
   2. After that, tie payments to clear milestones: foundation poured, framing complete, rough-ins inspected, etc. This ensures you’re only paying for actual progress.
3. Require Insurance and Licenses
   1. Always verify proof of general liability insurance and workers’ comp. If something happens on site, you don’t want to be the one holding the bag.
4. Show Up on Site
   1. Visit at least weekly (more if possible with some surprise visits). Document with photos and notes.
   2. Contractors respect a developer who’s engaged and checking work. Not one who disappears for months and is non-responsive.
5. Expect the Unexpected
   1. Change orders, delays, and weather happen. What matters is how you structure them. Build contingency into your budget and require that all changes are documented, priced, and approved in writing before work continues.

The developers who get burned are almost always the ones who:

• Paid too much upfront.
• Relied on verbal promises.
• Didn’t visit the site until it was too late.

Protect yourself with process, not luck.

KEY TAKEAWAYS:

• Try not to pay more than 10% upfront.
• Tie every payment to visible milestones.
• Walk the site weekly and document everything.
• Insurance, licenses, and written agreements are non-negotiable.

PEOPLE ALSO ASK:

What should be in a contractor agreement?
A good contractor agreement (finalized by an attorney) includes:

• Scope of work (with detailed specs).
• Payment schedule tied to milestones.
• Project timeline with completion dates.
• Insurance requirements.
• Warranty terms.
• Change order process.
• Dispute resolution (mediation or arbitration).

Do I need a general contractor or can I self-manage?
It depends on project size:

• Small projects (single-family rehabs, cosmetic flips): You may be able to self-manage with trade subs.
• Larger projects (ground-up builds, multi-family, commercial): A general contractor saves you time, manages subs, and reduces liability. Beginners usually benefit from a GC.

How do I handle delays and change orders?

• Delays: Track them in writing. Some are excusable (weather, inspections), others are not. Enforce penalties or revised timelines as outlined in your contract.

Change Orders: Require written approval before work starts. Each should outline the new scope, added cost, and timeline impact. Never approve verbal change orders.
 

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