Carolina Commercial Real Estate Connection

Thriving Amidst Economic Turmoil: Tim Winter's Blueprint for Building a Resilient Construction Business

• Tony Johnson

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What if you could transform your passion for building into a thriving business, even amidst economic turmoil? Join us as Tim Winter, the mastermind behind Paradigm Homes, shares the remarkable story of his contracting career, beginning with early hands-on lessons from his father and grandfathers. Tim opens up about his journey from Penn State graduate to a key player at a national home builder in northern Virginia, detailing how he took the leap to launch his own company just before the mortgage crisis hit. You'll hear how his resilience and adaptability led him through the Great Recession, switching gears from residential to commercial projects before finding his true calling in high-end custom homes.

Ever wondered what it takes to grow a successful construction business from scratch? Listen to Tim's firsthand accounts of managing initial projects for family members and overseeing complex renovations, including a historic building for a family restaurant. Tim reflects on climbing the ranks within a national builder, gaining invaluable experience as an assistant project manager and beyond, culminating in the pivotal decision to start his own venture in 2006. Discover the significance of a hands-on, client-focused approach in sustaining and growing a business, especially during challenging economic periods.

Tim also sheds light on the advantages of having architecture services in-house, making a strong case for the design-build model that streamlines processes and enhances client satisfaction. Learn about the digital tools like Monday.com that have revolutionized Paradigm Homes' project management, ensuring meticulous documentation and effective communication. Plus, get inspired by the Paradigm Foundation's charitable work in countries like the Dominican Republic and Kenya, exemplifying how industry expertise can be harnessed for social good. Tim's insights are not just about building homes but also about building a legacy that gives back.

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Speaker 1:

Good morning. Welcome to another episode of Carolina Commercial Real Estate Connection. Today we have Tim Winter on with us. Tim, thank you so much for joining us today.

Speaker 2:

Thanks, tony, appreciate you having me on.

Speaker 1:

Tim is a longtime general contractor, so I feel like this is going to be a great conversation. Today we're going to go over everything contracting, everything contracting. So, tim, could you start out by telling everyone a bit about you, how you got into general contracting and where and what all you do in general contracting?

Speaker 2:

Absolutely. Well, I'll start with where and what we do and then kind of give you the backstory. So we are, we do. A lot of the ebb and flow over the years has changed, but predominantly now where we've landed with our niche is mid to high-end custom homes. We also do additions and renovations and we the company is called Paradigm Homes. We also have an architecture company that's attached to it as well, called Homelux Architecture, and we'll talk a little bit more later on our foundation, I'm sure.

Speaker 2:

But you know when, why and how did I get into this world? Well, it all started when I was a kid. My dad used to buy houses, fix them up, rent them out, and you know, I was, you know, the grunt, free labor. You know, just kind of like, hey, this is what we do, you work, we work, this is how this is going to happen. So I've just kind of been around it since I was a kid. My grandfather both of my grandfathers were just hardworking guys, so they always had me doing projects and different things. My dad probably one of the biggest things as I got older and got into it and actually got wise enough to ask for some money right To to for some of these projects was my dad bought a commercial building. I was, I was 16. So I was able to drive and and, uh, you know I was, I, I I bid out some work for him to go in and just kind of like tear out, you know, basically got the building and, uh, I learned a lot through that. I learned a lot on underbid my time and just kind of learned what it's like just to kind of get down and dirty in construction.

Speaker 2:

But then, but then from there I went to school, went to Penn State I'm from Pittsburgh area originally and once we I got married, we got married, my going into the end of our senior year or got engaged our senior year, got married right after school and we said, whoever gets a job, that's where we're going to go. So we ended up in northern Virginia, outside of DC. I went to work for a national home builder here and spent about seven years with them learning the ropes of ins and outs of construction and new homes and the way the production systems work and, to be honest, it was really the best education I've ever had. The company that I worked for was fantastic. They're still an amazing organization. I got to the point where I've always kind of had that drive to kind of do my own thing or otherwise I probably would still be there Great, great organization.

Speaker 2:

But from there I launched in 2007 Paradigm Homes and at the time I had no idea that the world was about to come collapsing down. The mortgage meltdown happened in August of 2007 and a year later the stock market. So it was an interesting time. But I was young. I was 27 or 28, kind of young, dumb and naive and didn't know any better. So from there I started what I thought was a home building, custom home building company. I didn't build my first custom home, I think, until like maybe three or four years into the endeavor. All right, so how I survived kind of the great recession was I got into commercial work. I started doing retail space, restaurants, office buildings, basically anything. If someone would have called me to do a dog house, we would have built a dog house or a tree house or whatever.

Speaker 2:

At that time we were just doing whatever we could to kind of keep things progressing, and so we did that for kind of the combination of residential and commercial for probably about four or five years, and then we realized that we're much more geared towards the residential side, just because we tried to create a client process. How can we handle our clients? How can we help them have a great experience? So for us that's really what led us away from the commercial and got us more into the residential, Just as a little bit more can be a little bit more, you know, design elements and things like that that come with the residential versus some of the commercial, and so I say commercial is a little bit colder and residential is a little bit warmer. So it depends on the personality that you have and what you want to deal with. I think both days as a contractor, just like man. I don't know why I chose this profession sometimes.

Speaker 1:

That's funny. Yeah, it's definitely uh, you know, uh, very up and down industry and and, uh, hard work it's. We have a lot of similarities, um, with how you started that you started the exact same time I started on my own in 2007. So, um, I love the idea that when we started out initially, I got in and I was like man, this is great, it's going to be a booming economy, I'm going to really kill it and then the world collapses and you're like what the hell? I was the same thing. I was doing a bunch of nothing, and I find it very interesting. So you started out with the commercial thing. I was doing a bunch of nothing and I find it very interesting. So you started out with the commercial aspect. Did you have any commercial experience? You know, working for your father and being in the for a large national home builder. You obviously weren't doing a lot of commercial with that. Where did you feel the comfort with doing the commercial?

Speaker 2:

Yeah so. So when I first obviously things shifted, we hit the friends and family circuit of work right. So some additions and renovations of people that we knew. But one of the first projects, actually, I took on two projects right around the same time. One was a retail cupcake shop that my, my aunts were opening and so I was, you know, brought on to to manage that, and then my cousins and my uncle were opening a restaurant and the restaurant was the building was built originally in like 1869. And so it had to be totally brought back up there. You know we needed to put in elevators, we needed to bring in like it was. It was a yeah, that was easy.

Speaker 1:

This is easy. This is very easy. For this something to start out with, yeah, you were just like yeah, I'll do it, we'll figure it out, yeah that's fantastic that's kind of my personality go hard or go home, I guess right.

Speaker 1:

Well, I mean, that's kind of how you gotta do it. You gotta, you know, fake it till you make it at certain point, because you you're just not going to know what you're getting into. In those first couple of jobs, when you didn't know, did you end up doing okay? Did you lose any money in any of these initial ones, or did you kind of fare okay in all of them? We fared okay.

Speaker 2:

I mean, I think the big thing was the way I worked it out. Because they were family deals, I was able to kind of negotiate the contract a little bit.

Speaker 1:

So it wasn't full, just a full bid out job.

Speaker 2:

It was more negotiated than kind of an open book kind of approach, which was good, so it was. You know they were fair to me and vice versa, so I think it was a win-win for both of them. The family restaurant is still operating today, Northern Virginia.

Speaker 1:

They've been around for almost might be 15 years this year, oh, fantastic. Now tell me a bit about when you were working for the National Builder. What was your role in that company? Or roles?

Speaker 2:

I had several different roles over the years but I started off initially as so what? So the? I guess some of the big differences in commercial and residential is what they call their, their superintendents, their project managers, all that kind of stuff. So when I went to work for this builder they called us assistant project managers and then once you got promoted you got moved into project managers. So you were basically in a commercial where you're basically like a site superintendent or assistant superintendent, superintendent or assistant superintendent. So that's where I started and I spent about about three, three and a half years, you know, in those in those two roles.

Speaker 2:

And then I moved into the office and took a position and kind of they call it was a costing manager, which was very similar to like an estimator, but we also basically, you know, built and helped do the development, because the company I worked for was, you know, they weren't buying lots but they were buying finished lots from developers. So that position we'd go in and do a lot of the upfront costs and set all the kind of baselines and milestone markers and we would manage any change orders that came in from projects. It's basically like the financial side of the division that came in from projects. It's basically like the financial side of the division. And then from there I went to kind of in that same role. I was doing some general management, maybe not without the title. I had a great division president that I worked for. That brought me into a lot of meetings, a lot of things that were way above my pay grade and I should have been involved with, and, to be honest, that was a great learning lesson and experience for me. So I got to do some of those kind of general management things, even though it wasn't entitled.

Speaker 2:

But then in 2006 is when things started changing. They kind of saw the writing on the wall. Things were shifting and they started letting people go. So they moved me back into the field and I was building two houses. I'm like you know what, when you work for a production builder, usually building 20, 25 houses at a time, two was like okay, I'm not going to. I was really barely, you know, I'd go to work for a couple hours a day Like there wasn't much to do, and I'm like you know what, I can do this on my own, and so that's really what kind of you know. You know, set me on my trajectory to go start my own thing, and that's awesome, all right.

Speaker 1:

So let's let's kind of walk through starting your own thing. So you know, when we discussed initially, you started with the commercial and the residential cause. It was, you know, just so difficult and the market was terrible and I think anybody would take anything. Uh, at that point in time when you're, you know, from 2000, late 2008 to 2011, there was literally nothing to do, you would take whatever you could get your hands on. We did some terrible jobs for HUD housing and for anybody and everybody that would give us work. So you, you got that, that you were doing the both and you said that you guys decided to, you know, get away from the commercial and do the residential and you know anybody that's doing a vast majority of things in construction. The quicker that you find your strength and then niche down, that's when you can really kind of the rubber hits the road and you can grow as a company. So when you guys niche down, you said it was something with the client process. Could you kind of what are you describing there, what was happening?

Speaker 2:

Yeah. So what we kind of realized is, you know, there's a couple of different types of contractors out there. Some that are just like don't, don't, I don't want to talk to the client, I don't want to do anything they got to say with. And then there's those that are like I want to be hands-on, I want to guide them, I want to help them. And we kind of took that approach. It's like what can we do to create kind of a unique experience, because construction's messy construction's long construction can become expensive. So what are some things that we can do to put in place to try to help kind of create a smoother process?

Speaker 2:

Now, it's still been, you know it's construction. It's been a bumpy ride, but you know that is our focus. Like what can we do to create a great customer experience, even so much so as today, you know, our, our b-hag, as you call a big, hairy, audacious goal, is to be the ritz-carlton of custom homes, and so, um, we actually have hired a consultant and a coach from that, spent 18 years, 17 years with Rich Carlton to kind of come in and kind of help us kind of navigate. What are some things we can do to improve our experience, because we've learned a lot in the last couple of years. Covid changed this game, changed the industry a lot, with even costs, and then also we all got really busy. Now things are starting to slow and we kind of had some growing pains and had some upset clients. So we're just trying to figure out how to. How do we circle back so that we don't go through those same challenges again? And you know, we've got the right systems in place to manage a great client experience through.

Speaker 1:

You know, the home building process so, when you're doing that, what are some things that you've come up with, so, with your clients guiding them? One thing that you stated and I'd love to learn a little more about is you say you've got an in-house architecture firm, that not everyone has that. So how early in the process did you guys establish that, and what was the drive? What was the driving reason for putting that together?

Speaker 2:

yeah, so initially we would outsource architecture and about three years ago my friend who runs the architecture company that we used to outsource, he was pivoting his business from kind of mid to high-end custom homes to high-end to ultra luxury custom homes and we just kind of didn't fit that profile, especially because we still do additions and renovations.

Speaker 2:

So him and I talked, and he's like you might want to consider, you know, maybe bringing someone on for some of these other small projects, smaller projects we can be there on the ultra high end stuff, but you might want to consider that. So that opened up my eyes. I'm like you know what, instead of going to find another firm, what if I just hired an architect and brought it in-house Right? I was looking at how much money we were sending outsourced to architecture and I said you know, between that I should be able to afford to bring an architect on in-house. Control the process, because that's the other thing is, when you outsource not everything but a lot of things, you can't control the time right because they don't directly work for you. But in this case we can move projects along, we can adjust things. So that was kind of the driver, kind of two things. One it was the control and then two it was kind of just managing the cost and creating another vertical of income stream.

Speaker 1:

Yeah, I love that idea. So we we still outsource architecture. It's one thing that I would love to get at some point, but it's. It seems like it would almost be a game changer because you know you can really eliminate the competition. So there's certain things that we try and do right now that can eliminate competition. But the earlier you can get the client and get the other people that can come in and swoop and bid it out of the way. When you offer things that other builders don't offer, it's comparing apples and oranges for the client. The client can come to you. They know that they're going to get an amazing experience when they're going to get that design where you guys actually, you know, own the design and have fully vested into the design, as opposed to just saying, okay, here, here's three architects, pick one, we'll work with you with the architects. Completely different experience. So do you charge? Is it a premium you charge in doing that, or is that kind of equal out as the same price? How does that look?

Speaker 2:

It's probably a little bit less than what we were. Outsourcing Depends on the project and the size. We try to be competitive, you know, internally. So if somebody does come say, hey, what are you charging me for architecture versus me going to the third party, you know we can say, look, we discount our services because you've hired us to do both and you now have the opportunity to have us control everything, versus if we go outsourced you're paying more and we may not. You know we have less controls.

Speaker 2:

So it's a good selling piece from that. We haven't had too much reservation with it. You know we claim to be a design build firm, so it helps from that perspective when you got clients looking for it. And the other thing that we found is when you bring in two or three architects and the client picks one, they go through and design it and then all of a sudden you've got the builder, the client and the architect all sitting looking at each other and pissed off that the architect designed something that's over budget and it's the contractor's fault, right? So not that I'm blaming the architects, because you know it goes both ways, but that's that's a big challenge that we've always run into is like the house gets over designed because you know most architects aren't building houses, so they don't understand some of the costs and implications that come in especially over the last couple of years with all the crazy cost increase.

Speaker 2:

So yeah, so that's been a big one. For us is having everybody at the table. You know it becomes more of a partnership approach. We've got owner, architect, builder all sitting together from the beginning and then if there's an interior designer, we'll bring them in at the beginning. So that way it's cohesive, right. That's the beginning part of our process, that beginning part of our client experience. It starts right there as a round table versus an us versus them mentality.

Speaker 1:

Yeah, that makes a big difference. And really, as far as for you guys, making that client experience, that's definitely a game changer for a client experience. When you can do that and, trust me, if you've been in this industry any amount of time you'll go through with a client. Set up a budget, go find an architect, tell them what you want. Everybody's on the same page. Then you get the drawings and you're like okay, what just happened here? Why is this thing designed like this? This is definitely not in budget for what we were talking about. This is like on a different planet.

Speaker 1:

And then you know so not only are you looking at the design and having some things that can come up that you're not controlling huge timeline factors. Right now, when you're going to architects right now, anybody who's dealing with that architects you're going to architects right now, anybody who's dealing with that architects are. You're going to wait three weeks, a month, month and a half sometimes for an architect to even start a drawing. So then if you have a problem and you have to go back to them for a redesign, then a lot of times you're having to wait again before they start the redesign. So, boy, you are not only saving them money, you're saving people probably two, three months of time, a lot of times when they're going through this, because you can control all of that.

Speaker 1:

So that was a fantastic idea to implement and it sounds like it's paying off, and I can definitely imagine it. It continues to pay off and grow, so that is fantastic. Another thing that is great that you guys do that you didn't really bring up. You guys have a charity organization that you've put together. Could you tell us a bit about that, how that got started and what that's all about?

Speaker 2:

Yeah, absolutely so. The picture that's directly behind me is a picture of the Dominican Republic and that's where it began. So about 10 years ago my wife went there on a trip with our church and came back with this vision and passion to build houses. She doesn't know how to build houses, but she says you do, so we need to go figure it out. So, in true Tim fashion, we figured it out and so we started the Paradigm Foundation about 10 years ago and we started in the Dominican Republic and we've been there since, you know, for 10 years. And then about five years ago we moved into Kenya. So we've been doing projects in Kenya. I just got back from there in March. We were there for about 10 days and then we've done some projects in Brazil. We've done a couple of projects in Central African Republic. We've got a new partnership in the Amazon of Brazil. So, just looking to expand and looking for opportunities, I mean to date the foundation has done over 60 homes and, I think, two churches and two community centers. So I mean we're not talking big sums of money to build houses. It's not like the US, it's, you know, 15 to you know, $18,000 gets a house done, gets that in place and you're changing people's lives not only immediately, but also just for generations. So the generational impact is just it's huge and so it's been amazing to be a part of.

Speaker 2:

We take teams, we go to the DR. We've got a DR trip coming up in September. We go to Kenya, typically around March or April, and then we also, if anybody wants to do it, you know, hey, we've got a group of people who want to go on a trip. We've set those up too. So, yeah, it's been a fun journey. It's been a fun experience to give back and just, you know, you're seeing lives changed, not only there, but you're also seeing. You know, I take my staff every year when we go on a trip to the DR. I said if anybody wants to go for the first time, I'll cover your cost. So I've had about four or five of them kind of jump on at that and they've been down so they get their experience and one of the things that we've got some signs here and around the office that talks about how their daily job is creating impact other than just our clients, right, because of the foundation. So, yeah, it's been. It's been a fun, fun journey and who knows where we end up next.

Speaker 1:

Yeah, that's amazing. So, yeah, that you know what you just brought up there at the end. You know you've got signs around the office and you know you want your team to buy in on. What's our purpose? Do we have a purpose that we're all standing behind? It's not all about you know how much money are you making. Surely you don't have a great team If all your team is worried about how much money they're making. If they have a purpose on what they're doing and you clearly define that purpose for them and it makes them feel good about it, you know they want to grow the team because they know that it's benefiting not only them, it's benefiting others.

Speaker 1:

And yeah, I commend you and your wife for putting that together. That's a game changer. I absolutely love it. I think it's amazing Not only that. You know any client that's doing work with you knows that portion of yours is going. A portion of anything that you're doing is going towards good. So it gives them a good feeling when they're choosing and going with your company, that it's not only benefiting you and the people that are around you, but that it's not only benefiting you and the people that are around you, but you're benefiting others in the world, so that's awesome. Absolutely, I commend you guys for doing that.

Speaker 1:

Thank you, thank you and we'll put some information in the show notes if anybody wants to get in touch and reach out and find out more or, you know, donate to the cause. I think it's a great cause, all right, so now I lost my track here. I wanted to go a little bit further into how do you determine where you're going next. I know you said it's through the church. Could you kind of walk them through where, how you chose these places and why you're in these certain areas?

Speaker 2:

Yeah, sure. So you know, each country has a community church partner, right, because the whole goal of us is it's an empowerment program. We say we want to give people a hand up, not a handout. So we want the church and the community to come alongside, you know, these families that we're serving to find ways to, you know, help, support them outside of housing, whether it's food needs or medical care or just some prayer, whatever the situation is, we want the community to be involved. So for us, we started in the DR.

Speaker 2:

We've gone through a couple of different communities, but the current church and community. There's a school attached to it, which is amazing. There's 400 kids in the school and they start teaching them English at like five years old, and so that's a really cool program that they've got going there. And then in Kenya, the same thing. So in Kenya, there was actually there's this primary school and they just started a high school. There was actually there's this primary school and they just started a high school, and so it just, you know education is huge, so that's, it doesn't always have to be around education, but those are our two kind of bigger partners right now that focus on education and then brought in some housing, seeing, you know, impact through, you know, these leaders stepping in and pouring into their community and giving back.

Speaker 2:

I mean they don't have to do this, right, they live there, but they choose to work in these communities and to help others and it's, I mean, to me that's almost more humbling than what we do, right, because they're in there day in and day out and walking with these families and you know we come in from time to time and visit and you know we come back to our, you know, but come back to the States, which is which is great, but yeah, so we try to find church partners or great community connectors all over, you know. So, like the partner that we've got in the Amazon, that was a connection through somebody, so it's just networking, right, it's. You know, someone hears what you're doing, oh, you should talk to so-and-so over here, right, and so-and-so says oh, you should talk to so-and-so. It just becomes a kind of a spider web of connections, especially once you kind of get things out there, what you're doing, and people want to get involved.

Speaker 1:

Absolutely All right. Awesome, Thank you. So, all right, let me jump back over to your company and let's go through a little bit. I think it's going to be beneficial to everyone. You know, with any construction company, as you kind of grow from you, you know, being a one man show and growing into things you need systems, put systems in place in order to grow and expand your company. What type of systems do you guys operate on? Do you have a project management system? Do you do any type of EOS, or how do you guys operate?

Speaker 2:

Yeah. So I would say prior to 2019, we were kind of like all over the place, we didn't really have a good. We had some systems. We had some systems, but they weren't you know fine tuned systems like to where we are now. And part of that was I started working with a scaling up coach as a component of, you know, similar to EOS. So we follow some of the same similar principles and practices. So we have we we use, you know, the scaling up model for, you know, growth and development and everything like that. But then we use, for now, we've got two project management softwares we're using, we're using BuilderTrend, but we're actually in the process of transitioning over everything to Autodesk. So we're in that transition right now, right now. And then we in 20, at the beginning of 2020, we switched to.

Speaker 2:

Mondaycom is basically it's our brain trust. It has everything in there. We've built this thing out and we've been building it for the last four plus years. It holds everything all project updates, checklists, I mean it's basically we created this thing called an autopilot. If I would hand it to somebody, they could go build a house. Now it may not turn out very nice and it may not be built on time. But if they follow it to the T, you can get it done.

Speaker 1:

Wow, that's fantastic. So mondaycom, which is a great, it's like a project management online software, which is fantastic, is fantastic. So, yeah, so you're taking that and running it through and that's the whole thing. As you're growing with a company, if you are trying to grow and scale it, you have to document processes. So just what you said you have to have it where somebody can just step in. That's how you hire somebody that's inexperienced and can train, they step in and they have. It's basically just a checklist that walks them through. As long as they follow the checklist, follow the correct pattern, then it's kind of dummy proofed. Obviously, you know you have oversight over them, but it gets somebody in, can train them up and that way they're doing it the way you want them to do it, not how they might've been trained previously or never been, as long as they follow it right and and they use it.

Speaker 2:

that's part of the challenge as a leader is getting people to use the tools that we've created.

Speaker 1:

you know it's, it's, it's there for a reason, you know yeah, do you guys have any type of uh um, a scorecard or a weekly check-in to verify these guys are following protocol, or how do you do that?

Speaker 2:

Yeah, so we do. We do uh a weekly production meeting uh 11 o'clock on Tuesdays and we cover kind of like hot items and it's kind of that's when we kind of use that as to how do we connect the office in the field. Um, sometimes there's a disconnect, uh between selections and you know orders and things like that. So that's a good time to get everybody on the same page. We also just talk about any, you know, challenges that we might be having within you know, subcontractors or vendors or clients or whatever comes out of that. But yeah, we do that every Tuesday.

Speaker 1:

And how do you guys communicate? Do you have a messaging app that you use? Do you communicate through Monday? Do you communicate? Do you have a messaging app that you use? Do you communicate through Monday? Do you communicate? I know one thing that we had a challenge was we would have text, messages, emails, so we've got everybody communicating through one singular platform. Now, do you guys do anything like that?

Speaker 2:

You know we use Microsoft Teams and some are better at it than others. You know we use Microsoft Teams and some are better at it than others. You know it's probably a combination of of texts and Microsoft Teams. You know our internal team is much better because they're in front of the computer, so they're they're better at the teams than the field managers. The field team is going to be more text and phone calls and because I'm a hybrid, I do a little bit of both.

Speaker 1:

So when your field guys are they able to access, let's say Monday, or I know you said you're using BuilderTrend Do they access BuilderTrend via their mobile phone in the field? Is that how they keep up to date?

Speaker 2:

Yeah, they all have an iPad that has access to everything. They also have laptops so that when they're in the office or if they want to take it out in the field, they have access to all of that. So we're very tech-driven. So everything that we do is done through some type of process or online tool that we use. And then what's what's what? It's helped us kind of going through COVID, because we were already set up to go remote. The only thing that we didn't do a lot of was video conferences on teams. We did a little bit of it, but you know, other than that, the only thing that we had to pivot during COVID was really our billing system, because our billing was all paper at the time and now it's all digital.

Speaker 1:

Okay, so could you give me an example of one big challenge or issue that you know caused you guys to do things the way you've done? Have you run into any big challenges, over even from COVID to now, that have been like game changers for you? Have you run into any big issues with clients maybe they're not paying clients running into a problem, clients designing something and then you building it and there being any big problems that somebody that could help somebody kind of in the beginning kind of catch themselves from running into that era. That's one of the biggest things contractors run into is these big, big, massive problems, not small problems or no big, massive problems yeah, well, I'm dealing with a big, massive problem.

Speaker 2:

Right now. I got a client that that hasn't paid us and we're, you know, in the mix of a lawsuit. So, uh, and what what's crazy is is for seven, 17 years, I've never not had a client pay us, and then in the last year I've had three, maybe even four, and so it's that's probably the biggest challenge that you know that I've faced, because it impacts cashflow, it, everything else it impacts, you know, especially when you're dealing with legal stuff. Right, it just takes away from your day-to-day. It's just, you know, you got an 800 pound gorilla on your back everywhere you go. Um, you know how to avoid that, you know I, I think, um, making sure that the clients show you some kind of you know funds up front so you can confirm that they have it, or put something into a contingency escrow account so that if they go over budget which is usually what happens, right, it's, it's, we've got the budget, we work with the bank, the bank pays us, but then all the overages, the change orders or unforeseen conditions, those are the things that kind of creep in that. So one of the things out of that, too, is we actually started forcing our clients to carry a 10 percent contingency, 10 to 15 percent contingency. We need to see the funds.

Speaker 2:

You know, the other project was a little bit different. It wasn't, it was, it was more multifamily and that was we were working with a developer. So that that that's a little bit different. So we, you know, I don't know how I would structure that differently, I think it's just, you know, par for the course. Every. You know, I'm sure there's so many horror stories of contractors. You know I'm not the first, I won't be the last to go through a situation like this.

Speaker 1:

Oh, yeah, well, there's, there is. You're constantly finding new things that can create problems. We are going through one where we had a sub that we paid a large amount of money. We signed the progressive lien waivers with him. He didn't pay the supplier a hundred and something odd thousand. We paid him though the lien waivers, but it doesn't matter, we still now he didn't pay them, he paid he. He's saying he paid them, but they, I guess, put the money towards other jobs that he owed on. So now I have to repay them. So you know, it doesn't make any difference.

Speaker 1:

You as the contractor, anybody getting into contracting, you're, you know, the last line of defense. Everybody's going to go after you. You're the one that. So you have to always be prepared. You have to have money set aside for these things. You know, like he's saying a contingency, yes, that's great if you can get a client to have a contingency, but you know, more times or not, you're going to, they're, it's going to find a way and it always comes back to it seems like the contractor, the bad contractor.

Speaker 2:

Yeah, you know we take the blame for a lot.

Speaker 1:

We do take the blame for a lot, but that's you know. That's what. That's why contractors a lot of them don't make it. You have to be prepared for these contingency. You also have to put money in these projects to make sure you cover for. You know, do you have something for if the job goes way beyond timeline and you're responsible if you're not doing a cost plus contract? You've got just a guaranteed maximum price contract or something and the timeframe goes over. Do you have something in there that's going to allow for you to be paid for all this extra time or not? Otherwise it's on your own dime and all of a sudden, a job that you did nothing wrong. You make no money. So when you're doing contracts, tim, do you guys typically do cost plus or do you do a guaranteed maximum price contract, or how do you guys do it?

Speaker 2:

We kind of use a hybrid right, because the sticks and bricks and the components of construction we get bids in price and we're able to kind of, like you know, lock most of that in um and then, but like our allowances, like on our finishes, our flooring and countertops and cabinets and things like that, we'll plug in an allowance, um number right, hundred thousand cabinets right, and then what we do from there is we just we just do a small markup just to kind of cover a little bit of overhead and our taxes on top of that. You know we're not gouging if they go over, but no, we try to be pretty fair from that perspective.

Speaker 1:

Yeah, so it's kind of a hybrid.

Speaker 1:

Yeah, that, and that's also what makes it difficult when you're bidding a job. So when you're bidding a job, typically, like you say, everybody's going to come in relatively close on the sticks and bricks. And how you differentiate yourself as a contractor is if somebody comes in way lower, they're coming in way lower by just not giving someone an adequate allowance on those items you know, and battling that with a homeowner. And then even when you give them adequate allowances, they go spend more what you gave them when you gave them like a mid-level. So you can just imagine if they took the low guy.

Speaker 2:

And then they'll say, they'll tell you, you didn't give me enough.

Speaker 1:

Right, you didn't give me enough. I'm like well, I mean, I was already high, I was trying to get the number closer to where it was workable, right, and you know, that's the problem. Yeah, yeah, that's too funny. Well, man, it's been great having you on today. I think it's been a wealth of knowledge for anybody beginning as a contractor or thinking about becoming a contractor. So if people wanted to reach out to you to find out more about your charity or just find out more about you, what's the best way to reach you?

Speaker 2:

Yeah, you can send me an email at twinteratparadimehomescom. Twinteratparadimehomescom.

Speaker 1:

Awesome Tim. Thank you so much for being on and thanks for what you're doing out there. We sincerely appreciate you taking the time to sit and chat with us today and help out those aspiring contractors. Sir, have a great day, sir.

Speaker 2:

You too Appreciate you. Thank you, thank you.