Do you provide incentives to your contractors?

Rental Property Investor · Houston, TX · Member since 2023 · 29 posts · 12 votes

This is my second time working with 2 guys on a house I am flipping. We have a good working relationship. I was curious if anyone has ever done anything like provide incentives or bonuses to your contractors for completing work early? This particular project is running late and now of course I'd like to get done faster. Im worried though that providing a such a thing would lead to hurried or sloppy work. Any thoughts?

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Jonathan Taylor SmithBusiness Member
Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
1y
YES, I do provide a bonus / penalty structure to my contractors. I have them tell me how long a project will take to complete, and then I add buffer days or maybe up to 2 weeks, depending on how long / complex of a project it is and potentially accounting for weather if it is outside work. Then if they are done by that deadline, I offer a bonus. But for each day / week beyond that deadline, I impose a penalty. The numbers vary per project, but it helps to get things done on time. I do not worry much about "hurried or sloppy work" because it is also in my contract that all work must pass inspection, which may include the city / county (for permitted projects), lender and myself. I handle payments by draws and I must always be ahead and work versus payments. The final payment is always the largest. I also buy my own materials.
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