Do you bonus contractors?

Contractors
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Do you bonus contractors?

Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

Do you give bonuses to your contractors?

If they go above and beyond?
If they finish on time or ahead of time?
For exceptional quality or service?
So you stay at the top of their list for future work?
For working through the weekend or at night?

What else?
How much money do you bonus?
Do you let them know in advance you will bonus if they _______?

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Dave Martel
Electrical Contractor · Vail, CO · Member since 2010 · 40 posts · 10 votes
13y

I'm curious as well. Never got a bonus in 23 years...plenty of people want me to work for free though.

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  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    13y

    Nope on all accounts except for one holiday season bonus I have to my main contractor. It is something I would think more about though...I will be curious to hear other answers on this.

    0Reply
  • Dave Martel
    Electrical Contractor · Vail, CO · Member since 2010 · 40 posts · 10 votes
    13y

    I'm curious as well. Never got a bonus in 23 years...plenty of people want me to work for free though.

    6Reply
  • Jon Klaus
    OP
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    I've got a contractor busting his hump to get a restaurant ready for me. He's worked 13 out of the last 14 days, and 10 days straight. Just thinking about how I can best show my appreciation.

    1Reply
  • Jay No
    Carpenter · Brooklyn, NY · Member since 2013 · 7 posts · 0 votes
    13y

    Give him a couple hundred bucks tell him to take his family out for dinner. You just might get it back its only money

    0Reply
  • Jessica Russell
    Real Estate Investor · Perrysburg, OH · Member since 2013 · 34 posts · 4 votes
    13y

    We give a 1% (of total bid) for each day the job is done early. Example...total bid is $ 10,000...we write in contract to compensate $100/day for each day of early completion...but, it goes the other way too...Contractor's bid is reduced by $100/day for each day they go over on timeline.

    2Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y

    Do this all the time. Especially if we do particularly well on a project. I'm a big fan of aligning interests, and by sending the message, "If I do well, we all do well; if I suffer, we all suffer," my contractors now have a vested interest in my success.

    In other words, I expect that when I say to a contractor, "I'm over-budget on this project and need your best price" that he'll do what he can to help me out; in return, when we do well on a project, I like to ensure that that everyone benefits. And those that go out of their way the most (working extra hours, taking on extra tasks, etc) get rewarded the most.

    I'll do anything from hand them extra cash to give them a Home Depot gift card to give them a gift certificate to a nice restaurant. And the amount could be anywhere from just a token ($50-100) or something substantial ($500+), depending on how instrumental they were in the project succeeding or how much they have helped me in the past on prices when I needed help.

    I also go out of my way to get my contractors more business -- I'm pretty sure they appreciate this more than the cash. If you can do that, they probably won't even care about bonuses, because you're already providing them an opportunity to make more money.

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    6Reply
  • Michael D.
    Investor · San Jose, CA · Member since 2011 · 355 posts · 90 votes
    13y

    And make sure he brings his family to opening night, on the house. Or to the pre-opening, training day.

    Michael

    4Reply
  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    13y

    Jon

    What will happen when you say to the significant other I have a 1000 dollar bill with your name on it if he comes in on time and under budget AND I will not tell your significant other... What happens if you say the same to the contractor.
    There are positive and negative motivators positive are always better

    1Reply
  • Ronald Wentz
    Investor · Cleveland, OH · Member since 2014 · 32 posts · 12 votes
    12y

    Contractors should receive a bonus for completing job before your scheduled due date. Treating your contractor well and paying his wage, not what you think he should earn . Chances are when you need him again you will be a priority. Good luck

    1Reply
  • Brian Mathews
    Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
    12y

    I've never had anybody offer me more money than what I quoted whether I finish early or whatever I do.   If anything they want a better deal for giving me the job.   I've also never heard of such a thing offering contractors more money.   Investors are inherently cheap I've found. 

    2Reply
  • Terri Lewis
    Flipper/Rehabber · Elkhart, IN · Member since 2014 · 197 posts · 41 votes
    12y

    I totally agree with @J Scott @Michael D. @Paul Timmins A good one will go out of their way to get things done. A positive reward, not a negative action. 

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Brian Mathews:

    I've never had anybody offer me more money than what I quoted whether I finish early or whatever I do.   If anything they want a better deal for giving me the job.   

     Do you do a lot of repeat work for investors?  Most investors I know who use the same contractors over and over routinely give them bonuses for successful projects or at various times of the year.

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    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @J Scott 

      common practice for me.. I have 4 GC' that work on my various projects. If we do well I spread the wealth if its tight or we did not do so hot I won't

    I can tell you I shock the crap out of the subs though I usually have 20 50's in my pocket and  will lay a 50 on a sub and thank them  ..  this is during the job  and not tied to completion or whatever.

    Are market in Oregon is starving for good subs.. So we have to treat them right or we end up losing them and having to use the not so good ones

    I may spend 500 bucks per house handing the 50/s out.. But remember I come from a sales background  not a grind the sub background...

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    5Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Jay Hinrichs:

    I can tell you I shock the crap out of the subs though I usually have 20 50's in my pocket and  will lay a 50 on a sub and thank them  ..  this is during the job  and not tied to completion or whatever.

     I do the exact same thing...

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    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @J Scott 

      fine minds think alike..  I love handing the guys working on the house a 50 and tell them hey take your wife to dinner tonight..  building loyal subs is an important element to being a builder or remodeler.  cramming them down at all angles as stated above leads to discontent from my experience.

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    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @J Scott 

      in a follow up to this I have an x partner who is just brutal on Subs he back charges them crams them down any chance he gets etc etc. 

    We were do a foundation dig out and my excavator ( who is a chatty Cathy) is saying if he has to do a job for him ( and he does a bunch this guy builds 50 plus houses a year) that he only does what he is contracted to do and made the point of say if there is a little dirt mound over there and I can move my machine over in 20 seconds and move the dirt in another 1 minute I am not going to do it period..

    Also another major issue is with his framers.. they leave the job a mess.. they will go into the new lumber pile grab a nice two by four and cut off a foot of it.. instead of hunting around for a smaller piece they don't care.

    Now my framer he does the opposite and at the end of the job all the left over material is stacked nicely lumber company comes and picks up what can be returned and I get a nice. credit.. My X partner just throws it all a way he thinks he is winning but really he is not in the long run

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    2Reply
  • Brian Mathews
    Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
    12y
    Originally posted by @J Scott:
    Originally posted by @Brian Mathews:

    I've never had anybody offer me more money than what I quoted whether I finish early or whatever I do.   If anything they want a better deal for giving me the job.   

     Do you do a lot of repeat work for investors?  Most investors I know who use the same contractors over and over routinely give them bonuses for successful projects or at various times of the year.

    Not much anymore.   I've ran most off.   They are too cheap and don't like to pay on time or want to beat you up on price.   My only work with investors anymore is service work on rentals.   A lot of them are starting to buy home warranties.   I'll go fix what the warranty company's screw up.   I'm more of a value guy than a cheapo contractor.   I fix problems and make things right.   

    1Reply
  • Account Closed
    Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    12y
    Hell to the no....why? Because then "bonus" becomes expected in future projects...no longer being a bonus but instead a normal pay.
    0Reply
  • Brian Mathews
    Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
    12y
    Originally posted by @Account Closed:

    Hell to the no....why? Because then "bonus" becomes expected in future projects...no longer being a bonus but instead a normal pay.

    And this is why I don't work with many investors.  I don't expect a bonus and would be shocked if anybody offered one.   But if I did something above and beyond to help you out of a tough situation and you compensated me unexpectedly.   I would be much more willing to help you out of a tough situation if another one arose.  If I went out of my way to help you out and I got this attitude.   It wouldn't happen again.   I guess I'm a different type of contractor though.  I'm not desperate for work and don't have to work with people I don't want too. 

    4Reply
  • Atchut Neelam
    Real Estate Investor · Minneapolis , MN · Member since 2014 · 169 posts · 33 votes
    12y
    Yes I do. Provided quality requirements and timelines are met. Benefit is they would give my work priority when compared to others.
    0Reply
  • Account Closed
    Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    12y

    @Brian Mathews 

    you and I work in two different worlds I assure you. I never expect anything for free nor want it. friends are friends and business is business. That way "bonus" never happens. what i make/ don't make shouldn't be any of the workers concerns, they get paid regardless.

    0Reply
  • Deborah Smith
    Rental Property Investor · Chandler, AZ · Member since 2012 · 87 posts · 39 votes
    12y

    I stopped giving bonuses.... really only because every person we ever gave extra money to seemed to disappear after that.  Still haven't figured that one out.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Brian Mathews:
    Originally posted by @Account Closed:

    Hell to the no....why? Because then "bonus" becomes expected in future projects...no longer being a bonus but instead a normal pay.

    And this is why I don't work with many investors.  I don't expect a bonus and would be shocked if anybody offered one.     

    There are obviously different types of investors.  Many of the investors I know give bonuses to contractors (I've never had a contractor who has later expected the bonus be part of their pay), and from a relationship standpoint, you'd probably love working for them.  

    The reason I think you'd love working for many of the investors I know:

    -  They don't micro-manage (once you've proven that you are a mature and responsible contractor)

    -  They don't ask you to look at a job unless they intend to give it to you (assuming you don't jack your prices up between jobs)

    -  They have reasonable expectations (if they hire you again, that says they're good with your past performance, so just keep it up)

    -  You will know what they typically want done, so you won't have to spend lots of wasted time clarifying thing

    -  They pay quickly and consistently (if they don't, you shouldn't work for them)

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    1Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Seth Sherman:

    I never expect anything for free nor want it. 

     I don't consider bonuses to be free.  My contractors get paid the agreed upon sum to complete the agreed upon work.  They get bonuses when they make my life easy -- they give me great prices (well below retail), they prioritize my work over other work, they put in overtime when necessary, they show up consistently on time and work fast, they come in on budget, they self manage so that if I don't show up for a week I can trust everything is still on track, if they find small surprises I don't ever have to hear about them, they treat my wife and my guests as well (if not better) than they treat me, etc.

    These are things that not all contractors do...especially the contractors who typically work with investors.  My contractors do these things -- they go over and above for me because they know I go over and above for them.  That includes things like bonuses for a successful project.

    Of course, your situation may be different -- your contractors may do all those things simply because you pay them their agreed upon amount (without bonuses), or perhaps they don't do these things and you just don't care.  If either of those things are true, then I guess there's no reason for you to be paying bonuses...and my advice doesn't apply to your situation...

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    0Reply
  • Jason Starr
    Baltimore, MD · Member since 2014 · 1 post · 0 votes
    12y
    J Scott, where does one find these great contractors in the Baltimore area? I need one for a small city rehab. Jason S
    0Reply
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