Paying Out Contractors

[Spencer Krautkramer]

What is the standard protocol for paying contractors when doing work on your property? I am a new investor and beginning my first larger scale project. The contractor is requesting 40% pay at the start of the project and the remaining pay after completion. Is that relatively normal? I work in the construction industry and we typically pay our subs on a monthly basis based upon what has been completed, but I am not familiar with the residential world.  What are everyone's thoughts?

[Scott E.]

Quote from @Spencer Krautkramer:

Quote from @Kerry Noble Jr:

ask em to do 4 Draws.....or ask em to pay per line item on the scope of work. They will lean more to the draws

 Hi Kerry, thanks for your response! To give a little more context to the work, it is just about a $7,000 project and will only take a week to complete. Do you think the payment method they asked for makes sense for this scenario?

On a small project like that, 40% up front and 60% at the end is a fair and reasonable pay structure.

But I would only proceed with a deal like this if I have worked with the contractor before, or if they were referred by somebody who you trust that vouches for them.