How or when to pay for contactors (disbursements)

[Dan Marl]

Hello everyone. I have been a long term landlord but have never dealt with insurance companies or contactors (lucky me).

There was a natural disaster to my rental home in Texas and the insurance company came out with the adjuster and gave me the amount they think that will cover the damage.

All 3 bidding contractors said the amount is too low and if they get the contract, they will put in supplemental claim later on. So i have picked a contractor but he wants the full amount of what the insurance gave me before the works start. Then he will put in the supplemental later. To me it doesn't sound right.

What do you guys usually do? Give him half of the check first? Or break into 4? When should be the last check?  Thank you

[Josh C.]

You may not get a good contractor by not offering upfront payment. 25-30% upfront is very common. We wouldn’t do any work without upfront money. But don’t pay it all up front. Also, don’t agree to work and then hope they get a supplemental later. Those aren’t guaranteed so make sure you are protected.

Good luck. If it’s a company with a public image and online, you have little risk of them just taking your money and running. Two guys and a truck with no website you should be more careful about that.