Payment process of your contractors
First flip and working on SOW. I've heard a few different ways, but wanted to see how flippers paid their contractors when working with HML that pay once projects are completed and inspected.
Do you use your own funds to pay a percentage down to get them on the books and then rest after completion?
Nothing until project is complete?
Follow the contractors payment plan? I've been several different plans, depending on the contractor I'm talking to.
Thank you!
I did a Hard money loan with a rehab budget of 130k, 100k financed, I used my funds to pay 25k-30k each time doing 4 draws from the lender. The pay structure I used for the contractor was 25% once materials were on site, 50% once certain mile stones were met (all flooring installed, Cabinets in place, ETC.), last 25% once final punch-list was completed with a walk through. I don't like to pay for work that is not completed, so that way if they take the money and run I am not out all of my money. I also like to use a contract that specifies when and how they will get paid, and the time line. If you message me I can send an blank contract. Hope this helps!