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Rehabbing & House Flipping

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Steven Barr
  • Investor
  • Atlanta, GA
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Having contractors purchase on your Lowe's/Home Depot Pro Account

Steven Barr
  • Investor
  • Atlanta, GA
Posted May 25 2023, 05:20

Hi BP! 

We are thinking of opening up a Pro account at Lowe's and Home Depot. They have a program where your contractors can come into the store and pick up the materials that you order. It is just billed to your account. Also, contractors can go collect materials, and Lowe's/HD will call you with an itemized list of materials being purchased so that you may approve or deny before they put on your account and leave the store

Was curious if anyone is doing this, and also what the risk implications of doing this are? Only thing that stands out to me is that they could steal materials, and this is just paying them upfront in a different form as opposed to the 10-30% cash of the project's cost

Seems to be a good option if doing a decent volume of home flipping, but would love to hear other's opinions

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Chris Seveney
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#2 All Forums Contributor
  • Investor
  • Virginia
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Chris Seveney
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  • Investor
  • Virginia
Replied May 25 2023, 05:57
Quote from @Steven Barr:

Hi BP! 

We are thinking of opening up a Pro account at Lowe's and Home Depot. They have a program where your contractors can come into the store and pick up the materials that you order. It is just billed to your account. Also, contractors can go collect materials, and Lowe's/HD will call you with an itemized list of materials being purchased so that you may approve or deny before they put on your account and leave the store

Was curious if anyone is doing this, and also what the risk implications of doing this are? Only thing that stands out to me is that they could steal materials, and this is just paying them upfront in a different form as opposed to the 10-30% cash of the project's cost

Seems to be a good option if doing a decent volume of home flipping, but would love to hear other's opinions


 I would not recommend doing this, as next thing you know they will be buying stuff for other projects on you card and good luck trying to get them to pay you back. I never pay a contractor upfront, if they do not have the cash to buy the initial materials and bill for it, then sorry I am not using them. 

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Steven Barr
  • Investor
  • Atlanta, GA
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Steven Barr
  • Investor
  • Atlanta, GA
Replied May 25 2023, 06:55

@Chris Seveney isn’t this where the phone call from Lowe’s would come into play? They aren’t allowed to purchase materials and leave store without my approval. If I saw additional items I would reject it

What are your thoughts on this?

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Mark Bohstedt
  • Contractor
  • Missouri and Az
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Mark Bohstedt
  • Contractor
  • Missouri and Az
Replied May 25 2023, 07:07

Steven, here are some pros and cons from a GCs perspective, I spend about 20k per month on my HD pro account. 

Cons:

Unless you are very knowledgeable about the materials you need including small items like nuts, bolts, screws, straps, etc., you’ll constantly be having to run to pick these items up for your contractor. I prefer to order the materials myself and will seldom work with a client who wants to provide everything. 
Any material or fixtures provided by you will not have a warranty from the contractor, leaving you on the hook to pay for a reinstall if a faucet/sink leaks, etc. This is why a lot of contractors will mark up materials as they need to provide a warranty on them for you. 
I am not a delivery service so I will charge a customer for picking up items at HD, which will add to their material cost. 
 
Pros:

About the only pro I can think of is discounts. If your order is more than$1,500.00 you can have it run through the bid room, HD has this and I believe Lowes does also. You can typically get your order discounted 5% or more, on a $18,000 order last week we received a $2,100 discount off the order. My personal opinion is ordering and paying for materials yourself would be way more stress for you than it’s worth. 

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Steven Barr
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Steven Barr
  • Investor
  • Atlanta, GA
Replied May 25 2023, 07:49

@Mark Bohstedt thanks for the insight

As far as the nuts, bolts, etc… isn’t this something the contractor would know to get? So if I gave them a list of materials for a flip, they would go to Home Depot, grab the materials, and then additionally grab whatever else they needed. It would go directly to my account and I would approve the purchase 

So I might not know down to the details all the nails, screws, bolts, etc… but I could at least look at the items and determine if it seemed reasonable for the job, or if they were trying to buying stuff for other jobs on my account


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Mark Bohstedt
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Mark Bohstedt
  • Contractor
  • Missouri and Az
Replied May 25 2023, 08:14

Steven, my mistake, I thought you would order materials and they would pick them up. 
Determining who will warranty items and installation on products you purchase will still be an issue, and either you or your contractor will be making at least a few additional trips to pick up material that was missed on the original order. 

  I don’t think that experienced contractors will want to work this way. For new contractors that don’t have established accounts or the capital to purchase material this could work for them. 

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Steven Barr
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  • Atlanta, GA
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Steven Barr
  • Investor
  • Atlanta, GA
Replied May 25 2023, 08:34
Quote from @Mark Bohstedt:

Steven, my mistake, I thought you would order materials and they would pick them up. 
Determining who will warranty items and installation on products you purchase will still be an issue, and either you or your contractor will be making at least a few additional trips to pick up material that was missed on the original order. 

  I don’t think that experienced contractors will want to work this way. For new contractors that don’t have established accounts or the capital to purchase material this could work for them. 

 @Mark Bohstedt I’d prefer to not have to do this. But I refuse to pay upfront for anything 

This seems to be a solution for contractors who can’t pay for materials on larger jobs 

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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Investor
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Replied May 25 2023, 16:30

Do this once you and your crew has built rapport. You can set limits, and request calls every time they are making purchases to accept or decline the purchase. It is a great way for contractors to constantly buy material without you having to make the orders every time.

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Carlton B.
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Carlton B.
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  • Rental Property Investor
  • Milwaukee, WI
Replied May 26 2023, 10:24

Some contractors especially larger more established ones will always buy there materials but want to be reimbursed. Others will ask what you prefer and others will need it bought for them. For me it does not matter as long as I trust the contractor, and don't work with contractors I don't trust. If they are going to steal they don't need your account to do it. 

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Doug Smith
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Doug Smith
  • Lender
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Replied May 27 2023, 04:11

We order from different stores including Home Depot with our account and have the contractor pick up the materials for the job. We don't give out our cards. 

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Replied May 29 2023, 07:49
Quote from @Steven Barr:

Hi BP! 

We are thinking of opening up a Pro account at Lowe's and Home Depot. They have a program where your contractors can come into the store and pick up the materials that you order. It is just billed to your account. Also, contractors can go collect materials, and Lowe's/HD will call you with an itemized list of materials being purchased so that you may approve or deny before they put on your account and leave the store

Was curious if anyone is doing this, and also what the risk implications of doing this are? Only thing that stands out to me is that they could steal materials, and this is just paying them upfront in a different form as opposed to the 10-30% cash of the project's cost

Seems to be a good option if doing a decent volume of home flipping, but would love to hear other's opinions


 What we're doing sometimes is the other way around, we purchase with my contractor PRO card sometimes. Also usually we pay the job 25% in front for labour, but for the rest of labour payment, I've scheduled a zero interest financing with them so I can pay in 3-6 months. 

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Allen Bounds
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Allen Bounds
  • Architect
  • Pensacola, FL
Replied May 30 2023, 12:27

I have a Lowe's Pro account. Here are some more things to consider:

1. The interest rate is very high. You have to commit to paying it off every month or the discount does not make financial sense.

2. Their item numbers and descriptions are very vague. I have to look up most parts to see what is actually purchased. This takes some time.

3. The discount rate you start with may decrease with time, check the offer prior.

4. Having the card can make you kind of lazy. For instance, I can get certain products cheaper elsewhere but sometimes it is just easier to throw it on the card...

The cool thing is you can try it on smaller things and figure out what works best for your operation. Good luck going forward!