Fix and Flips

10 Replies

Hi,

      Should a investor for a fix and flip property ask  a subcontractor too buy material out of there own pocket upfront?(reinbursed later) Shouldn't the investor pay for this?

I have had contractors offer to pay for it upfront, but smaller things like a box of nails that they choose because they know the correct angle/size/style and they are already at Home Depot anyway.

The larger items, I always pay for. That way, I know I am getting the right quality, right number of items, etc. Good luck!

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

I'm not a big beliver in reimburse later.

The contractor always want the easy way so he might buy expensive stuff.

I buy ALL MATERIALS.

I create a shopping cart with light fixtures, tiles, vanities, wood floors ect and the contractor going to pick it up from home depot. 

Any additional materials he may go to home depot and do a phone sale.

In a flip this little things can add up to be a huge expense. I would recommend you to be on top if it.

Yep, I buy all the materials.  I tried a turnkey guy on the last one just to see if I could get out of the management side of things and its just too hard to price "$85 per fixture including materials" That could be a $10 light with a ripoff on the install, or a decent ceiling fan he's putting in for free.

Different people do different things, though.  Sounds like you might be the contractor(?)  If I'm buying materials I don't pay anything for labor until after its completed, but will let them pull draws pretty quick.  If they are buying materials its customary to give them money to start, which I don't like.

I concur with Didi and Darrel above!  Home depot will do phone call approval...stay on top of it!  Get a pro reward account and save some bucks too!

Taking material out of the equation makes for a simpler arrangement.  Keep the focus on labor, but make sure there is not a leak in material cost somewhere at the same time.

You can bulk buy most of the material on a customer order with using phone in as the backup.  Quote the job where they pick it up as needed unless you want to be deeply involved.

I always pay for material... Some of the time I am picking out and buying the material myself and some of the time I am writing my contractor a check for what he needs. Labor is paid at the end of the job. Depending on the size of the job there could be up to 3 drawls.. Hope this helps!! 

Different trades work differently...

I buy the paint and caulk, but I don't buy the brushes, rags and dropclothes.

I buy the fixtures and water heaters, but I don't buy the pipe.

I let the roofer buy everything, but I tell him the brand and quality I want.

I buy the sheetrock, mud and tape, but he provides the tools.

I buy the light fixtures, switches, wire, junction boxes, the electrician shops with me at home depot or lowes so that he helps me pick out the panels and breakers.

We all have different systems, plans, ideas, vision etc... I always buy my own materials and bring it to the house. I personally don't believe in reimbursing because this is your business and they are working for you. You need to provide the materials and tools for them to perform better for you. You save more money and not pay for their time, because sometime they bring the wrong appliances/materials and you have to redo it again. It gets scrappy with sub-contractors later in the project; do it yourself and get over with it. 

Don't forget to save most of the tools and brushes for your next flip. Some contractors walk away with your tools.. 

Originally posted by @Parish Pradhan :

You need to provide the materials and tools for them to perform better for you. 

 I would recommend NEVER providing tools for your independent contractors.  If you do, it wouldn't be a stretch for the IRS (or a jury) to construe the contractor as an employee, and that could put you on the hook for extra taxes and -- worse case -- liability in the case of an injury or death.

If you hire a general contractor who is doing a list of fix ups such as drywall repair, fixing windows, small trim work, changing hardware etc... i would pay for the materials and bring/deliver to the project.  The contractor will get paid per our agreement (HR rate or per job) at end of the week or project.  If you are hiring a specific trade such as Tile, hardwood, carpet, HVAC, Electrical, or Plumbing i would let them supply the material.  This will save you the time since they know what they need and usually have it readily available.  With a good professional company they usually will bill you at end of job or send you a bill and not ask for a deposit (in my experience).

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