System for paying Contractors

[Jonathan Johnson]

Hello BP!

I have a question about rehabing with contractors. I've read a few success stories and horror stories, both sometimes have contractors run away with the money. I'm guessing that there needs to be a system for how things are paid for, how the contractor and team is paid, and perhaps some sort of installment phase.

How can someone hire contractors to do repairs, make sure there's incentive to get the work done, and not lose money due to crooked handy-men? 

Do you have them sign something in the beginning?

[J Scott]

You should have a contract in place, and if you have concerns about giving money to a contractor upfront, then don't pay until he's started the work.  If a contractor says he needs money upfront for materials, offer to pay for the materials directly.  

If he says that he doesn't want to start without a deposit because he doesn't trust you, then offer to pay him for the first day when he shows up the morning of the first day.  On day two, he gets some more.  Etc.  Until you're comfortable enough to pay him ahead of work completed or he's comfortable enough to hold off on payment.