Paying Contractors on Smaller rehabs
I have got a question on paying your contractors for a smaller rehab. -- Is it best on smaller rehabs to pay your contractors per job or to pay them just at the end of the jobs if it should not take more than 1-2 weeks. This rehab will be only a kitchen update, flooring, paint, and other small jobs. The costs should not exceed a couple thousand
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I agree with bot Jason and Steve. A 10% holdback is good for those contractors you have not worked with a long time and you should not pay upfront beyond what has been completed. Only in the case where you have worked with a specific contractor for a long tie and built a relationship/trust with him should you ever consider giving 50% upfront.
Even with the great relationships I have now, I use a draw format. I pay the material costs upfront and give my contractor weekly draws. Once the job is completed to my satisfaction, the final draw is paid and that is never before I have inspected and been completely satisfied with the work.