Higher End and New Constructuion Question

[Greg P.]

Hello all, I'm looking to build a couple houses with the same contractor I've been using for rehabs. The average rehab costs is around $35k, but these higher end houses and new construction ranges from $120-160k. He's asking for money up front. On smaller projects, I'd pay him ever week after work has been done, but since this is a larger project, he says he needs money up front for the project not to stall. Should I give him money up front or stick to my guns about giving him money as we always did after work is done? Please advise as this is a new level of real estate I'm venturing into.

Thank you.

[Steve K]

It's not unusual for a home builder to require money up front. There is a lot of time and effort involved in bringing a new house out of the ground and expenses add up quickly with new construction. When I build for other people I always require 10% of the project upfront.

On another note in my experience it's rare that a small contractor who is used to doing minor rehabs is going to make a good homebuilder unless they've done it several times before.