Paying for a GC for a flip

[Elizabeth Beard]

I just bought my first fixer upper to flip and now I’m trying to find a GC. I’ve been calling around to leads I’ve found. One asked me today how we planned to pay him. I always assumed a cost plus model but he said that GC’s are too busy and it’s not enough money unless they can be 50% partners on the purchase and the flip. What are best practices for paying a GC for a flip? Any recommendations on finding a GC who’s not going to take me for a ride?

[Evan Polaski]

@Elizabeth Beard, best practices: pay the GC for the job he performs, and you keep all the profit.  I am willing to take the risk and reap the full reward.  I get a bid for the scope of work I need completed.  I pay based on specific milestones as outlined in the contract.  I do NOT pay based on percentage complete, as that is both a red flag that the contractor is bad with money and an easy way to let the GC get ahead on draws.  So if there is demo, I have my GC line item demo cost, rough-in plumbing/electric/framing AND passed inspection, cabinets installed with all pulls, etc.  Milestones that are clear cut either completed or not.

Then I pay them with a check when those milestones are completed.