Developer · Chatham MA · Member since 2014 · 32 posts · 6 votes
How do you incentivize the rehabber to prioritize the transaction over other business or personally held rehabs?
Has anyone kept the property in an investor’s name and then wired progress construction payments to a separate bank account in control of both the rehabber and investor?
Any feed back on above or other suggestions for a successful agreement and outcomes?
I'm an investor, contractor, and agent out of New Haven county.. with that experience I would say if possible the goal is to get a contractor that is professional and understands the opportunity he or she has on the project first.
- (From a contractor's perspective) Depending upon my work scheduled, I would prioritize the work that has the greatest upside, while factoring in the customers who I have already scheduled (who will wait, who won't, who do I want to really deliver great service to, who might I be ok with letting go)
- You can also make this part of an agreement if you really wanted to. Have a formal document you both agree to and sign that details terms including that your contractor works on your project full-time, and no other work until it's completed. Might be tough to find someone to agree to it, but it's an option.. everything is negotiable.
- You might have already done this, but another tactic is to just be very thorough and detailed about the structure of your payments to the contractor, and making sure they understand it. Again... assuming the contractor is professional, they should be incentivized further when they see after Phase 1. is completed they get 20%, Phase 2., additional 20% released, etc.. Included would be details about what work exactly needs to be to complete each phase.
At the end of the day, sometimes there is still a lingering stigma of contractors not liking investors, and investors not liking contractors. Ultimately I think you have to employ the hire slow, fire fast technique until you find the right contractor that you work well with.
Investor · New York City, NY · Member since 2013 · 1k+ posts · 269 votes
6y
We typically sign profit sharing agreements with our Project Managers /partners. We find that’s the best way to insure safety for everyone. It really comes down to building a relationship.