On a value-add 1-4, the rehab budget gets most of the attention, but the payment schedule is what protects it. A contractor who is paid ahead of the work has less reason to finish on time. Here is the draw structure I like to set before demo day:

1. Scope first, then schedule. Each draw ties to written line items in the scope, not a calendar date or a guess at percent complete.

2. Small start-up payment. Enough for mobilization and first-phase materials, not a big chunk of the contract.

3. Milestones you can see: demo and haul-off done, rough-ins in, drywall hung, finishes installed, punch list closed.

4. Inspections before walls close. On permitted work, the passed rough-in inspection is part of the draw request. Photos of plumbing, electrical and framing go in the project file either way.

5. Lien waivers with every draw, from the GC and, on bigger draws, from major subs and suppliers, so you never pay twice for the same work.

6. Retainage until the end. Hold back a final payment until every punch item is signed off and the final inspection is in hand.

7. Change orders in writing and priced before the work starts.

None of this is about distrust. Clear milestones make good contractors easier to work with.

How do you structure draws on your rental rehabs: milestone-based, weekly, or something else?

BJ Everson | Columbus investor and Realtor with Swiss Realty Group