Contractors
I hope this isnt a dumb question. But I am interested in purchasing a rehab through a hardmoney lender, which I am going to have to reimburse the contractor through draws out of escrow.
I know you dont pay the contractor until after the work is completed, but I was just wondering is it common to get the contractor to supply the materials, through his funds. Or would I have to pay for the materials upfront?
I am planning on paying according to an estimated quote price, not hourly labor. But how are the cost of materials handled?
Have the contractor supply you with a material list and you handle the purchase of the materials. Good luck.
Keep ion mind that one cost of this is the potential loss of any contractor discounts on materials that he/she may get that you could lose by purchasing them on your own.
I concur with Mike. With some small jobs I have done
turn key but for the most part most contractors have expenses too..........it is not unreasonable for him to be compensated for such.
I have gone a few rounds with lenders (traditional) that have their draw sheets back loaded............the contractor ends up being the bank.
Again, like Mike said.........much has to do with the relationship that you have with them...........the more business you give them as well as paying them within a reasonable manner, the more likely they are willing to work with you.
regards
NC
We are contractors also and what we do is something that works for both us and the client:
We do an upfront deposit - normally 10% at contract signing then we break the rest down by tasks completed. Like dryin roof we draw a percentage, load shingles another draw, shingle and finish roof - another draw, etc.
Typically after any major material is loaded on the site we draw a percentage to cover it especially as some homeowners are not above trying to get a "bonus"