How to determine when to Pay GC or contractors on Rehab

[Buyan Thyagarajan]

Hi Guys,

I am currently in the process of doing Rehabs on my 2 single-family homes around Philly. I had a bad incident where a contractor ran away in the middle of the construction and I have hired a new company who is working on the 2 projects now. I have made some payments for the initial advance and demo and currently, they are working on the house. My rehab is simple where I am replacing the floors with LVP, repainting, adding a half bath, kitchen redo, and bathroom redo. I had paid close to 50% on the first project and the contractor is asking for a payment. How do you guys set milestones on rehab projects and how do you determine project progress like 30% done, 50% done, etc? How do you determine when to pay the GC on payments? Do you have any project management templates in excel or any other tool which could help?

Buyan

[David Krulac]

We will rarely, and I mean very rarely will pay in advance.  Usually we pay in full when work is completed satisfactory.  Sometimes we will pay for materials and have directly delivered to job site. Contractors and subs must sign a Stipulation Against Liens. Occasionally we will have draws usually 4 draws with the largest draw being the final draw, when work is complete. Divide the work into 4ths and pay the draw when that portion of the work is completed satisfactory. Using that method, you are never paying in advance.  We have lots of contractors, who we have used for years, some decades.  And we always pay very promptly.  There is one contractor, we use who requires payment daily, which we accomodate.