My Painter wants half down. What's the best way to cover my self?

Investor · Highland, UT · Member since 2018 · 70 posts · 23 votes

I'm doing a small flip on a house 2 hours away in Utah. A fellow BP member gave me a referral of another flipper in the area. I called him about contractor suggestions and he mentioned that his son does painting and other handy man work. This is just what I need! He wants half down for the paint work($2100). He said he accepts Cash and Venmo only(no credit cards). What would be the best way to cover my self here? I think a lot of people would just pay the money but I would like at lease enough information I can go after him if he walks away with my money. I don't have time in my busy day to drive down there and have him sign something. I'd prefer to pay venmo but haven't had experience paying a contractor this way. Any suggestions? thanks. -Ray

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Lynnette E.

Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes

I would not trust someone that you do not have a previous business relationship with and that is not local with a cash upfront payment.

Just tell him you do not pay upfront. Tell him that you want a written agreement. He can sign it and scan it back, or take a photo on his phone and text it back. Tell him that he can tell you what paint and supplies he needs and you can order it on line and pay for it and he can pick it up. And that you will have a friend stop by weekly and for each milestone you decide, primer? Ceilings? Walls? Trim? You will pay so much as he finishes the job with about 15% extra held until the very end so you have enough extra to pay for touch ups, etc or hire someone else if he flakes. And this contract needs a completion date with an interim schedule.

Don't be a sucker! You are hiring the son of a stranger referred to you by a stranger.... We want to think everyone on BP is our friend, but they are not. I have had numerous scammers message me from BP wanting to be partners, wanting me to invest in their whatever...and many have less writing skills that my Nigerian Prince who is going to marry me and make me rich after he gets all his treasures back from his wicked uncle.

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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
You may have to give him a 1099 so get the W-9 info for that. He should be able to provide you with the documentation. If he refuses, find a different contractor.
5 Reply
Ray Loveless
OP
Investor · Highland, UT · Member since 2018 · 70 posts · 23 votes
6y
@John Teachout, I updated the post with some additional details. I still need to call his son but got the impression that he just helps his dad out on flips and doesn't have any official tax documents. I think he would be perfect because I could pay him haul trash out of the place and do any miscellaneous work I need done for this.(
0 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
If I was getting over 2000 of work done I’d want some kind of signed contract stating the scope of the work and terms involved
7 Reply
Stacey Mollinet
Investor · Layton, UT · Member since 2016 · 48 posts · 41 votes
6y
I would ask to mail him a business check for my documentation. Venmo has a clause in their user agreement that says they could reverse the charges if they detect it was used for business purposes, although it would be more a risk to him than to you. You are required to issue a 1099 if you pay him more than $600. If you want him to sign something, you could email an agreement and he could scan it or take a photo of it and send it back to you. Then you wouldn’t need to drive to where he is. You might want to do a weekly video progress update. About 10 years ago, I had an out of state contractor that told me things were progressing when nothing was going on. Once I figured it out and threatened to sue him, I got a local property manager to check on him weekly.

2 Reply
Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
6y
@Ray Loveless
As a contractor, I have a contract that we both sign, wether it’s a $500 or $10,000 job. If he’s not a licensed and insured contractor, you may not want to hire him just based on that, but if you’re ok with it, I’d start off sending maybe $500 and have him send you some pics of work getting done and then send more payments as work gets completed
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Allan Smith
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
6y
Man I'm surprised everyone is so trusting on here so far. 2 hours away and he's a painter? Doesn't look like a good start to me. I always hear of subs running off with advance money like this one wants.
I would offer to pay for paint directly thru the vendor, and offer a payment after a fee days work is completed. All he has is labor in it if you pay for paint. Unless he has a large crew that gets paid daily but I doubt that. So all he has to do is pay his living expenses for a few days while he works and before you pay him. If he can't manage that, I certainly wouldn't trust him to run a painting business very well.
10 Reply
Lynnette E.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
6y
I would not trust someone that you do not have a previous business relationship with and that is not local with a cash upfront payment.
Just tell him you do not pay upfront. Tell him that you want a written agreement. He can sign it and scan it back, or take a photo on his phone and text it back. Tell him that he can tell you what paint and supplies he needs and you can order it on line and pay for it and he can pick it up. And that you will have a friend stop by weekly and for each milestone you decide, primer? Ceilings? Walls? Trim? You will pay so much as he finishes the job with about 15% extra held until the very end so you have enough extra to pay for touch ups, etc or hire someone else if he flakes. And this contract needs a completion date with an interim schedule.
Don't be a sucker! You are hiring the son of a stranger referred to you by a stranger.... We want to think everyone on BP is our friend, but they are not. I have had numerous scammers message me from BP wanting to be partners, wanting me to invest in their whatever...and many have less writing skills that my Nigerian Prince who is going to marry me and make me rich after he gets all his treasures back from his wicked uncle.
12 Reply
William Hochstedler
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
6y
Our policy with subs is that you only get 50% up front if you have general liability insurance, a trade license, and proof of worker's compensation (or a waiver).

Usually with these folks there are two issues: cost of materials and what the worker needs right now. As others have mentioned, you can solve the materials issue by paying for them yourself. In terms of the immediate needs, we often find that unlicensed people have heard of the "half up front" convention and just ask for it because they think it will make them look professional. Usually, the reality is they just need $100 to buy gas or pay a phone bill. It sounds like this guy might be worth a $50-100 risk to get a general laborer that far away. But I like @Allan Smith's suggestion of keeping him on a short leash and paying him frequently as progress is verified. And with painting, make sure you go up there in person early to see the quality.

But do not ever pay an unlicensed laborer 50% up front for labor only . There's a good chance someone like this will be in jail before he makes it to the job site--particularly if he just got a big payday.
4 Reply
Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Ray Loveless Honestly, there are some great recs already.

Tell him that you would prefer to pay for the paint and materials over the phone first, and then see his reaction. If there is a very strong opposition, then just use another contractor.

Note: What you are trying to do here is see if he is legit or not.
0 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
6y
@Ray Loveless obviously this guy is a discount, shade-tree unlicensed painter so many of these suggestions aren’t realistic. As a couple others have said, offer to pay for his initial material and then release money as he completes the job. You’re not going to mitigate all the same risks as with a fully licensed, and insured contractor and that’s ok, it’s the nature of the class you’re flipping or rehabbing and their associated margins
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
6y
There is usually a higher business cost to use those experienced contractors who are properly insured and have a great track record.
One of the few times I see investors get a great rate and high quality work is if either they employ the contractor directly so their jobs are the sole focus or they do lots of volume to give a contractor team consistent work.
It sounds like you are playing in the one off space with an non-certified contractor hours away from where you are. Sounds like the low potential cost of services is luring you in. When investors buy a property it usually is smart to base the rehab and work off of RETAIL rates and see if the project still hits objectives. If to make the deal work everything has to go perfect for work completed in a timely manner and for low fees then the odds of that happening are LOW.
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Account Closed
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
6y
Originally posted by @Ray Loveless:
I'm doing a small flip on a house 2 hours away in Utah. A fellow BP member gave me a referral of another flipper in the area. I called him about contractor suggestions and he mentioned that his son does painting and other handy man work. This is just what I need! He wants half down for the paint work($2100). He said he accepts Cash and Venmo only(no credit cards). What would be the best way to cover my self here? I think a lot of people would just pay the money but I would like at lease enough information I can go after him if he walks away with my money. I don't have time in my busy day to drive down there and have him sign something. I'd prefer to pay venmo but haven't had experience paying a contractor this way. Any suggestions? thanks. -Ray

It makes no difference if you live in the area or are from out of town, getting into bed with a contractor is getting into bed with a contractor. I often think of it as a marriage - lol. Until you build up trust with some contractors, you will have to fly blind, trust your instincts and hope for the best. I do everything in writing. Good luck!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Steve B.:
@Ray Loveless obviously this guy is a discount, shade-tree unlicensed painter so many of these suggestions aren’t realistic. As a couple others have said, offer to pay for his initial material and then release money as he completes the job. You’re not going to mitigate all the same risks as with a fully licensed, and insured contractor and that’s ok, it’s the nature of the class you’re flipping or rehabbing and their associated margins
Steve exactly what U have is owners wanting things done as cheap as possible.. most licensed bonded contractors simply are not going to work as cheap as most landlords want them to work for.. so in this case you have an unlicensed handyman doing work.. in our state you cant give a written bid without a license that would be contracting without a license and subject to fine.
So what most do is simply micro manage the unlicensed contractor if price is the over riding goal.. if doing it correct with licensed insured bonded folks is the primary mission then the price would be different.. and for those folks at least the ones I work with.. we pay Zero up front. and we send out draws once a month if the job takes more than a month and pay on completed work. plus the contractors have their own accounts and they buy the materials not us..
but out in the mid west and other areas were there is simply not enough margin to hire the more expensive guys this is a necessary evil you have to deal with..

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Vince Roddy
Rental Property Investor · Joliet, IL · Member since 2019 · 4 posts · 0 votes
6y
@Allan Smith
Allan, you nailed it. Any serious business contractor would accept those terms. Particularly since we suggested that the paint and supplies be purchased directly by the property owner.
0 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
6y
@Jay Hinrichs yes I Agree, The class of your project, margins, risk tolerance, and expectations will largely determine what type of professional or unprofessional would make the most sense to hire.
Some of these posters seem to think a one size fits all is the only solution and not following their “yellow pages” model of hiring contractors is inherently wrong.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Steve B.:
@Jay Hinrichs yes I Agree, The class of your project, margins, risk tolerance, and expectations will largely determine what type of professional or unprofessional would make the most sense to hire.
Some of these posters seem to think a one size fits all is the only solution and not following their “yellow pages” model of hiring contractors is inherently wrong.
its just a catch 22 hard to have it both ways.. but when you do land that reliable handyman that person is worth their weight in gold or bitcoin or whatever LOL

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Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Ray Loveless
From the sounds of it he isn’t getting a contractor discount anywhere, offer to buy the supplies and have them on site so he’s out nothing to start with. When he’s progressing nicely pay 50%, when he’s done inspect it and pay the rest.
Paint is something that is easy, but absolutely can be done poorly too. I’d give him a room or two and go from there
1 Reply
Steven Lowe
Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
6y
@Ray Loveless do some due diligence on the painter and speak with a few of their references before agreeing to pay them anything. If they check out, its probably ok to give them an advance, especially if you are expecting them to purchase materials.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Usually we have to pay contractors half down (or third down on large projects). Painters are 50/50. I don't like paying up front, but am willing to do it if their references check out. I would ask him to sign a contract and make sure you have his liability insurance and what not.
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Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Ray Loveless I would just buy the paint and materials he needs directly from his local Lowes/HD/or Sherwin Williams and have them there for him to pick up. You can pay over the phone on a card, we do it all the time.
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Samuel Rogers
Contractor · Coeurdelane, ID · Member since 2017 · 73 posts · 34 votes
6y
I am a painting contractor by trade and own a well established company. Do NOT pay the man half down.
Pay him 10% down, and progress payments along the way. Paint and paint supplies are normally 10-15% of any painting project. Once he is halfway done pay him up to 50% of the money owed. Do NOT pay him in full until you have completed a final walk thru and are satisfied.
I always recommend making sure a contractor carries liability insurance (because spilled paint can ruin a lot of things)...
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Patrick Garrett
Real Estate Broker · Trussville, AL · Member since 2018 · 21 posts · 6 votes
6y
@Ray Loveless It’s just good practice to get some type of contractual agreement signed with all contractors.... You can get him to sign electronically if getting physical signatures are not a feasible option...I use DocuSign and AdobePro for almost all of my real estate related contracts...
1 Reply
Russell CazeaultPro Member
Contractor · Osterville, MA · Member since 2018 · 41 posts · 30 votes
6y
@Ray Loveless
As a roofer we typically get 33% with a signed contract. This helps weed out the tire kickers and avoid deadbeats. I could see 50 % for a trade where material costs comprise more than half - like solar or where special order or custom such as kitchens.
Painting however is different - most of the cost is in the labor.
Get another price if he’s not willing to back down from the 50% deposit.
Also consider using someone who is covered by a liability and workers comp policy
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Bill Kramer
Contractor · Evansville, IN · Member since 2019 · 142 posts · 208 votes
6y
I must be weird, I like big juicy paychecks. So I take as little as possible up front.
Example: $4,000 job
I want materials and maybe a hundred bucks for gas. Then the race is on! So if that means a $1,000 deposit and a $3,000 payday then heck yeah baby! I would do that vs 8 $500 payments all day every day.
I can do more with $3000 than I can with $500
Again, I must be a weirdo haha
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Natalie Schanne
Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Ray Loveless - For a flipper, from a TAX standpoint, if you hire someone who you pay more than $600 to in one year (not a corporation and not via credit cards) and you do not 1099 them, then your whole expense ($4000 cost of painting) could be disallowed OR you could get a $500+ fine for failing to 1099 properly. So, you need to get someone who will fill out your 1099 paperwork before you pay him/her more than $600. I also get meticulous cash receipts for the $200/day handyman I pay in cash from time to time. Some handymen will not understand why you need this 1099 form because no owner occupant homeowner will ever ask for it because they cannot deduct the paint job against their taxes.
Definitely do not recommend paying 50% upfront. I worked with an electrician on one house and he was OK and then I paid him 50% down for a $2000 scope of work, he signed the papers and everything, and he ghosted me. After a month, I asked for my money back and he gave me a check that bounced. I had to beg to get him to install a couple of fixtures and would have been better off firing him and hiring someone else because he was chasing that next check to pay TODAYS bills even though he still was supposed to do yesterday’s work. I only have him he money because he said I’ll start tomorrow be done within 5 days and he just came up with excuses and never started.
Also I paid a licensed contractor $8500 to paint my whole house and the paint job is totally mediocre like $4000 paint job (about $1000 of materials). I have drip marks everywhere. They only did one coat when they were supposed to do two because I can see where the coverage isn’t great or uniform. I can see where they spackle behind the paint because they didn’t prime and the sheen is wrong so there are big circles in the walls. My husband paid them the final payment despite my objections so now I have to do it myself to touch up the crap.
If you’re a member of National reia you get 20% off behr paint at Home Depot all day every day. They can go to the pro desk and call you and you can do text to pay or pay w/ a credit card over the phone. If I’m a painter and I don’t trust you yet, I want you to buy the materials and give me some cash by the end of day 1, if I didn’t get anything upfront. if i hire any helpers, I have to pay them immediately. Though I’ve had the I’ve got to pay my guys scam used on me to extract money that wasn’t owed yet. Sometimes it’s a balance because you want them to show up again and finish. Never let them get ahead of you with the money because then you’re more likely to wait and eat their lies than to fire them and hire someone else who will show up and do the work.
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