What type of agreements do you have with your contractors?

[James Heller]

Hi everyone -- I am buying property remotely (in Denver, from San Diego) and beginning to partner with several contractors in the area. Really awesome folks I've gotten in touch with.

I'm curious what type of agreement the more seasoned fix'n flippers use between themselves and their contractors. Do you have a formalized contract, or just a verbal agreement? Do you add language that protects you in case work stalls (or the property is vacant) for several days? What other types of things are you mindful of?

Thanks in advance

James

[Will Barnard]

Agreements should ALWAYS be in writing, never verbal. The contract should include the start date, estimated completion date, price, reference change orders and/or allowances, and should contain some verbiage of penalty for delays within the control of contractor (weather, pandemic, etc. not in contractor's control). You can even add bonuses for completing ahead of schedule which is fair if you include penalties for tardiness. You should ensure they are licensed and have the proper insurance, both worker's comp and liability. You should carry proper insurance for your project and refer to your insurance broker's advice for each individual property scenario.