How do you pay your contractors?

[Robert Tinker]

Just got my first deal. Now we are ready to renovate. Is it customary to pay contractors anything up front? Most bids came in asking for 50% up front and 50% upon completion.

[Brian Garrett]

I wouldn't give a contractor 50% upfront and 50% upon completion especially if I've never worked with them. It's common for contractors to ask for some money upfront typically to cover the cost of materials. Then moving forwards payments should be on a draw schedule as they complete and sign off on stages of the rehab. It's important to have this documented and agreed upon (via contract) before you give them any money or they begin any work.