Bonus for contractor

[Guillermo Oyola]

What are your thoughts on giving a contractor a bonus for finishing a job well ahead of schedule and not going over budget? This is someone that I want to continue to work with and build a relationship. They also are vetted and highly referred by trusted realtor close to our family. I really want to motivate to finish earlier on a flip, so we can start looking for next property.

[Nathan S.]

@Guillermo Oyola Bonuses can be a great way to motivate contractors. I personally wouldn't go overboard where it may set a precedent to do the same on every job. I would make it very clear that it's for a fast and quality job well done. David Greene goes over this topic pretty extensively in one of his books. Prior to the start of the job get an itemized list of all work and materials needed. Ask the contractor how long the job will take to complete. Write up a little contract with the itemized bid he gave you and say that if he finishes early from the agreed upon date, that you will provide a 3%-5%(whatever you feel comfortable)bonus pending your approval on the quality of the work and that there are no mistakes he needs to come back and fix. On the same contract you can also say that any day over the agreed finish date that he will be penalized a certain amount per day. Gives you the advantage of both positive and negative reinforcement and should keep them more accountable and have a more professional and transparent relationship.