All Forum Posts by: Adam Talbot

Thanks @Seth Elliott and @Andy Webb for sharing your experience. @Seth Elliott

@Seth Elliott- To answer your question, the majority of the GCs wanted payment for ~30% of the total project up front. Some wanted a little more and some a little less, but that was the average. From there, they all had slightly different payment schedules that they preferred, but the consistent theme was that they wanted to be paid each tranche in advance for the work that they would complete rather than being paid upon completion. 

Hey all,

Quick question about general contractors. I have heard from several seminars, meet ups, mentors, etc. that one of the biggest mistakes new investors make is that they pay contractors money up front and end up getting ripped off (the contractor never does anything and just takes their money and runs). Many experienced investors have told me to never do this and to only pay upon completion of all or a certain percentage of the project as agreed upon with the contractor at the beginning of the project.  

I went into my first large rehab project with this approach, met and walked the house with 10+ different general contractors, and they all told me that that payment arrangement would never work for them and that it would be impossible to find a GC here in San Antonio that would be willing to do that. After weeks of contacting and interviewing GCs, we ultimately had to hire subcontractors and act as the GC ourselves in order to pay upon completion.

Is this one of those things where theory is just not the same as reality? Is it just specific to this market (San Antonio)? Or did I just not persevere long enough to find the right GC?

I am just wondering how I should approach future projects and if it is even reasonable to expect GCs to take on the risk of completing a percentage of the work without receiving any money up front and trusting that I, the investor, will pay them upon completion. 

Any thoughts/advice would be greatly appreciated!!

Thanks in advance.