Fix And Flip Real Estate Investing | Do NOT Pay Your Contractor! (Until You Watch This)

Hey, today we're going to talk about creating a payment schedule with your contractor so that you're both on the same page in creating a win-win situation. Coming up next. Once you have selected a general contractor for your project, you will need to negotiate the payment terms on how and when the contractor will be paid. The best way to establish the payment term is to create a payment schedule. Then you want to include this in the contract. Welcome back, I'm Joe. After flipping over 300 homes in a very competitive market, I've decided to create this channel to help the new and experienced investor. Make sure you subscribe so that you don't miss a chance to create the life that you've always wanted through real estate. Let's jump on in. Remember, negotiation is all about finding middle ground, addressing each other's concerns, and establishing terms that are fair and reasonable for both parties. If this is your first flip project, there's a good chance that you and the contractor have never worked with each other. So both of you have concerns and fears about each other. Let's go over some of the fears or concerns that each of you may have. Let's talk about the contractor's fears. First, they can be concerned about not being paid for the work that's being performed. They may be concerned about paying for project costs out of their own pocket. Plus, they'll want to be paid as much as possible as soon as possible. As for the house flipper's fears, you're going to be really concerned with the contractor skipping town with your payment. You're also going to be concerned about the timeline budget, and quality, and you may not want to pay until the work is completed. Do you like these videos on flipping? Hit that thumbs up and comment below yes so that I know that you're with me. The best payment strategy to address these concerns is to create a payment schedule. You're going to break down the budget by category, pay the contractor As he completes certain tasks during the flip. The payment schedule addresses the contractor's concern about paying out of his pocket and gets the job done a lot quicker by getting him paid as soon as the work is completed. Let's touch on 4 key elements to include in your payment schedule. Number 1 are payment milestones, and there's a couple of ways that I handle that. If I hire just a general contractor for the job, Then he's getting paid on a regular schedule for the work that has already been completed. If I decide to kind of step into the general contractor role and hire subcontractors, then I'm paying them as they're completing their work during the flip process. So 2 different ways to handle that. Number 2, payment amounts. So you want to include in the contract with your contractor how much you're going to pay each increment along the way. Keep watching because I'm going to show you how to incentivize your contractor so that they keep working. You won't want to miss this. Number 3, payment timeframe. I like to pay my contractors as soon as their work is completed. They need the money so that they can start doing other parts of the project. So the timelier you can be with payments, the more that the contractor will appreciate that. The 4th thing is payment type. Now that's getting paid cash, check, some sort of an electronic payment. Please understand that even though somebody may be getting paid in cash, At the end of the day, you're going to report that on your taxes and provide them also with a W-9, I'm sorry, a 1099 at the end of the day for the work that they've performed. Okay, here it is. If you want your contractor to stay within the time frame, then you're going to build in an incentive for them to get done early. And you can pay them a monetary amount, whether it's a dollar amount, a specific dollar amount, or a percentage of the project. So what this does, it keeps them motivated to finishing your project on time and on budget. And so if they do that, then let's say you give them a 5% bonus at the end of the day. Making sure that your contractor is paid in a timely manner will ensure that the project is done in a timely manner. But it's more than just handing your money over at the start of the project. You have to remember to protect yourself, your assets, and your timeline. With these 4 elements, you'll be on your way to a highly successful flip. If you're new to flipping and you want to see a project that we just picked up, just click on this video right here. I reveal all my plans on how to get the most profit out of each flip. Make sure you subscribe and feel free to reach out to me anytime.