Rehab Contractor Management: Keep Flips On Schedule

Your flip stalls when a contractor ghosts you or adds surprise costs. Deals bleed cash every day a project sits. Tight rehab contractor management keeps timelines and profit on track.

Hire right with a clear contractor vetting checklist

Banks move slow. Self employed investors often hear no. You cannot afford crew problems too. Start strong with a simple, repeatable screen.

• License and insurance: active license for the trade. General liability at $1M. Workers comp or a state waiver.
• Portfolio: three recent jobs like yours. Before and after photos. Addresses you can drive by.
• References: two owners and one supplier. Ask about speed, quality, and change orders.
• Crew size and subs: who shows up daily. Which scopes are subbed out.
• Permits: who pulls, timelines, and inspector relationships in that city.
• Cash flow: can they float materials until draws hit. Many cannot.
• Paper trail: sample invoice, lien waiver, and schedule from a past job.

Most hard money lender contractor requirements match this list. Expect a W 9, COI with your entity named, a signed scope, and a draw schedule. Have these ready to avoid delays. If your budget is still loose, use a detailed line item approach. See this guide on accurate rehab cost estimates to tighten numbers before you hire.

Write a scope and schedule that leaves nothing to guess

A clear scope stops finger pointing. It also speeds underwriting and draws. Build a simple scopes of work template you can reuse.

• Project overview: address, target buyer, target ARV. ARV means value after rehab.
• Trade by trade scope: demo, framing, MEP, drywall, paint, flooring, exterior, punch.
• Materials list: brand, SKUs, finishes, quantities, and who supplies them.
• Inclusions and exclusions: hauling, permits, daily cleanup, protection, and dump fees.
• Milestones with dates: start, rough in complete, inspections passed, finals, punch.
• Quality standards: city code, manufacturer specs, and specific tolerances.

Set dates you can track. Call these your rehab project timelines. Do not write “ASAP.” Use real weeks and days. For example: demo 5 days, rough framing 7 days, MEP rough 10 days, drywall 8 days, finals 6 days.

Enforce contractor timelines with simple, fair terms

• Start date and completion date with a 5 day grace period.
• Liquidated damages: $150 per late day after grace, capped at one draw.
• Retainage: hold 10 percent until final inspection and lien waivers.
• No payment for stored materials without photos and receipts.

Add a tight change order control process. It protects budget and speed.

• All change orders in writing with photos and cost impact.
• State added days and which milestone moves. No hidden delays.
• Owner approval before work starts. No retroactive charges.
• Cap total changes at your contingency, usually 5 to 10 percent.

Need a clean workflow from offer to close to demo. Use this fix and flip process checklist to align vendors and financing early.

Pay by progress, not promises, using a rehab loan draw schedule

Front loading payments kills control. Pay for finished, inspected work only. Your lender will like that too. Build a rehab loan draw schedule that fits real checkpoints.

• Draw 1: Demo complete and site protected. 10 percent.
• Draw 2: Framing and structural work complete. 15 percent.
• Draw 3: Rough plumbing, electrical, and HVAC passed. 20 percent.
• Draw 4: Insulation and drywall hanged and taped. 15 percent.
• Draw 5: Cabinets, tile, trim, and paint complete. 20 percent.
• Draw 6: Flooring, fixtures, exterior, and finals passed. 10 percent.
• Retainage: Punch list done, lien waivers collected. 10 percent.

Most private lenders inspect each draw. Many fund within 2 to 3 business days after approval. Plan cash to bridge that window. If you use a fix and flip loan with up to 90 percent LTP, you bring less cash to close. LTP means percent of purchase price funded by the loan. Some programs also finance 100 percent of rehab costs. That pairs well with progress based draws.

Set a tight progress inspection checklist

• Percent of scope complete by trade since last draw.
• Code inspections passed. Keep copies onsite and in a shared folder.
• Photos with close ups of critical items, like shower pans and panels.
• Materials onsite. Count boxes, verify SKUs, and note storage.
• Cleanup and protection in place. Floors and new windows covered.
• Open items and punch list from prior visit closed out.

Use simple tools. A shared folder, dated photos, and a two column punch list. Left side is the issue. Right side is the due date. Keep it current at every visit.

Communication that keeps crews moving

Your crew wants quick answers. Give them a set rhythm. Keep it short and consistent.

• Weekly site walk: same day and time. 30 minutes max. Decisions made onsite.
• Midweek check in: a five line text with status, blockers, and deliveries.
• Shared calendar: inspections, deliveries, and city holidays added upfront.
• Decision channel: one text thread for field changes and approvals.

Simple templates you can copy

Weekly update text: “123 Maple. This week: finish tile, trim paint, set vanities. Blockers: inspector Thurs, sink backordered to Fri. Needs from me: approve vanity swap by 2 pm.”

Change order request: “CO 07. Move can lights to align with island. Cost +$240 labor, +0 days. Photo attached. Approve to proceed Y/N.”

Delay notice: “Crew short two days due to rain. New siding finish date 6/14. No other dates move.”

When banks want tax returns, your project can sit. If you need speed and no income docs, see how fix and flip financing without tax returns works so draws start on time.

Red flags and fast fixes

Watch for warning signs early. One late day can become two weeks. Protect your timeline and budget.

• Invoice misaligned with the draw schedule. Pause and reconcile before paying.
• Frequent material “shortages.” Require receipts and labeled onsite storage.
• Skipped permits. Stop work until the permit is pulled.
• No shows after deposit. Enforce terms. Shift scopes to a backup crew.

If you must replace a contractor, document work complete with 100 plus photos. Get a partial lien waiver for work paid. Bid remaining scope with two backups within 48 hours. Update milestones and notify your lender the same day.

Frequently Asked Questions

What is a fair contractor payment structure for a cosmetic flip?

Keep deposits small, often 0 to 10 percent, only after permits are pulled. Then use 4 to 6 progress payments tied to visible milestones. Hold 10 percent retainage until finals and lien waivers. Most draws fund within 2 to 3 business days after inspection.

What do private lenders usually require from my contractor?

Typical hard money lender contractor requirements include a W 9, license, and a COI showing $1M liability and workers comp or a waiver. Lenders also want a signed scope, a rehab loan draw schedule, and a lien waiver form. Some ask for two references and a project timeline. Having these ready can shave several days off closing.

How can I enforce contractor timelines without blowing up the relationship?

Write dates into the contract with a 5 day grace period. Use small daily liquidated damages, like $150 per late day, capped at one draw. Pair that with a 10 percent retainage. Reward on time delivery with fast approvals and same day inspection requests.

What should my change order process look like?

Use a one page form with photos, added cost, and added days. Require written approval before work starts. Cap total changes at 5 to 10 percent of budget. Track CO numbers by date to prevent confusion, for example CO 01 to CO 10.

How long should a standard rehab take?

Cosmetic turns often run 4 to 6 weeks for 1,200 to 1,800 square feet. Full gut jobs can run 12 to 20 weeks, especially with layout changes and permits. Exterior heavy projects can slip in winter by 2 to 4 weeks. Build float days for inspections and weather.

How do inspections and draws usually work?

You request a draw when a milestone is done. An inspector or lender rep visits within 24 to 72 hours. Funding often hits in 2 to 3 business days after approval. Plan cash to bridge that 3 to 5 day gap so crews keep working.

How do LTP and ARV affect my budget and scheduling?

LTP means loan to purchase. A loan at 90 percent LTP lowers your cash at close. ARV means after repair value. A higher ARV can allow larger rehab budgets, but only if the scope, comps, and schedule support it.

If you want to talk through your specific deal, our team can review your scenario and tell you what fits. Reach out to Diplomat Property Loans to start the conversation.