Here’s a story you’ll hear at every investor meetup: “My contractor took the deposit and disappeared.”
Here’s the story you won’t hear: the investor paid most of the job up front, had no written scope, no schedule and no lien waivers, and visited the house twice in six weeks.
The contractor was the problem. But the system made it possible.
I’m Ben Lovro. I renovate houses across the South Carolina Midlands, and I’ve learned that contractor management isn’t about finding a perfect contractor. It’s about building a process that makes good contractors better and keeps bad ones from hurting you.
The mindset shift: you’re the general manager
On a flip, you are running a construction project. Even if you hire a general contractor, you’re still responsible for the outcome — the budget, the schedule, the quality and the sale.
That means you need four things in writing before anyone swings a hammer:
- A scope of work
- A schedule
- A draw schedule
- Proof the contractor is legitimate
Let’s take them in order.
1. Write a scope of work that leaves nothing to interpret
A scope of work is a room-by-room list of every task and every material. Not “redo the bathroom.” Something more like:
- Remove existing tub surround, vanity and toilet; haul off debris
- Inspect and repair subfloor around toilet flange as needed
- Install new tub surround (specified product), new vanity with top (specified size and finish), new toilet
- Replace supply lines and shut-off valves
- New exhaust fan vented to exterior
- Paint walls and ceiling (specified color and sheen)
The test: if you handed it to two different contractors, would they bid the same job? If not, it’s too vague.
Your scope comes straight from your repair walk-through. I organize mine the same way I estimate — by system — so nothing falls through the cracks. That method is on the estimating rehab costs page.
2. Get bids against the same scope
Send the same scope to at least two or three contractors. Ask them to price it line by line, or at least by room and trade. Now you can compare honestly.
When bids come back, the cheapest one isn’t automatically the winner. Ask:
- Did they bid everything in the scope, or quietly leave things out?
- Can they start when they say, and do they have the crew to finish?
- Will they commit to a written timeline?
- How did they answer when you asked about change orders?
The cheapest bid that turns into change orders and delays ends up being the most expensive job on the street.
3. Vet them: licensed, insured, referenced
Before anyone works on your house:
- License — confirm they hold any license your state requires for the work. In South Carolina, the SC Department of Labor, Licensing and Regulation oversees contractor licensing; check status at llr.sc.gov.
- Insurance — get a certificate of insurance showing general liability and, where applicable, workers’ compensation. Call the agent to confirm it’s active.
- References — talk to at least two recent clients, ideally investors. Ask about schedule, communication and how problems were handled.
- Trade licensing for specialty work — electrical, plumbing and HVAC often require their own licensed trades and permits.
- A small test job — when possible, start with a smaller project before you hand over a whole house.
This isn’t paranoia. If an uninsured worker gets hurt on your property, it can become your problem.
4. Set a written schedule with milestones
A schedule turns “we’ll get to it” into accountability. Break the job into phases:
- Demo and cleanout
- Rough-ins (plumbing, electrical, HVAC) and any required inspections
- Insulation and drywall
- Cabinets, counters and trim
- Flooring
- Paint
- Fixtures, appliances and final connections
- Exterior and curb appeal
- Punch list and final clean
Put a target date on each phase. Know your holding cost per day so a slipped milestone has weight. I explain why that daily number matters on how to flip a house for beginners.
5. Tie every draw to completed work
This is the most important rule on the page. Pay for work that’s done. Not work that’s promised.
Build a draw schedule that maps to your milestones:
- Each draw is released when a defined phase is complete and you (or your lender’s inspector) have verified it.
- No draw for a phase that’s half done.
- A final portion is held until the punch list is finished and the house is clean.
If materials need to be purchased up front, consider buying them yourself or paying the supplier directly so the money goes where it’s supposed to.
If you’re financing with a hard money or private lender, they’ll often have their own draw process with inspections. Line your contractor’s draw schedule up with your lender’s so you’re never stuck in the middle. More on that on the financing a flip page and on hard money loans.
6. Collect lien waivers with every payment
A lien waiver is a document from the contractor (and ideally from major subs and suppliers) confirming they’ve been paid for the work covered by that draw and waiving their right to file a lien for it.
Why it matters: if your contractor doesn’t pay a sub or a supplier, that party may be able to file a lien against your property — even though you paid the contractor. Lien waivers protect you. Your closing attorney will care about them at sale. Have an attorney show you the right forms for your state.
7. Demand daily photos and visit often
Ask for photos at the end of every workday — from the same spots each time, so you can see progress. A crew that’s working has no problem sending pictures. A crew that goes quiet is telling you something.
And show up. Unannounced visits, scheduled walk-throughs at every milestone, and a final walk with the punch list in hand. You catch problems while they’re cheap to fix.
8. Handle change orders in writing
Surprises happen. When the crew opens a wall and finds rot, you’ll need a change order. Rules:
- No extra work without a written change order that describes the task and the price.
- Ask for photos of the problem before you approve.
- Track every change order against your contingency so you always know where you stand.
9. Keep the relationship good
A system isn’t the same as being difficult. Pay on time when work is done. Communicate clearly. Make decisions fast so the crew isn’t waiting on you. Good contractors want to work for investors who have their act together — and when they find one, they keep showing up.
If you build that reputation, you’ll have crews who want your next job. That’s how flipping scales.
Systems beat heroics
Two deals is luck. Twenty is a system. Every rule on this page — scopes, schedules, draws, waivers, photos — is a piece of an operating system for your business. That’s the same thinking behind the systems site and the tools I built into REI Boss.
Your next step
Take the next house you’re looking at and write the scope for one room — the bathroom is a good start. Make it specific enough that two contractors would bid the same job. Then post it in REI Skool and ask other investors what you missed. You’ll learn more from that one exercise than from a week of videos. And when you’re ready for the full flip sequence, it’s in the flipping houses guide.
Questions people ask
Where do I find contractors for house flipping?
Ask other investors who they use and who they fired. Ask the supply house counter staff which crews pay their bills and show up. Look for active job sites in your target area and talk to whoever is working. Then vet every name — license where required, insurance, references, and a small test job.
How should I structure a contractor draw schedule?
Tie each draw to a defined, inspectable milestone in the scope of work — demo complete, rough-ins passed, drywall hung, and so on. Pay only for completed work, collect a lien waiver with each payment, and hold back a final portion until the punch list is done.
Should I pay a contractor a big deposit up front?
Be very careful. Large upfront payments remove your leverage and are the most common way investors lose money to contractors. If materials need to be ordered, consider buying them yourself or paying the supplier directly.