Deposit AGAIN

go do it

i know this has been covered before BUT!

it looks like i have a remodel coming up in a month or so, whenever the architect finishes the plans.

i have no contract yet but i have the job.

my question is the project is going to be 285k or 300k to build. most of the time i get 1/3 deposit but a deposit of 100k at contract signing may sound a little overboard to the homeowner.

what are some opinions. should i get a smaller deposit because of the price of the project? they are getting a loan so as soon as they start useing the money the intrest clock starts ticking.

just trying to save them some intrest payments.

HUDSONVALLEYEXT

If its a loan I don't see a bank giving them more than 30k to start. What are you doing for all that money building a new house onto their current one? LOL

KillerToiletSpider

For a small job like that we would get 15% upfront, with a draw due at 50% completion of the rough.

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go do it

almost a new house!

we are adding a second floor

a lot of demo though

and the architect has some pretty high dollar specs

so 100k deposit is to much?

i think it might be

bigchaz

Set stages to get paid 4-5 times throughout the job. Maybe 10-15% up front and 15-20 percent at different stages of completion. By the time job is done have them only owe you 20 percent or something

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Charlie Soden
Apex DeckSavers
"New life for old wood"
Deck cleaning and staining Wake County

Mike Finley

I'd go just the opposite. Way more payments like 15-20 over the project.

Take a $10k deposit, then a big one at start to cover mateirals, then key them into logical phases, foundation, framing, rough elec, rough plumbing, roof... etc... key them to inspections... keep the last deposit only as large as you are comfortable never seeing. Can you take a 20k hit at the end? $1500 sounds more like it to me.

If this is going to be paid by a construction loan, there's more to it then just thinking it's time to get paid. The bank is going to dictate payments.

skyhook

1/3 or 50% up front is not out of line. What happens if the HO goes belly up and leaves you with 100K subs and materials to pay out? Typically, you will need to have everybody and everything from start to finish lined up in order to stay on the critical path. CYA.

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dirt diggler

why no contract??

(can't see anywhere where you mentioned the reason)




interest time clock??

bigchaz

Thats what I had in mind, I just had no idea how many stages are involved in those type projects.

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Charlie Soden
Apex DeckSavers
"New life for old wood"
Deck cleaning and staining Wake County

go do it

dirt

i don't have a contract yet because i don't have the final set of plans from the architect.

i did a pre-bid on a set of plans that were 95% complete to see if we were on track as far as cost to the homeowner. we were and pretty much got the job right there and then. but i will wait and get the final plans and then check my numbers and then get a contract signed.

i don't know what a bank calls it when a customer activates a loan as far as draws go. so i just said "intrest time clock" or when you get a draw you start paying intrest on what has been withdrawn from the loan.

i will probably hit them up for 50k as a deposit and then structure the draws in progress payments and leave very little at the end like mike said.

i have worked with banks before and undrstand the draw process. it is just the deposit on this large of a project i was fuzzy on

it should be a fun job

but the homeowners think they are going to live in the house the whole time construction is going on. sometimes with no ac. it gets hot here in albuquerque.

they said that as long as we keep the cats happy everything will be fine. damn cats.

TigerFan

We break out large contracts as follows:

12% to 25% up front - the more the better.

then we fill in the back end: 5% (3% due at substantial completion and 2% due at final completion)

then we fill in the draws, typically 4-8 draws, by taking the remaining money and dividing it by the number of draws: I try to get 1 to 2 week draws depending on the length of time we estimate to be on the job. Up to 60 days, a draw every week, 60+ a draw every other week.

That has worked "ok", but I find that early on I'm hurting for the big ticket items, plumb, elec and mech. So, I'm considering modifying this a bit.

Ex would be:

$120,000.00 job: 60 days, 15% up front, 6 draws

Pay schedule

$120,000.00 Enter total contract here


$18,000.00 15% Init
$16,000.00 7th 1st draw
$16,000.00 14th 2nd draw
$16,000.00 21st 3rd draw
$16,000.00 28th 4th draw
$16,000.00 35th 5th draw
$16,000.00 42nd 6th draw
$3,600.00 Sub Substantial
$2,400.00 Final Final

$0.00 Remaining balance

tf

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Luke

Many of our jobs are this type of large renovation project. Each project is unique, but generally we set up a payment schedule similar to this: 15% downpayment due at signing of contract
25% due upon completion of demolition, base framing (roof
papered-in

Luke

Hit the wrong button.....continuing with the payment schedule 25% due upon completion of rough mechanicals, electrical, insulation and hanging of drywall (not finishing, hanging), 15% due upon completion of window/door installation and exterior closure (siding/ext. trim), 15% due upon interior trim completion and balance due upon completion of the work. Obviously each job schedule gets tweaked depending on if a kitchen is included and you have large cabinet costs, large bathroom expenditures, etc. In general, we try to space the payments out so that they fall in a fairly regular time pattern but are also easy to understand for the customer. They should be able to easily see that you have reached the agreed-upon benchmark. Yes, the addition is under roof and the felt paper installed. Payment. Yes, the rough-ins are complete, the addition is insulated and the drywall is hung. Payment. Etc,Etc. Never have more than 5% due for the final payment. If banks are involved then they tend to dictate the schedule a little bit but you still should have a lot of input.

go do it

yea i think a 15% deposit @ signing sounds fair to me also.

then structure payments on % of job completion.

we will be putting in runtal h/w baseboard and i will need to order that right away because it will take 2 weeks for it to come in

so some of that deposit is already spent.