Down Payments

[emahler]

I have a chain saw and a pickup truck (both are requirements when one is born in West Virginia) and I charged her $250 to cut it down and haul it off. I just took a day off work and doubled my money for that day, plus got firewood as a bonus.

just curious....how much did it cost your company for you to do this? or does it not matter...

 

[speedypetey]

Also, I agree with what Charlie said, as a home owner I would never give a down payment. A contractor that needs a cash deposit to purchase materials is not the guy I want to hire. I know that his supplier will give him at least 30 days to pay for the material after he buys them. If he can't cover his labor for a couple weeks until he is finished, his company can't be that stable.

That is absolutely NOT the point.

I used to feel the same way about down payments. Then after several of my close contractor friends and other folks scolded me for not getting down payments I saw the light.

I don't need the money. I have more than enough credit to buy whatever I need, and more than enough capital to keep working for a few weeks without any income if need be.

It is all about trust and good faith. You give me 20% down on good faith and I will then have the good faith in you that I will get paid for the rest of it.
This is of course on medium to large jobs. A $1000 one day job I'm not going to ask for two checks in the same day.
There are just as many cooked clients as there are crooked contractors out there. So many %#@* folks looking to screw you out of anything they can.
"That receptacle is not the shade of ivory I was expecting. I'm not gonna pay you the last $500 I owe you".

I have built a number of homes, and I have never paid until 100% complete, or a rough-in draw and trim draw in the case of the plumber or HVAC.

I suppose maybe it's a regional thing - luckly people in my region are the trustworthy type.

If you think not paying for something as large as a home until it is done is trust, you are nuts. Actually, the guys getting strung out for several months without pay are NUTS!!

I am NOT a bank. I will NOT finance your job. Logical payments in logical increments is, well......LOGICAL. And this includes a small down payment.




<end_rant/opinion>

 

[drbond24]

Just up the street, we hear a loud bang and boom, they hired a handyman to take down the tree, no insurance coverages, after all what could happen, who knew the tree would take out half the house, and destroy two cars in the neighbors driveway, look at the good side, no deaths or serious injuries, this time.

The tree I took down was small enough and far enough out in the yard that I couldn't have hit anything with it if I had tried.

just curious....how much did it cost your company for you to do this? or does it not matter...

I was working for Uncle Sam at the time. They didn't care whether I was there or not as long as projects were done by their due date.

 

[shockin]

That is absolutely NOT the point.

I used to feel the same way about down payments.

It is all about trust and good faith. You give me 20% down on good faith and I will then have the good faith in you that I will get paid for the rest of it.

<end_rant/opinion>

I appreciate your view point, but I disagree. I fail to see how a 20% downpayment insures that you will recieve the other 80% at completion. You do have the "law" on your side. You have a signed contract or proposal, which will hold up in court, you also have the ability to file a lien if necessary. Shouldn't that be enough insurance that payment will be made.

I should also note that if it was the norm around here to recieve down payments, I would gladly accept them. Who dosen't want the cash sooner.

 

[shockin]

That is absolutely NOT the point.

If you think not paying for something as large as a home until it is done is trust, you are nuts. Actually, the guys getting strung out for several months without pay are NUTS!!

<end_rant/opinion>

When building homes, which is something I do on the side, I don't know why you have the impression that guys are getting strung out for months without payment. In most cases I am happy to meet them on site the day they are finished with a check and a lien waiver. Maybe thats why they show up every day until they are finished. No finish = no money.

I believe I actually show a great deal of "TRUST" in them when I hire them to come do the work without soliciting bids. Most subs are ones I use on a regular basis and trust. For example the plumber is T&M.

Let me ask you this. On larger contracts 500K - 2M do have different terms then I am able to get from generals. Talk about stringing someone out, generals are terrible about payment. There is zero chance of getting a down payment.

How do you handle T&M work. If it's a few day project, and a customer just calls you to come do the work, do you still get a down payment. I'm not trying to be sarcastic or argumentive, I'm just curious.

 

[satcom]

The tree I took down was small enough and far enough out in the yard that I couldn't have hit anything with it if I had tried.

So if the tree cut slipped, and injured or killed you, that is ok? you also put the property owner at risk, when you take on jobs without insurance.

 

[drbond24]

So if the tree cut slipped, and injured or killed you, that is ok? you also put the property owner at risk, when you take on jobs without insurance.

Point taken, but I don't think that way. This wasn't a business I was operating (although at the prices she was quoted, I sure thought about it), it was just one friend helping another. Yes, I could have been hurt but that is true pretty much anytime. Driving, flying, hunting, even sitting on the couch watching Law & Order is dangerous if you consider the inactivity is allowing you to gain weight. I don't burden myself with stuff like that.

 

[growler]

She called a tree-cutting service and they wanted several hundred dollars just to come cut it down and leave it laying in her yard. I have a chain saw and a pickup truck (both are requirements when one is born in West Virginia) and I charged her $250 to cut it down and haul it off. I just took a day off work and doubled my money for that day, plus got firewood as a bonus.

This story would be much better if you had noticed the potential profits made but cutting trees for $250 ea. and selling fire wood. The next day you had went out and started you own tree service and now you are a very successful tree service owner and still only charging $250 a tree.

I can go over and change out one panel for a friend for say $100 in labor but that means nothing. The minute I start to try and make a living changing out panels I have to charge more. It's the same with a tree service. You did a favor for a friend and that's Ok but you can't make a living cutting and hauling trees at $250 apiece.

You should check out what a tree service has to pay for insurance and workman's comp. It's considered hazardous. :grin:

 

[jimmyglen]

this turned into a tread about trees


OK to you guys who dont get a deposit

can I hire you to build me something? I could have you strung out and coming back over and over and over until the job is "done to my satisfaction" and I would never need a bank!

I have wired custom homes that they take over a year to build (no joke)

the men get paid every week and the supplier gets paid every month etc etc


and if you didnt jump when I say jump then I could hire the next guy to take over and never pay you anything - hopefully ou be 90 percent roughed in

 

[480sparky]

....and if you didnt jump when I say jump then I could hire the next guy to take over and never pay you anything - hopefully ou be 90 percent roughed in

I then file a lein on the property and you cannot close and move in. I could also sue for breach of contract and recover damages.

 

[shockin]

and if you didnt jump when I say jump then I could hire the next guy to take over and never pay you anything - hopefully ou be 90 percent roughed in

480 is correct. Why would you get the work done for free or with an extended payment schedule just because you didn't make a down payment?

We've been involved in custome homes that take 1 year to complete as well. But our rough in takes a month, then we get paid. Wait 6 months, then the trim may take 6 weeks, then you get paid again. These homes are always T&M for us. Do require a deposit on T&M?

 

[growler]

But our rough in takes a month, then we get paid. Wait 6 months, then the trim may take 6 weeks, then you get paid again.

I have to ask. How come it takes 6 weeks to trim out a house that it only took a month to rough? :grin: :grin:

 

[shockin]

I have to ask. How come it takes 6 weeks to trim out a house that it only took a month to rough? :grin: :grin:

Funny how that works - It seems that once you have money, you loose the abilty to stick with the decision you made the day before.

No matter to me - their money will soon be mine. But wait, I didn't get a deposit so I guess I will be doing the house for free...

 

[satcom]

Funny how that works - It seems that once you have money, you loose the abilty to stick with the decision you made the day before.

No matter to me - their money will soon be mine. But wait, I didn't get a deposit so I guess I will be doing the house for free...

I think it's just great, that you have eniough money to give some of it away. along with your time, most of us are not that well off.

 

[iwire]

At this point the it has turned into a grounds up grounds down discussion. No right or wrong answers just peoples preference of how they want to run their business.

It makes no sense to me to tell a guy who has a 25-30 year successful business he is doing it wrong and does not know how a business works.

People go into business to do things their own way and if they are not breaking the law and are happy, who are we to criticize?

It's a big country and each area is going to do things in different ways.


FWIW the local power company takes $125 up front and puts it in a bank each year I get the interest from it. I will never get it back as long as I am their customer.

I could have said no but I like having electricity. :grin:

 

[shockin]

I think it's just great, that you have eniough money to give some of it away. along with your time, most of us are not that well off.

Alright,

Lets do some math. Lets say my price for that house is $30K. Fixtures provided by the owner. Again these are very rough numbers with some extreme rounding.

Rough-in = 60% & Trim = 40%. Therefore the rough-in is $18K. Roughly 40% of that is material. That material doesn't have to be paid for becusae you have 30 - 60 days to pay for it. So that leaves me with 10,800 in labor.

If I had take cash out of saving to cover that labor what could I have earned in interest on that 10.8K for 30 days. About $45.00.

 

[480sparky]

...I could have said no but I like having electricity. :grin:

Solar power (PV), wind generation, gas-powered generators........

Heck, even the Professor on Gilligans' Island made a bicycle to charge the radio batteries. :grin:

 

[growler]

If I had take cash out of saving to cover that labor what could I have earned in interest on that 10.8K for 30 days. About $45.00.

So you're saying that an EC should look for a builder, find a barrel and bend over and smile.

That's got to be the worst business advice I have ever herd. No one should ever take money out of savings to cover a job, just for the fun of it or to help the builder out.

If the builder can't afford to pay for the job he should go back to McDonalds. A sub should never finance a job. Can I get an Aman.

 

[peter d]

Solar power (PV), wind generation, gas-powered generators........

Heck, even the Professor on Gilligans' Island made a bicycle to charge the radio batteries. :grin:

Don't forget that people got by on gas lanterns or less for an awfully long time before electricity came along...

But how would Bob be able to post without electricity? You might as well just ask him to kill himself.

 

[speedypetey]

How do you handle T&M work. If it's a few day project, and a customer just calls you to come do the work, do you still get a down payment. I'm not trying to be sarcastic or argumentive, I'm just curious.

Most of my T&M work is for established customers so payment is typically a non-issue.
If the job is expected to be big, like several weeks, or big enough with a new customer that I want to have some security, then I have a T&M contract with terms and conditions.