Fix and Flip Academy: Chapter 6 — How to Select and Vet Your Contractor

Fix and Flip Academy: How to Select and Vet Your Renovation Contractor

Your contractor is the single biggest variable in whether a fix-and-flip project finishes on time, on budget, and at a quality level that commands top dollar at resale. This chapter covers how to find and vet your first contractor — and, critically, how to manage them throughout the project using your lender’s draw schedule as a built-in accountability framework. For a deeper dive into contractor red flags, lien waivers, and contract specifics, see our standalone guide: How to Choose the Right Fix and Flip Contractor.

Where to Find Investor-Experienced Contractors

The most common mistake first-time flippers make is hiring a contractor who primarily does homeowner remodels. Homeowner contractors optimize for custom finishes, client preferences, and open-ended timelines. Investor contractors optimize for cost-per-square-foot, speed to completion, and renovation choices that maximize resale value. These are fundamentally different skill sets. Start your search by asking other investors in your market — attend local REI meetups, join investor Facebook groups in your metro area, and ask your real estate agent and lender for referrals. Private lenders like LYNK Mortgage work with hundreds of investors and contractors across multiple states, so your loan officer can often point you toward contractors who are experienced with the draw schedule and inspection process.

When interviewing contractors, ask specifically for 3–5 recent fix-and-flip or rental renovation projects (not custom homeowner remodels). Drive by those properties or look them up on Zillow to evaluate the finished quality and check how quickly they sold. Call at least two references and ask direct questions: Did the project finish on time? Were there change orders? Would you hire them again?

Verify Licensing and Insurance Before Signing Anything

Go to your state’s contractor licensing website and confirm the contractor holds an active, unexpired license. Check how long they’ve held it — contractors licensed less than three years warrant extra scrutiny. Beyond licensing, verify that they carry general liability insurance (minimum $1 million per occurrence) and workers’ compensation coverage. If an uninsured worker is injured on your property, you face a potential lawsuit. Ask for certificates of insurance and verify them directly with the insurance carrier. Your fix-and-flip lender will likely require proof of contractor insurance before approving draw requests, so this step is both a safety measure and a financing requirement.

Get Bids and Written Contracts Before Closing

Get written bids from at least two contractors before you close on the property. Each bid should itemize every line of work with specific materials, quantities, and costs — not vague descriptions like "renovate kitchen" or "update bathrooms." The scope of work should specify cabinet brand and style, countertop material, flooring type and manufacturer, fixture models, paint colors, and number of coats. This level of detail serves three purposes: it protects you from scope creep and unexpected costs, it allows you to compare bids accurately, and it’s what your lender will require when reviewing draw requests for reimbursement.

If a contractor can’t put together a detailed written proposal, that tells you something about how they run their business — and it’s rarely good news. Move on to another candidate.

How the Draw Schedule Works with Your Lender

If you’re using a fix-and-flip loan with a rehab holdback (which is how most private lenders, including LYNK Mortgage, structure renovation financing), your contractor payments will be tied to a draw schedule managed by the lender. Here’s how it works: the lender holds your renovation funds in escrow and releases them in stages as work is completed and verified through inspections. A typical draw schedule looks like this:

Draw 1 — Demolition and rough-in complete (30-40% of rehab budget): Demolition finished, framing modifications done, rough plumbing and electrical installed. The lender’s inspector verifies the work matches the approved scope before releasing funds.

Draw 2 — Mechanical and finish work in progress (30-40% of rehab budget): Drywall hung and finished, cabinets and countertops installed, tile work complete, paint in progress. Another inspection confirms completion before the draw is released.

Draw 3 — Final completion (remaining 20-30%): All work complete, fixtures installed, final cleaning done, property ready for staging and listing. Final inspection confirms everything matches the scope of work.

This draw process is your built-in accountability system. The contractor doesn’t get paid until the lender’s inspector verifies that the work described in the scope has actually been completed. This protects you from paying for incomplete or substandard work and keeps the project moving forward on schedule. Make sure your contractor understands and is comfortable with this process before you hire them — contractors who resist lender inspections or demand payment outside the draw schedule are waving a red flag.

Payment Structure: Protect Your Cash

Never pay more than 10% of the total contract value upfront as a deposit. A reputable contractor has credit lines with suppliers and vendors and can begin work without a large cash advance. Your lender’s draw process will fund the majority of the renovation costs as work is completed, but you’ll need cash available for the initial deposit and any out-of-pocket costs that exceed the lender’s rehab holdback. Budget for this cash requirement before you close — if your total rehab budget is $45,000 and your lender covers $40,000 through the holdback, you need $5,000 in cash for the gap plus $4,500 (10%) for the contractor’s deposit.

Managing the Project: Stay Involved

Hiring the right contractor and having a lender draw schedule in place doesn’t mean you can disappear until the project is done. Visit the property at least once a week during active renovation — twice a week during the early demolition and rough-in phase when the most surprises (hidden plumbing issues, electrical that doesn’t meet code, structural problems behind walls) tend to surface. Document the property’s condition with photos at every visit. If unexpected issues arise that require changes to the scope of work, discuss them with your contractor immediately and get a written change order with the additional cost before approving the work. Change orders that aren’t documented in writing lead to disputes at the end of the project.

Track your project timeline against the original schedule. Every week of delay adds $500–$750 in holding costs on a typical financed flip (interest, taxes, insurance, utilities). If your contractor is consistently behind schedule without a legitimate explanation (material delays, permit issues, weather), address it directly — and if necessary, be prepared to bring in a second contractor to complete specific trades. Your goal is a completed renovation in 8–12 weeks for a typical cosmetic rehab, not an open-ended project that drains your profit through holding costs.