First Flip: Contractor Bids, Scope, and Draw Plan

A contractor’s price is only the start of a first flip’s repair plan. Before work begins, you need to know what the price includes, when each task can finish, and what evidence supports the next payment.

Use the first-flip readiness worksheet to record the contractor questions still open. Then connect three documents: the contractor agreement, your detailed scope of work, and the proposed lender draw schedule. They should describe the same project with totals and dates that agree.

Give every bidder the same starting information

Prepare a room-by-room list of the work you want priced. Include dated photos, known defects, the intended finish level, and any inspection reports available. Arrange lawful property access so contractors can review conditions themselves.

Separate confirmed work from questions. “Replace the damaged kitchen floor” is a proposed task. “Determine whether the floor damage extends into the framing” is an investigation that could change the scope. Ask who will evaluate it and how the findings will be priced.

The FTC recommends checking contractor credentials, obtaining multiple written estimates, and asking why prices differ. Its guidance addresses home improvements for consumers. Use those hiring practices as a starting point, while verifying which laws and contract requirements apply to your investment project. FTC contractor-hiring guidance

Compare complete scopes before comparing totals

Create one comparison sheet with the same rows for each bid. Mark every row as included, excluded, allowance, or unresolved. An allowance is a budget placeholder; ask what happens when the actual selection costs more or less.

Here is a hypothetical bid comparison, with invented amounts for illustration. Assume both contractors have quoted the same defined work and finish level, except for the listed exclusions.

Comparison item	Bid A	Bid B
Quoted total	$46,000	$50,000
Disposal excluded from quote	$2,000	Included
Permit-related costs excluded	$1,500	Included
Appliances excluded	$3,000	Included
Comparable planned total	$52,500	$50,000

Bid A becomes $46,000 + $2,000 + $1,500 + $3,000 = $52,500 after the listed exclusions. Bid B is $2,500 lower on that basis. These are planning comparisons, not local cost estimates. Confirm the missing prices with actual quotes and clarify allowances before choosing.

Also compare availability, supervision, and relevant experience. A lower complete price does not answer whether the contractor can perform the agreed work on your schedule.

Check who will actually run the job

Ask for the legal contracting name, the daily site contact, the planned crew, and the trades to be subcontracted. Request references from completed projects similar in size and repair type. Ask those owners how changes were handled, whether the contractor returned for corrections, and who communicated delays.

Verify required licenses or registrations with the relevant state or local authority. Request insurance evidence and have the appropriate insurance professional confirm the coverage needed for the work. The FTC advises checking licensing and insurance and reviewing a written agreement before committing. Requirements vary by location. FTC contractor-hiring guidance

Discuss investment-property use, vacancy, and renovation with your own insurer. Keep contractor coverage and the property’s coverage as separate questions to resolve.

Turn the selected bid into measurable work

Assign a simple identifier to each scope item and reuse it in the contract, schedule, photos, and draw requests. Start with the scope of work guide for the full format.

For each item, record:

• The room or location and work to be completed.
• Quantity, material specification, labor, and installed price.
• Who supplies materials and what the price excludes.
• Any allowance, unresolved condition, or professional review needed.
• The evidence that will show the task is finished.

For example, replace “bathroom update” with a list covering the named fixtures, flooring area, finish materials, installation, and cleanup. Let the qualified contractor specify technical work. You are organizing the agreement, not designing electrical or structural repairs yourself.

Use the lender’s required budget categories when submitting. If the contractor combines two categories, attach a reconciliation showing how the combined amount maps to the submitted scope. Preserve the original bid so the numbers remain traceable.

Put permits and specialist work before dependent tasks

Ask the local building department which approvals and inspections apply to the actual proposed work. Record who will submit applications, pay fees, schedule inspections, and obtain required final signoffs. Confirm local trade requirements instead of assuming one city’s rules apply elsewhere.

For older homes, resolve hazard questions before scheduling disturbance. EPA explains that covered renovation work on pre-1978 homes can bring house-flipping businesses under its Renovation, Repair and Painting rules. When a flipper hires an outside firm to perform all such work, EPA says that firm must meet the applicable certification and work-practice requirements. EPA guidance for house flippers

Use qualified professionals to assess suspected hazardous materials and identify the applicable program. Put their work, cost, and timing in the scope. Do not treat lender approval as permission to skip local requirements or specialist review.

Build milestones around completed work

Ask the contractor for a sequence showing what must happen before the next trade begins. Place material lead times, required approvals, and inspection appointments into that sequence.

Replace “week three payment” with a defined work milestone and its expected date. A useful schedule has separate columns for the contractor’s payment trigger, evidence of completion, draw request date, and expected reimbursement. The lender must confirm which milestones qualify under the proposed loan.

Keep these events distinct: materials ordered, materials delivered, work installed, local inspection completed, and lender draw accepted. They are different events. Ask how the loan treats each one, especially deposits and materials that have not been installed.

The rehab draw guide explains the process. Reconcile the actual loan documents and contractor terms before relying on a reimbursement date.

Agree on changes before they become extra bills

Set up a written change-order process in the contractor agreement. For each proposed change, record the reason, revised work, price adjustment, schedule effect, and funding source. Identify who has authority to approve it.

Separate an owner-requested upgrade from newly discovered necessary work. Both can affect the total, but the decisions differ. A different cabinet finish may be optional; a documented condition may require a specialist assessment before work proceeds.

Ask the lender how scope changes, budget transfers, and added work are approved. A contractor’s agreement to do more work does not establish that the loan will reimburse it. Update the scope, contract total, remaining budget, and draw forecast together after the required approvals.

Keep a small, consistent draw record

Create one folder for each milestone. Use the same scope identifiers throughout it. Include dated progress photos, invoices, the requested amounts, and any additional documents the lender requires. Confirm local lien-document requirements with the appropriate title or legal professional rather than copying another state’s forms.

Maintain a simple payment log: amount invoiced, amount paid, amount submitted for reimbursement, and amount received. Do not mark a draw as received when it is merely requested. Carry any unresolved item forward with a named owner and next action.

At the weekly project check-in, compare completed work with the next payment deadline. Ask what could prevent the next milestone: an unavailable material, unfinished trade, missing approval, or scope question. Resolve the specific dependency before assuming the original schedule still holds.

Bring the execution plan to the financing review

Your initial package should include the selected bid, scope, contractor details, milestone schedule, and unresolved questions. Identify allowances and preliminary dates clearly. Explain any mismatch between contractor payments and expected draw releases.

Return to the first-flip readiness worksheet to record the remaining steps, then review the first-flip funding path. When you have a property and a repair plan to discuss, submit your first-flip scenario. A clear contractor plan helps make that conversation specific; financing remains subject to individual review.