If your contractor is any good, he or she likely won't be able to start for a few weeks. So don't part with a large chunk of your renovation money upfront.
To book the job, you should put no more than 10 percent down, Holmes says. And even that should "should not be more than $1,000," he says.
Follow up in 10 percent increments as the contractor meets certain preset milestones on the project. But that doesn't mean you should "pay time and labor as they go," says Holmes. "You want it to be a set price."
Schedule the final payment -- about 15 percent of the total -- for 30 to 45 days after the job is complete, he says.
Incremental payments ensure against disappearing contractor syndrome. Withholding the last payment guarantees that if there are any problems after the job is done, they'll be fixed promptly.
This type of payment schedule is business-as-usual for professional contractors, Holmes says. They'll say, "once you're totally satisfied, call me up and pay me," he says. "It gives you that window in case things go wrong. And little things can go wrong."