first flip failure, embarrassment, and lawsuits. yay

first flip failure, embarrassment, and lawsuits. yay

Grand Rapids, MI · Member since 2015 · 113 posts · 29 votes

I guess this is more of a venting post than anything. 

2 years ago I bought my first house to flip.  Here's the original post.   I stopped posting after everything started going downhill. 

To make a VERY long story short, the house was eventually torn down after many issues arose and at the advice of my contractor.   He advised me to do a prefab home because his partner is the dealer in the area for a prefab home company and it would be faster and cheaper than doing a stick built home.  

After months and months of talking with them about that option I finally got numbers for what the cost would be and found out it was not going to be cheaper and because I wasted months just getting, it wasn't faster either.   I decided it would be best to cut ties with the contractor, cut my losses and sell the lot.   The contractor still owed me a decent amount of money leftover from the original money I gave him but he said come of that money was for a "design fee" for the prefab home which he never communicated with me during the process of talking about doing a prefab home and I never signed any contract with him or the prefab home company.   

 After months of asking for my money back, he refused and said I'd have to sue him to get it back.  So I am.  I'm currently waiting to hear back from my attorney on the status. I wish I could sue him for a lot more than I am. 

As if nothing else could go wrong, last month I accepted an offer for the lot and was supposed to close on it the last week of May.  The last week of May came and my realtor called to tell me the buyers were backing out because a property they found before mine came back on the market after a deal fell through.  

Really??!  Can something else go wrong please?!  I'm beyond frustrated, pissed and burned out.  Yes I definitely made my own mistakes.  I never should've torn the house down.  I should've fired the contractor at the first sign of red flags, which there were many.  I'm incredibly embarrassed at this failure and not really sure what to do now.  

The property is back on the market so if anyone wants a 5500sf lot in one of Grand Rapids, MI hottest neighborhoods (less than a block from Wealthy/Eastern) hit me up.  

3Reply
36 views

Most Popular Reply

Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
Originally posted by @Jonathan Thrasher:

I guess this is more of a venting post than anything. 

2 years ago I bought my first house to flip.  Here's the original post.   I stopped posting after everything started going downhill. 

To make a VERY long story short, the house was eventually torn down after many issues arose and at the advice of my contractor.   He advised me to do a prefab home because his partner is the dealer in the area for a prefab home company and it would be faster and cheaper than doing a stick built home.  

After months and months of talking with them about that option I finally got numbers for what the cost would be and found out it was not going to be cheaper and because I wasted months just getting, it wasn't faster either.   I decided it would be best to cut ties with the contractor, cut my losses and sell the lot.   The contractor still owed me a decent amount of money leftover from the original money I gave him but he said come of that money was for a "design fee" for the prefab home which he never communicated with me during the process of talking about doing a prefab home and I never signed any contract with him or the prefab home company.   

 After months of asking for my money back, he refused and said I'd have to sue him to get it back.  So I am.  I'm currently waiting to hear back from my attorney on the status. I wish I could sue him for a lot more than I am. 

As if nothing else could go wrong, last month I accepted an offer for the lot and was supposed to close on it the last week of May.  The last week of May came and my realtor called to tell me the buyers were backing out because a property they found before mine came back on the market after a deal fell through.  

Really??!  Can something else go wrong please?!  I'm beyond frustrated, pissed and burned out.  Yes I definitely made my own mistakes.  I never should've torn the house down.  I should've fired the contractor at the first sign of red flags, which there were many.  I'm incredibly embarrassed at this failure and not really sure what to do now.  

The property is back on the market so if anyone wants a 5500sf lot in one of Grand Rapids, MI hottest neighborhoods (less than a block from Wealthy/Eastern) hit me up.  

I agree it was a mistake to tear it down. You could have sold it after demo to the studs to another flipper who could have finished the job. That would have had more value than an empty lot. I am sorry for stating what you already know.

Don't be embarrassed. It took a lot of courage to post this on BP and I am assuming you did it partly to help others from making similar mistakes. We always hear success stories on BP but people general don't post failures, which are more common than you would think in the flipping business.

It sounds like you are taking the right actions at this point. I would just encourage you to not be discouraged by this experience. Many people have gone on to great things from much larger failures. It is not important how many times you get knocked down, but rather whether you get back up again.

See this reply in the discussion

4 Replies

Jump to latestLatest
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y
    Originally posted by @Jonathan Thrasher:

    I guess this is more of a venting post than anything. 

    2 years ago I bought my first house to flip.  Here's the original post.   I stopped posting after everything started going downhill. 

    To make a VERY long story short, the house was eventually torn down after many issues arose and at the advice of my contractor.   He advised me to do a prefab home because his partner is the dealer in the area for a prefab home company and it would be faster and cheaper than doing a stick built home.  

    After months and months of talking with them about that option I finally got numbers for what the cost would be and found out it was not going to be cheaper and because I wasted months just getting, it wasn't faster either.   I decided it would be best to cut ties with the contractor, cut my losses and sell the lot.   The contractor still owed me a decent amount of money leftover from the original money I gave him but he said come of that money was for a "design fee" for the prefab home which he never communicated with me during the process of talking about doing a prefab home and I never signed any contract with him or the prefab home company.   

     After months of asking for my money back, he refused and said I'd have to sue him to get it back.  So I am.  I'm currently waiting to hear back from my attorney on the status. I wish I could sue him for a lot more than I am. 

    As if nothing else could go wrong, last month I accepted an offer for the lot and was supposed to close on it the last week of May.  The last week of May came and my realtor called to tell me the buyers were backing out because a property they found before mine came back on the market after a deal fell through.  

    Really??!  Can something else go wrong please?!  I'm beyond frustrated, pissed and burned out.  Yes I definitely made my own mistakes.  I never should've torn the house down.  I should've fired the contractor at the first sign of red flags, which there were many.  I'm incredibly embarrassed at this failure and not really sure what to do now.  

    The property is back on the market so if anyone wants a 5500sf lot in one of Grand Rapids, MI hottest neighborhoods (less than a block from Wealthy/Eastern) hit me up.  

    I agree it was a mistake to tear it down. You could have sold it after demo to the studs to another flipper who could have finished the job. That would have had more value than an empty lot. I am sorry for stating what you already know.

    Don't be embarrassed. It took a lot of courage to post this on BP and I am assuming you did it partly to help others from making similar mistakes. We always hear success stories on BP but people general don't post failures, which are more common than you would think in the flipping business.

    It sounds like you are taking the right actions at this point. I would just encourage you to not be discouraged by this experience. Many people have gone on to great things from much larger failures. It is not important how many times you get knocked down, but rather whether you get back up again.

  • Grand Rapids, MI · Member since 2015 · 113 posts · 29 votes
    8y

    Thanks Joe.  After all the demo was done, there were only 3 walls left standing so tearing it down wasn't that much more but it was still the wrong decision.  I firmly believe the contractor got in over his head and he lost of lot of his workers and instead of finishing the job himself he wanted to pass me off to his partner who did the prefab homes.  

    I'm not letting this experience keep me from succeeding at investing BUT it's very hard to not feel beat up and unmotivated. 

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    @Jonathan Thrasher

    Sorry to hear of your experience. It's nice of you to share. Wish I had some words of wisdom to throw at you, but I am sure you have already spent many hours thinking about all of the failure points along the way.

    Get back out there. I will agree with @Joe Splitrock there is no reason to be embarrassed I would bet most of us have gotten into something that turned out way worse than originally planned.

  • Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    8y

    @Jonathan Thrasher I am an experienced flipper but... bought this homely little "underground" house on November 15th with the intent of building a second house on top. Endless delays with building dept to come up with a fire separation design they liked (what's an extra $5000?) , tore the roof off (making what was a livable home now unlivable) and - the foundation height is uneven. Framer packed up tools and said to call him when he can build something straight. Back to engineer, back to building dept - (our solution is to pour a cap to even things up). Thousands of extra dollars spent or committed. It is 7 months later and I have less than I started with. I will get through this... not sure I'll actually make much at this point. It happens...

Join the conversationCreate a free account to reply, vote on answers and follow this thread.