Going to ruffle some feathers. Bad REI's that try to screw legitimate contractors

22 Replies

I had a uniques situation that came up about 5 months ago that finally was settled. If not for me being patient (which is not always the easiest thing for me to be), being reputable and haveing loyal associates It could have gotten ugly.

I met a "new" REI (foriegn) at a meeting whom said he had aquired a property through an inheritance and needed some work done so he could flip the home. Kitchen and bath upgrades, flooring and painting. (4wk time frame given but I finished in 3wks that was to provide me a performance bonus) I gave this gentleman a very detailled bid and performed all the work in it's entirety ON BUDGET! with NO overuns (he never disputed or questioned anything I, my crew or other professionals I brought in did!) In fact he was "amazed at the transformation". Well of course upon finishing the work I never received the final payment. I gave him the benefit of the doubt. Low and behold I get a call from one of my crew mebers whom said he had been contacted by this guy to do work on another of his projects. Come to find out this guy in my opininion was just a sneaky SOB whom was just trying to find out whom my professionals were and tried to pull them away from me. Fortunately I treat my guys with respect. Any way with the eventual threat of a lawsuit and subversive tacticts from contractor associates we cornered him. He fianlly paid up. All of my friends walked off his jobs (while staying with in their legal rights) through non-payment by him as per contracts for work performed. I guess I see so much contractor bashing here on BP I just wanted to throw my 2 cents in.

When he didn't pay you why didn't you just put a mechanic's lien on the property when he didn't pay you? That is a huge advantage contractors have over investors.

there are people that will take advantage of you in every profession,,,he will quickly run off contractors and end up dealing with the contractors no one else wants

Agree @Andy Collins , and then complain that contractors aren't helping him enough or wont call him back.

@Cal C.

Mechanics lien was next...

@Andy Collins

The contractor network for Re-habbers in my area have been put on alert. he tried using wife as a front last week.

@Mike Salisbury

Just as a I whom is both a REI and contractor I DOCUMENT everything via pics, contracts and communications. Why? it seems to protect EVERYONE.

Guys like you are great, problem is that guys like you are hard to find for the prices we need to spend to get something done. Hence the headaches. Plus many guys LIKE you (not you) often think their s--- doesnt stink and there services are iirreplaceable, and take it as a personal insult when people like us tell what we need ti get a job done for....how dare we...

Account Closed

Great comments and thoughts as you are not alone... You have the right to hire anyone you want. If you do not like the price you get for a project go elsewhere and choose another contractor. In my opinion just as in any profession you will find a varied pool of workers and it is your job as a REI to find one that fits for you. As a contractor I interview my clients as well as they interview me. If there is not a fit for either of us we move on. I will always have work and there will always be homes that need to be re-habbed. I am always surprised at how many REI's I meet that have no clue about the true costs of construction. If it was easy everyone would do it!

Originally posted by @Account Closed :
@Cal C.

Mechanics lien was next...

You should get familiar with NJ law on mechanic's liens...I believe it would actually be too late to file the lien (in NJ, you have to initiate the process within 60 days of completing work, I believe). This should be a (nearly) first resort, not a last resort.

If an investor doesn't want to pay, don't play nice...file a lien and get to court as quickly as possible so he doesn't sell the property under you or drag it out past the statute of limitations.

As long as there is a low barrier to entry into any business activity you'll have the good, the bad and the ugly.

In Missouri, there are more steps to go through, license requirements for a used car lot than starting a RE business, RE has no barriers to go do some deal. Contractors certainly have license and bonding requirements, but as long as people will hire a guy with a truck and a few tools there will be issues.

Saying contractors must come in on a bid job where an investor needs to be to make money is amusing, rather ignorant and entirely a selfish attitude. Just about every time I had a contractor do anything I felt like I paid too much or could have gotten it done for less. In every case, the more I paid the better the work was done overall, the more attention was paid to detail, the more communication there was and the more the contractor felt responsible to correct anything. You get what you pay for. Some exceptions, but generally.

The best way to go out of business in RE is to simply lose your integrity and pull things to get a few dollars more! :)

Originally posted by Account Closed:
Guys like you are great, problem is that guys like you are hard to find for the prices we need to spend to get something done. Hence the headaches. Plus many guys LIKE you (not you) often think their s--- doesnt stink and there services are iirreplaceable, and take it as a personal insult when people like us tell what we need ti get a job done for....how dare we...

this is like walking into a car dealership and telling them you need to get a new Escalade for $10k.

The scope of work dictates the price. Not what the investor penciled in on his spreadsheet for rehab budget.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

Sorry will comment in a bit... LOL

Originally posted by @James Wise :
Originally posted by @Seth Sherman:
Guys like you are great, problem is that guys like you are hard to find for the prices we need to spend to get something done. Hence the headaches. Plus many guys LIKE you (not you) often think their s--- doesnt stink and there services are iirreplaceable, and take it as a personal insult when people like us tell what we need ti get a job done for....how dare we...

this is like walking into a car dealership and telling them you need to get a new Escalade for $10k.

The scope of work dictates the price. Not what the investor penciled in on his spreadsheet for rehab budget.

James here is making an assumption and crossed an imaginary bridge based off of it. The assumption/resulting bridge is that we/i are determining a cost for work based on what we have alloted vs what we have determined to be appropriate based on years of experience dealing with contracting and knowing how to pay someone only for labor and materials instead of the previous x 2, which is the standard practice to unknowing homeowners. Many contractors don't believe they should have to forgo the x2. So screw them.

As far as your dealership analogy, i would never by an american made POS

Originally posted by Account Closed:

James here is making an assumption and crossed an imaginary bridge based off of it. The assumption/resulting bridge is that we/i are determining a cost for work based on what we have alloted vs what we have determined to be appropriate based on years of experience dealing with contracting and knowing how to pay someone only for labor and materials instead of the previous x 2, which is the standard practice to unknowing homeowners. Many contractors don't believe they should have to forgo the x2. So screw them.

As far as your dealership analogy, i would never by an american made POS

I've read hundreds of thousands of posts on this site and have met/spoken with with hundreds of the contributors, and I think I have a remarkable ability to be able to tell from someone's posts whether they are a successful investor or just a wannabe.

After reading a few of your posts, I certainly have my hunch about you, Seth... :-)

This post has been removed.

Account Closed

Not sure what your "x2" means... Care to explain?

Again you (not you per se but some REI's) often believe they know from years of experience what a re-hab should cost (what maybe 5-7 projects). That is awesome! So find a contractor whom agrees with you and is willing to do the agreed upon work for the fee and terms you both agree too. As a very experienced (30 years in construction as a hammer and nail guy as too which I also have 26 years of combined project management and ownership in various construction service businesses and have done work at THOUSANDS of properties) I am often shocked what inexperienced REI's think a projects cost is "A" but it really is "Z" because they really do not know what it takes to get from where a property is to where they want it be. The nice thing about being experienced is that I can say "NO". Which often shocks my potential clients. It is not because I am the greatest contractor nor I need to make boat loads of money. It is because I can tell from years of experience the supposed investor that is trying to hire me has very little real world construction experience and to much HGTV experience. For the record I not only just recently purchased a great mixed use property that I am going to make money on by having some of my professional associates work on along with me I also just finished laying 8 courses of brick at 40' each course by myself to get a project for one of my clients don on time and under budget. Cause that is what fair contractors that get paid a fair wage does. PS & FTR I LOVE AMERICA Try doing what you do as a REI in most other countries as you do here and let me know how it goes as I am always open to opportunities...

Originally posted by @J Scott:
Originally posted by @Seth Sherman: James here is making an assumption and crossed an imaginary bridge based off of it. The assumption/resulting bridge is that we/i are determining a cost for work based on what we have alloted vs what we have determined to be appropriate based on years of experience dealing with contracting and knowing how to pay someone only for labor and materials instead of the previous x 2, which is the standard practice to unknowing homeowners. Many contractors don't believe they should have to forgo the x2. So screw them.
As far as your dealership analogy, i would never by an american made POS

I've read hundreds of thousands of posts on this site and have met/spoken with with hundreds of the contributors, and I think I have a remarkable ability to be able to tell from someone's posts whether they are a successful investor or just a wannabe.

After reading a few of your posts, I certainly have my hunch about you, Seth... :-)

You really think youve read hundreds of thousands of posts? That would probably mean your too busy on this website Wilt Chamberlin of bigger pockets. as far as your "hunch" you know **** about ****, at least as it pertains to me. lets do an experiment, shall we??? You have a 3 bedroom semidetached rowhome and want to rip the existing radiator/boiler+oil tank out, put brand new duct every where including now finished basement with brand new 90k out gas furnace and caged in 2.5 ton condensor. Everything new, 410a etc. You tell me what you pay for all that, then ill tell you what i pay.

As far as your dealership analogy, i would never by an american made POS

I just need to say that while American made cars had a bad reputation in the 1980's, they are far superior to imported cars these days. I'm proud to say that I own three vehicles that were all made in America. One was built in Michigan and two in Ohio. One only has 3,000 miles on it, but the other two are over 100,000 and have had very few problems. My Tahoe that I recently sold had almost 200,000 miles on it and still ran like brand new.

You can bash American cars all you want, but they are not the "POS" that you claim.

This has really gone off the rails and turned into a "who's is bigger contest"

The point remains that if someone can't or is having an incredibly hard time finding guys to do work for price "x" price "x" is probably not realistic. If you dig long enough maybe you will find some dumb sap who underestimates the workload and under bids the job. Good luck with all the fun that comes with a G.C. realizing halfway into the job that he's working for free.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633
Originally posted by @Account Closed :
@Seth Sherman

Not sure what your "x2" means... Care to explain?

Again you (not you per se but some REI's) often believe they know from years of experience what a re-hab should cost (what maybe 5-7 projects). That is awesome! So find a contractor whom agrees with you and is willing to do the agreed upon work for the fee and terms you both agree too. As a very experienced (30 years in construction as a hammer and nail guy as too which I also have 26 years of combined project management and ownership in various construction service businesses and have done work at THOUSANDS of properties) I am often shocked what inexperienced REI's think a projects cost is "A" but it really is "Z" because they really do not know what it takes to get from where a property is to where they want it be. The nice thing about being experienced is that I can say "NO". Which often shocks my potential clients. It is not because I am the greatest contractor nor I need to make boat loads of money. It is because I can tell from years of experience the supposed investor that is trying to hire me has very little real world construction experience and to much HGTV experience. For the record I not only just recently purchased a great mixed use property that I am going to make money on by having some of my professional associates work on along with me I also just finished laying 8 courses of brick at 40' each course by myself to get a project for one of my clients don on time and under budget. Cause that is what fair contractors that get paid a fair wage does. PS & FTR I LOVE AMERICA Try doing what you do as a REI in most other countries as you do here and let me know how it goes as I am always open to opportunities...

No problem jeff. A contracting company with workers comp, secretaries, office space, trucks etc often carry the principal of attempting to price by taking material and labor costs and doubling them to the homeowner, at least ive been told by several management guys ive befriended at few different larger places i know. Ive also witnessed this principal firsthand. My woman decided years ago that she would change her heatpump system out for a new one. Wanted to get estimates from bge home. Fine but dont agree to anything i say. Her estimates for a midrange carrier 15 seer heatpump changeout?? 9500. I got a guy to do the swap out for 1000 in cash upon conpletion, same carrier comfort series airhandler etc new from the distributor at cost...how much you ask?? 3200....so i pay 4200 for what bge home wanted 9500 for ( lowered to 8500 2 days later). Girlfriend didnt beleive that it couldve been done correctly, hired an hvac company to go throught he whole thing. Turns out i saved 4000+ just by cutting out everything but labor and materials. .....what the true markup really is, whther its x2 or x3 or x1.4 who knows. What i know is that i pay labor direct and buy materials myself. X whatever is something that a knowledgeable thorough rei should never pay

Originally posted by @J Scott:
Originally posted by @Seth Sherman:
I own 40 rentals throughout baltimore

Yup, sure you do... :-)

Im guess im flattered you think im lying. Didnt i give you some insight into weeding through section 8 tenants? How do you think i know about that? Is dealing with section 8 bs a hobby of mine?

Originally posted by Account Closed:
Originally posted by @J Scott:
Originally posted by Account Closed:
I own 40 rentals throughout baltimore

Yup, sure you do... :-)

Im guess im flattered you think im lying. Didnt i give you some insight into weeding through section 8 tenants? How do you think i know about that? Is dealing with section 8 bs a hobby of mine?

Thanks to Wikipedia and the Internet in general, I'm pretty sure I can get people to believe I'm a neurosurgeon...at least until I start writing stuff that makes it obvious I'm not...

Btw, I thought you said you didn't care what I thought? :-)

Account Closed

Gotcha Seth, I thought that is what you meant. Everyone has expenses and costs in running a business. If someone takes cash and they do not pay taxes that is there ethical conundrum. I run my companies in a ethical and moral fashion (sometimes the two absolutely collide). That said I never tell another what/how to charge and no one tells me what/how to charge. Again one can always scrape the bottom of the pool for the lowest price but from my experience that is where the scum hang out. I do agree that sometimes hiring just for labor might be a good thing but again as a good business owner whom uses specific products at large I often am able to get products cheaper than even savy REI's. Also being an authorized installer for many of the products I use I understand how they should be installed correctly and as intended so the warranties are honored. That is often worth a few extra dollars. Best of luck

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