Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
So my contractor is complaining about how hes not making any money and completely under bid the job. I bought the house based on his bid then i even helped him out and raised it another $8,000. Then again saying hes not making anything and had to borrow money from hos brother which is anotwr contractor and there working together. No hes saying all his bids are gonna go up tremendously. Im really feeling hes not gonna hold up his end and be able to complete the job with the funds left and draws. Very frustrating because he told me before i bought it the price and now saying was a estimate then i went back higher and coming to me complaining bascially. What to do?
Do you have a contract that states the work to be done, materials to be used, price to be paid, etc? How much is the total cost if you jumped it $8k and he's still not happy or making money? Either way, sorry, your under bid is not my problem. It is a learning experience that he is now paying for. I have under bid many jobs and never had the audacity to think that was someone else's fault or problem. You suck it up, do the work and try to do better next time like a responsible adult
You have more properties purchased based on his bids? Is he the only bid you have? If so you need to get more. He might just not know how to bid. Is he the GC on the job and hiring a lot of subs? If so I would be very concerned on him paying his subs, because of he chooses not to, guess what property they put a lien on... yours!
On this particular project, I would make a list of what's left and what trades are needed. Bring in some contractors for quotes and see where you stack up. As much as I don't want any contractor working for me to not make any money, at the same time I wouldn't feel obligated to pay him more based on "I messed up and need more money". Every single person who has bid jobs more than a few has messed up and missed and most likely had some losing jobs. A good contractor chalks that up to business and learning.
@Joshua D. this is very common. Inexperienced contractors place a low bid to win a job, then come up short and ask for more money. Usually they just don't even finish the job and take your money. This is why people say a good contractor is worth their weight in gold. The problem is some carpenter get's the idea he can be a contractor and make the big money, but they lack business sense and management skills. As others stated, hopefully he has done enough work to warrant what you have paid him.
To protect yourself, I hope you had a good contract in place with very detailed scope of work and made sure he is bonded. The worst thing you could do is give him more money. Even that extra $8,000 should have been approved for payment only after job completion. If he has taken all the money in draws and the job is only partially done, then you have not managed him properly.
Money is the only leverage you have. You always want to only pay for work that is done, unless you have a track record and trust. This guy is a hack. It doesn't matter if costs have gone up, he should have had contracts for materials and subcontractors in place to protect himself.
Like others have mention this guy is playing you. His story sounds a lot like my long lost uncle from Africa who is actually a prince....blah blah blah. Seriously though he is trying to milk you. Contractors do this all the time. MOST do it in a more professional manner through change orders....this guy sounds like he is straight up trying to get money and run. With only reading what you and others have said thats my opinion of the guy.
I would start by not giving him another penny. Then start taking inventory and checking things off of what he has done and not done. Ask for proof of purchase for everything, yes you can do this even though he will more than likely claim you can't. Basically your goal here is to gather your own data to see whats going own. Act as if you are preparing to take him to court. Be professional about it of course, no need to be an a** about it. I'm not saying you should take him to court but you need to be prepared too. You will need to do a bunch of math and see how much you will loose if he skips town tomorrow. See if that number is worth going to court over or just cut your losses. I'm sorry you've been pushed to this but this is pretty much the road you are on now.
Also, depending on how your contract is set up, you may be able to sue for cost over runs due to hiring a new contractor. Because 100% guaranteed the next contractor will up charge you for coming in and finishing up someone else's work. Happens every time. And you can make the original contractor pay the difference. Of course you will have to weigh all this vs time and money you spend. Or just be prepared to do as much of the rest of the work yourself if possible.
Crappy situation for you. Sorry you got to go through this.
Enforce the contract (hopefully you have one). If he told you he would do the job for XYZ, then that's what he should stand by. If he underbid just to get the job then jacking up his price... Super unethical and and I would start looking for someone else.
@Joshua D.
As a contractor I very much agree not to be ahead of the contractor with payments. As much as cash flow is beneficial, a contractor with business sense and money management will not want to be behind your payments. I had an out of town investor pay a $4000 repair job upfront and there ended up being a delay due to a much larger problem others had not found. I would have rather not had it in our account at that time, although it did have me hurrying to get the specialist in so we could then finish! I know contractors are hard to find but there has to be a great trust between the investor and the contractor. There are plenty of stories on the contractor side where the investor has so little knowledge of basic home repair and cost that the investor does not know what he/she is ordering and then is unhappy that many expensive side items did not come with it. I definitely believe heavy communication and planning is necessary upfront. Both contractor and investor can have a very mutually beneficial relationship with goals that align.
It should not matter if contractors only provide you with estimated prices because thy are licensed they can be held to their contract price regardless if they are making money or not.That is the whole point of being a contractor. If they simply do not know how to price a job out then it is neither your problem but this tells you that you are dealing with someone that does not know what they are doing at all but it also falls on you because you did not know what you were doing either not knowing what things should cost. Just because a contractor comes in with a low bid does to imply they know what they are doing. I very seldom if ever go with the contractor that comes in with the lowest bid simply because I already know better having been a licensed GC myself for many years.
Unfortunately this happens. stop chasing bad money with good. Either force this contractor to do the job for the price contracted for or cancel your contact with them and get someone to finish the job that you can trust to do the job right, for the fair price, and finish the project on time. You may not be able to come out of it unscathed anymore. To me it sounds like you have handled this matter all wrong and now it is much too late.