Helppp and about to give up on Contractors

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Helppp and about to give up on Contractors

Luz Pagan
Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes

I am currently rehabing one of the house I bought. However, I notice that the project is taking so long. The Contractor we are currently working an the only one that answered in our area has delayed so much and we are behind scheduled. He told me his guys were going to be working on the house this week since all the permits have been obtained. Today, my husband went to the resident and his employees were not working, the same thing has hapend on previous weeks. 

There are so many projects that could have been done while waiting for the permits, but he promise that once the permits were in, he will have his crew will finish the project soon. Today I texted him, as well as my husband. I just want to know if this is normal for any of you guys or should I fired the guy? 

I am having so much trouble finding contractors in the area that I am investing, it is horrible. I am thinking of just hiring the experts myself, rather than hiring a General Contractor to hire the crews. I am losing money as this house is not finish yet. Any advised will be welcome! Maybe I am too desperate to finish..

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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
8y
Originally posted by @Luz Pagan:

@Matthew PaulSo the question is: do you take more jobs than what you  can handle? If you take the job, do you complete it from start to finish? Or Do you jump from work to work in sn attempt to make progress in all of them?

No I dont take on more jobs than I can handle , As far as completing from start to finish , yes . BUT that doesnt mean being there every day , subs are there some days , sometimes they get delayed , inspections can take a day , two maybe 3 . The customer makes changes . We have 2 , 3 even 4 jobs going at the same time at different stages . One day I may send 1 man to your job , another you may have 4 guys . 

Of course we jump from job to job . when the drywall crew shows up , I am not going to stand there with 3 guys and watch them hang drywall . ( I will but I will be billing ) No we go and demo another job .  As a contractor I am maximizing my profit .  I am constantly reallocating resources . 

We have to deal with weather , inspectors , subs , suppliers .  Just last week , digging footers for an addition , 3/4 's of the way digging and my guy hits an abandoned septic tank . Boom , job stops , almost 2 thirds of the tank are in the addition , its a 1000 gallon concrete tank . It takes 3 days for the engineer to come out and look . A day to get prices for a crane to lift it out and arrange to have it hauled , thats now 2 weeks out . And it added 8 grand to the job .  Now I have to push back my block layer and framer .   

So now i have just added 2 to 4 weeks extra to a job due to delays beyond out control. There is nothing we can do on that job .  So now we go do a fill in job thats on the list .

This happens all the time , its a balancing act 

13Reply
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  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    8y

    @Luz Pagan this is pretty typical in a hot market if you are a new player on the scene.  The contractors will support their returning customers or larger jobs more intensly then smaller low margin jobs with a new client.  I personally either do the work myself or contact subs directly to get work done.  The subs move from job to job at a much faster rate then the GC's.  They make more money the faster they move.  In your case it sounds like your GC is using your job as filler work in case his subs get an opening.  Depending on the work that is needed, pulling your own permits is not that hard, it just take a ton of your time until you get use to the process.

    12Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Arlen Chou,

    I appreciate your advised. This process is so frustrating and I believe you are in the right track. I am probably  just a minor project in his whole agenda. I started contacting other contractors in outside areas that might be able to have bigger crews. However, I will take your suggesting and I will be then subcontract others and get the permits myself to avoid all this waiting game.

    0Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    8y

    @Luz Pagan I would suggest that you document your process of rehabbing the property.  When I did my first property, I took lots of pictures and a ton of notes.  On subsequent projects I showed the contractors my work, so they knew I was "in the know" about their business.  It allowed me to negotiate with the subs from a base of knowledge and not frustration.  I also quickly learned the language of construction and I was able to communicate my needs and wants much more clearly.  Use this frustration as a motivational moment to make you stronger for your future projects.  

    Post up pictures of your project when you are done, it is always cool to see what people have done.

    Good luck to you!

    2Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Arlen Chou Thanks! I will do so.

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    I am a contractor , right now we are swamped . My subs are swamped , my suppliers are swamped . Every job is going slower because we have to wait for the subs . Inspections are slow because the inspectors are swamped . I am having my competition asking us  for help .  I am having to pick up materials instead of getting them delivered to get them faster . 

    I am giving estimates with start times in November and December . And prices are up and still rising . 

    4Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Matthew PaulSo the question is: do you take more jobs than what you  can handle? If you take the job, do you complete it from start to finish? Or Do you jump from work to work in sn attempt to make progress in all of them?

    1Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y
    Originally posted by @Luz Pagan:

    @Matthew PaulSo the question is: do you take more jobs than what you  can handle? If you take the job, do you complete it from start to finish? Or Do you jump from work to work in sn attempt to make progress in all of them?

    No I dont take on more jobs than I can handle , As far as completing from start to finish , yes . BUT that doesnt mean being there every day , subs are there some days , sometimes they get delayed , inspections can take a day , two maybe 3 . The customer makes changes . We have 2 , 3 even 4 jobs going at the same time at different stages . One day I may send 1 man to your job , another you may have 4 guys . 

    Of course we jump from job to job . when the drywall crew shows up , I am not going to stand there with 3 guys and watch them hang drywall . ( I will but I will be billing ) No we go and demo another job .  As a contractor I am maximizing my profit .  I am constantly reallocating resources . 

    We have to deal with weather , inspectors , subs , suppliers .  Just last week , digging footers for an addition , 3/4 's of the way digging and my guy hits an abandoned septic tank . Boom , job stops , almost 2 thirds of the tank are in the addition , its a 1000 gallon concrete tank . It takes 3 days for the engineer to come out and look . A day to get prices for a crane to lift it out and arrange to have it hauled , thats now 2 weeks out . And it added 8 grand to the job .  Now I have to push back my block layer and framer .   

    So now i have just added 2 to 4 weeks extra to a job due to delays beyond out control. There is nothing we can do on that job .  So now we go do a fill in job thats on the list .

    This happens all the time , its a balancing act 

    13Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Matthew Paul thank you for the explanation, it really helps to understand the overall work. In my case it was not a big job, just an extension, fixing a wall and electricity. I will understand if I have a big project, like in my second investment. I think that, next time, I will just subcontract other companies, get the permits myself for structural changes. 

    1Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    8y

    @Luz Pagan

    Do you have any deposits with your current contractor or are they paid upon completion of milestones

    1Reply
  • Ian Kee
    Investor · Milwaukee, WI · Member since 2015 · 130 posts · 60 votes
    8y

    It's tough to find good contractors, I feel your pain. But hang in there. You got a good explanation from Matthew Paul. But you do want to have your job completed on schedule, so make sure you are keeping your GC motivated. Don't prepay everything.

    1Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Chris Purcell,

    We have a contract that break down the payments down in 4th stages. We have paid the Deposit immediately upon request. The second payments is due once he completes the second task which is still pending. 

    @Ian Kee I agree with you that is why I did agree with the contract paying as progress is made. I communicate very often with him. Sometimes he said he will contact me and then he does not. I wait till the next day and reach out again. He apologize and tell me he was busy with something else. He is a great person, but this is a business and I treat it as so.

    1Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    8y

    @Luz Pagan

    So are you willing to lose that deposit and spend weeks finding someone else?

    0Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    Not sure yet. Do I want to lose more money and time on a job that is not being done fast enough? No. I Think that the more time I spend in this project I am losing more than what I am gaining. The house is off the market, but the insurance is still running, the bills and HOA fees are running, my money is not growing. I am paying the other investment bills and my own bills.

    The faster this house is finished the higher the chances of selling and me avoiding innecesary expenses. So maybe by doing it outselves will be a better option with the help of subcontractor, the next time.

    The reality is that I am the one intereseted in not losing money because is my business, the contractor does not have a problem with the time, he has his money secured. 

    So because I am in contract with him and I am a person of my word I will finish this one, but I might not hired him again. 

    What do you think? 

    0Reply
  • Daniel G Blais
    Des Moines, WA · Member since 2018 · 7 posts · 2 votes
    8y

    Someone had told me and keep in mind I'm a complete novice in this arena and still learning.  That you can set up a contract to incentivize the GC to get their work done by lowering the price on completion in the contract for every day they are late to the agreed schedule.   Like a late fee.  Just an idea, I dont know if its something you can do or not.

    1Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Daniel G Blais,

    Wao! that is an amazing idea and can be integrated to the next contract. Does anyone has experience with this?

    0Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    8y

    @Luz Pagan first let me clarify my statements, I don't think all contractors are bad.  It really comes down to time management skills for them and your skills to negotiate and see the potential problems prior to signing the contract. As @Matthew Paul has stated, stuff happens and everybody has to deal with it.  The problem you have is that your contractor does not sound like a very good communicator.  This is usually because of 1 of 2 things: they just suck at communicating or they are hiding from you.  As the client, it is up to you to decide which type of person you are dealing with.

    I would not force the project because you are person of your word... you should be following the contract and making your decision based upon that.  If he took your deposit, there should be mile stones and there should also be a target completion date.  I would focus on the completion date and get assurances via email that he is on track.  For a large project, I will ask for a detailed gantt chart.  On smaller projects, I will sit at a coffee table with the contract and draw one together.  They don't like it because it creates to much structure and they are afraid that you will be to hard on them if they miss some a date here or there.  But the reality is that it helps communication and sets expectations.  If everybody is realistic about time lines, the the chart should not be a problem.

    You are the client and your guys is suppose to be providing a service.  If he is not giving you the service he promised you need to decide if you are willing to just bend over and suck it up or fight.  Most contractors don't think a little customer will actually fight it.  I have had to fight 2 using lawyers, both I won because I documented everything. 1 we went to arbitration and he admitted to screwing up and paid me what I asked.  He just did not think I would go that far and just thought I would just ride along. The 2nd, he thought the same thing, but he is fighting until the end.  Long of the story is that at arbitration we only asked for $30k.  He said no, I filed with the state contract licensing board and I took him to court.  I won with the SCLB and it looks like I will win in court.  At this point I am not asking for $30k, we are going after $350k!

    My point is that this is all business, both sides have to approach it like that and if the other guys is not, then it is your job and duty to the investors to handle your business.  The investors in your case maybe you and your husband, but the principle is the same.

    5Reply
  • Andrew S.
    Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
    8y
    Originally posted by @Luz Pagan:

    @Daniel G Blais,

    Wao! that is an amazing idea and can be integrated to the next contract. Does anyone has experience with this?

     Yes, I have done this many times and generally, it helps a lot.  Often, the last couple of % of the work is the slowest as the subs don't want to make the trip to the site just to take care of some finishing touches, so it drags on.  The "penalty clause" really helps in this case.

    That said, you have to have enough leverage so the contractor accepts the clause upfront.  Sometimes, you can incentivize them to accept it by offering a higher price upfront.  Typically, I'd rather pay a little extra in exchange for more certainty on the timelines.

    3Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Arlen Chou Thank you, your feedback has been amazingly helpful. I have reached out to 3 more contractors for the second investment and will have this clauses in the contract. I guess being new in this business is really though.

    @Andrew S. Thank you. I will see how this goes.

    2Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Luz Pagan:

    @Chris Purcell,

    We have a contract that break down the payments down in 4th stages. We have paid the Deposit immediately upon request. The second payments is due once he completes the second task which is still pending. 

    One word of advice.  I've learned to not have the final payment be relatively small.  


    For instance, say you have a $12,000 job.  The payouts for four stages might be $3000, then $4000, then $4000, then $1000 for some end of the job finish work.  Some contractors might abandon the job after the third stage for a new $20,000 job that they have to start immediately or lose.  They may not plan on totally abandoning you, but then again, they may not feel they "cheated" you because they never got paid for that final stage.  The problem is, you need that final stage completed.  The problem for some contractors is they don't want to leave a $20,000 job to finish some trim work for a much smaller payout.

    So what I do if I see a draw tallied like that is make the final payout higher.  Maybe combine the 3rd one with the 4th one and have only three total draws with the final one being $5000 once the job is 100% complete.  Or switch the 4th with the 3rd.  It's harder to walk away from $4000. 

    This is not necessary for contractors/subs you know well and/or have worked with before.  Or for contractors that come with spotless reputations and glowing recommendations.  But it's a way to prevent being abandoned as the end of the job approaches with a tiny draw at the end.

    4Reply
  • Erik B.
    Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes
    8y
    I am a contractor (small) and I will tell you outright you are not his priority and most likely this company took on too much work and can't satisfy everyone fast enough. Plus his communication skills are terrible or hes "hiding" to buy more time. It's great you have a contract, some people d Dont even get that but a contract needs a date of completion. You can offer incentives instead of penalties for completing on time and ahead of schedule. Maybe 5% addl for coming in a week ahead of schedule. One last thing. I hear the phrase " its so hard to find good contractors" every day. And for the most part this is not true. It's hard to find good contractors at a price customers are ok paying. This era we live in everyone wants everything for nothing, loyalty is out the window and price is the driving factor. Good luck and if I can help in any way just reach out. Best
    6Reply
  • Erik B.
    Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes
    8y
    Another thing. The final payment should be close to 10% and should only be paid upon final satisfactory completion of EVERYTHING even touchups. In some areas this is actually law. The consumer can retain 10% until a week after completion.
    4Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Erik B.

    Thank you so much!!! That information is useful. I will reach out if I need need any clarification..

    1Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    8y

    @Matthew Paul brings up some great points; a schedule can very easily fall off track for reasons beyond the contractor's control; however, the lack of communication is unacceptable. If he tells you he will be working on your house on Monday, he should be there on Monday. If he isn't going to be there on Monday, he should be calling you and telling you. You should not be finding out by showing up to an empty house. 

    3Reply
  • Luz Pagan
    OP
    Flipper/Rehabber · Highlands County · Member since 2017 · 87 posts · 33 votes
    8y

    @Nicole Heasley Beitenman thanks for your feedback. That is the part that is so upsetting. I should not have to micromanage anyone. I should be able to trust my cintractor when he said he will be there. One of the reason I have the contractor is to be able to have time for other things. Now I feel like I have to be on site 

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    @Luz Pagan You just discovered one of the biggest problems most have and no one (gurus, podcasts etc) talk about. Hard to find good reliable contractors. At least they haven’t just run off with your money yet. Did you get referrals from this one before starting?
    1Reply
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