HELP PLS! This is a night mare.
Hi my name is Patricia, I recently bought my first for property for rehab,June 7 in Winston-Salem. Was partnering with a General Contractor that talked to me into. The deal was the I was going to buy the house and he will take care of the rehab, with labor and material. And the we were going to splint the profit from the cash out and continue to do.
We actually went and even open a LLC together.
He started taking walks out and telling we’re the bathrooms were going to be and all the changes.
In week 2 I didn’t see any progress they where just taking the trash out from demolition. Then he said that he didn’t want to do the partnering anymore bc he need to work with his credit first and he still wanted to do work in the house but with a official contract from his company.
Again I believe. He asked for 30% down of $59.000 Which I gave, but still there is no progress and I don’t see any materials. I Iive in Apex which is 1.5 hrs away and go to Winston every week. I keep asking him about the progress and he comes with different stories.
so this week which is week 6. I said that I wanted to be present when inspection comes. He told that I need to get permit my as a owner for the talking down the walls before electrician and plumbing come to do their work. I was soo suprised bc I have no experience with this but that I know that you need get permits when starting to make changes to the house.
so anyway inspection came and put stopped on the project. I explained to inspector in the phone what’s going on and he said that he supposed to get permits in order to continue. Contractor said he is not doing it.
Pls help me and advise me what to do,,I feel so stupid in trusting him and that I made a big mistake. I will like to talk to someone with experience so they can guide me on having the project finish with all the legal permits but with out loosing to much money and most important what do I do with this person that is trying to take advantage. Pls help me. Will appreciate.
Yep sounds like a mess. Why would you write a $59k check if your contractor partner was doing the rehab, labor and materials? Who legally owns the property? You or the LLC that you two formed? If the LLC you might not even be able to sell to get out from under it without your partner's signature. Sounds like a very very expensive lesson unless you think you can pick it up or hire someone to pick it up and finish it. Will there be any money left to be made by someone after your $59k write off? I speculate taking your partner to court wont produce dollars even if you get a judgment.
Quote from @Sergey A. Petrov:
Yep sounds like a mess. Why would you write a $59k check if your contractor partner was doing the rehab, labor and materials? Who legally owns the property? You or the LLC that you two formed? If the LLC you might not even be able to sell to get out from under it without your partner's signature. Sounds like a very very expensive lesson unless you think you can pick it up or hire someone to pick it up and finish it. Will there be any money left to be made by someone after your $59k write off? I speculate taking your partner to court wont produce dollars even if you get a judgment.
The house still under my name.. we were planning to transfered to LCC after the rehab. But 2 weeks In he dicided not to be partnering and to do the contract with his company. So far I paid him $13,650. For taking down the walls and taking trash out.
Get out from under it. It sounds like you in way over your head. Lots of resources on BP. Look for a wholesaler or an investor. Then listen to podcasts, read some books here on BP and decide if you want to look for another deal and if this is for you. A decent amount of work is done well before you close on anything from analyzing the deal to making sure you have the right team and the right legal docs in place. Due diligence, plan, budget, execute. You might have started at the execute part. Rewind a bit.
Or for all I know there still is a ton of money to be made on that property and you’ll come out ahead. But if you can’t sell to a wholesaler or an investor, it is an expensive lesson. Sorry
Thank you for your advice. I definitely going to learn from this.