Tax, SDIRAs & Cost Segregation

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Barrett Lund
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Lost All Faith in Contractor - What Are My Options?

Barrett Lund
Posted Nov 19 2022, 15:08

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 

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Olivia Radziszewski
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Olivia Radziszewski
  • Realtor
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Replied Nov 20 2022, 05:00

@Barrett Lund- Contractors can definitely be difficult to deal with! I am not sure what you mean by he is failing to give you a timeline. Sounds like things got muddled with the additional items that came up and perhaps you also failed to ensure that you got a clear budget and timeline for said additional items. These things happen! However, it is your project and therefore it is not acceptable that you have no idea when your project will be complete or how much you will be paying. If you are able to go to the property while he is there, I would do so and say simply that. 

It is a delicate dance with contractors and that is why when you find a good one hold on to them! Good luck!

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Mike Dymski#4 Private Lending & Conventional Mortgage Advice Contributor
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Mike Dymski#4 Private Lending & Conventional Mortgage Advice Contributor
  • Investor
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Replied Nov 20 2022, 05:32

Do exactly what you have laid out...let him know that you are serious, have him stop work, and invoice for work completed to date.  And to provide a firm written quote with line items for the remainder of the work.  Discuss with him that the current path has not worked for either of you and that it's time to deal with it, no exceptions.  The likely outcome is that you will end up with a high bill and then have to get another contractor to finish the work.  Ask me how I know that...

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Barrett Lund
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Barrett Lund
Replied Nov 20 2022, 09:58
Quote from @Mike Dymski:

Do exactly what you have laid out...let him know that you are serious, have him stop work, and invoice for work completed to date.  And to provide a firm written quote with line items for the remainder of the work.  Discuss with him that the current path has not worked for either of you and that it's time to deal with it, no exceptions.  The likely outcome is that you will end up with a high bill and then have to get another contractor to finish the work.  Ask me how I know that...

 Sound advice, what I am afraid of is this "high bill" - how can I contest this invoice if I don't agree with some of the charges, prices in general, and is there any recourse for the fact that he has not outlined these additional costs before continuing to work?

Also, would you both agree this is the correct forum to post this thread in for the highest visibility?

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Mike Dymski#4 Private Lending & Conventional Mortgage Advice Contributor
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Mike Dymski#4 Private Lending & Conventional Mortgage Advice Contributor
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Replied Nov 20 2022, 10:34

Without anything in writing, there is no good way to contest on your side and defend on his side.  His recourse is filing a lien, your recourse is a lawsuit, which no attorney will take.

The rehab and flipping or contractors forum is likely better but it may not matter.  I replied and had no idea which forum this was in.

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Barrett Lund
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Barrett Lund
Replied Nov 20 2022, 10:43

There are texts with me repeatedly asking for numbers, and updates. There was an initial contract back in April with outlines. Are you saying he has more leverage than me when it comes to filing a lien vs lawsuit?

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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Replied Nov 20 2022, 12:55
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 

 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. More work than verify again and keep moving forward. My guys send me videos of what they are doing and any issues they run across. I pay them in 3 draws. Final when we verify all completed  

All the best 

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Barrett Lund
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Barrett Lund
Replied Nov 20 2022, 12:58
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Replied Nov 20 2022, 13:04
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

Again, you have no oversight. You do not have a team. Now you are in a terrible situation. You do not have any choice but to verify what " more " he has done. If legit, pay him and move on. Next time, PLEASE have a team in place, RE does not have the be so stressful 
Good luck 

 BTW where is this ? 

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Barrett Lund
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Barrett Lund
Replied Nov 20 2022, 13:10
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

Again, you have no oversight. You do not have a team. Now you are in a terrible situation. You do not have any choice but to verify what " more " he has done. If legit, pay him and move on. Next time, PLEASE have a team in place, RE does not have the be so stressful 
Good luck 

 BTW where is this ? 

 How can I "verify" what he has done - who would be the mediator if I don't agree with what he invoices?

Texas

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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Bob Stevens#3 Rehabbing & House Flipping Contributor
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Replied Nov 20 2022, 13:17
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

Again, you have no oversight. You do not have a team. Now you are in a terrible situation. You do not have any choice but to verify what " more " he has done. If legit, pay him and move on. Next time, PLEASE have a team in place, RE does not have the be so stressful 
Good luck 

 BTW where is this ? 

 How can I "verify" what he has done - who would be the mediator if I don't agree with what he invoices?

Texas


 Why would you do deal in an area that you do not have a team? Ok so hire an inspector, or hop on a plan, Lesson learned 

Good luck 

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Dan Heuschele
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Dan Heuschele
  • Investor
  • Poway, CA
Replied Nov 20 2022, 18:27

My biggest mistake dealing with contractors is not replacing them at first signs of issues.   The contractor and I both hope that things will improve; That they will suddenly start meeting their commitments when they have been unable to meet their existing commitments. 

Replacing a contractor requires you to admit you made a mistake hiring the contractor, requires having to fire existing contractor,  requires getting new quotes and hiring a new contractor, requires recognizing the project will take longer and cost more than initially planned. 

My experience is that keeping a contractor that is not performing will be more costly and take longer than dealing with the problem.  However, the project will over run initial cost estimates and not meet the initial expected completion timeline.  

Good luck

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Barrett Lund
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Barrett Lund
Replied Nov 20 2022, 19:14
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

Again, you have no oversight. You do not have a team. Now you are in a terrible situation. You do not have any choice but to verify what " more " he has done. If legit, pay him and move on. Next time, PLEASE have a team in place, RE does not have the be so stressful 
Good luck 

 BTW where is this ? 

 How can I "verify" what he has done - who would be the mediator if I don't agree with what he invoices?

Texas


 Why would you do deal in an area that you do not have a team? Ok so hire an inspector, or hop on a plan, Lesson learned 

Good luck 

I'm in the area, and I'm a first time investor.

At this point, I am afraid of him "over" invoicing me because I am firing him. How can I be certain that the costs he is charging me for are legitimate. Keeping in mind, he believes I owe him for work he has already completed, more than I have already paid him. Is it basically, the price is his price and if I disagree its lawsuit/lien battle?

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Bob Stevens#3 Rehabbing & House Flipping Contributor
  • Real Estate Consultant
  • Cleveland
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Bob Stevens#3 Rehabbing & House Flipping Contributor
  • Real Estate Consultant
  • Cleveland
Replied Nov 21 2022, 05:40
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:
Quote from @Bob Stevens:
Quote from @Barrett Lund:

Apologies in advance if this is the wrong area to post. 

I am pretty fed up with my contractor and would like some advice on what my available options are. I started the renovation/remodel of my four unit complex in April of this year. This was quite the extensive project, and I was comfortable with the initial budget, and timeline of 90 to 120 days. We are now in November and the project is nowhere close to being completed as initially devised. Throughout the months of working on this project, there have been things that have come up that were not able to be seen in the initial inspection (wood rot, termite damage, etc). This has obviously made the initial budget more expensive. However the contractor never told me how much these things were going to cost, just that they were getting done. I asked for numbers, and never got answers. We are now at the point where he is telling me he has spent a lot more than what I have given him. I never gave permission for any overages. I have also asked on several occasions to get an updated completion timeframe and final (hard) budget number and the contractor is failing to do so. I am at the point now where, I want to (reasonably) pay for what has been done, nothing more and part ways. What is the best course of action to do so? Or general advice for my situation. I can provide more detail as needed. 


 This is ANOTHER reason I tell everyone "Never do a deal without a team that does not have a mutually rewarding outcome " Well you do not have a choice but to fire him and then keep your fingers crossed you do not get into this same situation again. NEVER pay for labor until you know its 100% completed, then pay another draw. Then and verify again and keep moving forward 

All the best 

For what I have paid him so far he has definitely spent more than that, and if no more work was completed and I didn't give him anymore money I would be happy to just let it be. However he is saying he has spent significantly over what I have given him. 

Again, you have no oversight. You do not have a team. Now you are in a terrible situation. You do not have any choice but to verify what " more " he has done. If legit, pay him and move on. Next time, PLEASE have a team in place, RE does not have the be so stressful 
Good luck 

 BTW where is this ? 

 How can I "verify" what he has done - who would be the mediator if I don't agree with what he invoices?

Texas


 Why would you do deal in an area that you do not have a team? Ok so hire an inspector, or hop on a plan, Lesson learned 

Good luck 

I'm in the area, and I'm a first time investor.

At this point, I am afraid of him "over" invoicing me because I am firing him. How can I be certain that the costs he is charging me for are legitimate. Keeping in mind, he believes I owe him for work he has already completed, more than I have already paid him. Is it basically, the price is his price and if I disagree its lawsuit/lien battle?


 Sir you have no choice but to meet with him at the property and come to a mutually agreement. All this stress and aggravation could have been avoided,  

Lesson learned, 

Good Luck