HELP! Contractor Woes on my first investment property!

Member since 2023 · 24 posts · 34 votes

Hi All,

My significant other and I recently bought a duplex with the intention of house hacking back in August of this year. We knew that the unit we were going to occupy needed significant renovations. After interviewing several contractors in our area, we thought we chose the best fit. We were terribly wrong. In the beginning, the contractor was very responsive and attentive to our requests. He said he was going to have our renovations done by the end of October 2023 (he started in Sept). Instead, he has been dragging his feet, dodging our calls and honestly has stopped working on the unit all together. I have already incrementally paid him a total of 36k (w/ credit card) and I don’t know what to do. At this point, I’m considering disputing some of the payments with my bank as he has not provided the agreed upon services. We want to settle this amicably but at the moment this contractor isn’t picking up our calls. As you can imagine, we are racking up expenses as we have to rent elsewhere because the unit is uninhabitable. I greatly appreciate your advice. Thanks in advance!

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Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

@Katelynn Malivert

1. File a complaint with credit card company immediately. Typically they will refund you the money and tell them you paid for work and they didn’t complete it (assuming that is the case) and tell them every attempt to co tact and last time you contacted

2. Were they licensed? If so file a complaint with the local licensing board

That is where I would start.

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Shane Elias-Calles
Developer · Orange County, CA · Member since 2019 · 80 posts · 53 votes
2y
Quote from @Katelynn Malivert:

Quote from @Tracy Ross:

I agree with @Chris Seveney. And potentially look into hiring a real estate attorney who can at first send a letter to the contractor threatening to file suit. If that doesn't get him moving then at least you have someone on retainer in case you need to follow through.
Yes, we actually did contact a lawyer and it would have costed us $2500 just to send out a demand letter. Because this was blatant fraud, we highly doubted the contractor would be spooked enough to pay up. We deemed it would’ve been a waste of resources. However, if we weren’t lucky enough to recoup our expenses from our CC company we were definitely prepared to follow through with litigation but that was our last resort as it would’ve been timely and costly. Luckily for us, our CC company paid us back every dollar that was paid to this contractor.

Try to go to a real estate meet up or get in touch with a local investor who does a lot of deals with a specific contractor. At times referrals are hard to come by as people don't like sharing their ace in the hole but if you build enough relationships and provide some bigger investors enough value they will typically offer some introductions to their good contractors.
I hired a contractor once who ghosted me, I called a larger investor he also worked for and let him know his contractor wasn't showing up. luckily for me the investor was a man of principle and he called the contractor and told him he would pull all of his work from him unless he showed up to my property.
there is power in numbers !
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Shane Elias-Calles:

Quote from @Katelynn Malivert:

Quote from @Tracy Ross:

I agree with @Chris Seveney. And potentially look into hiring a real estate attorney who can at first send a letter to the contractor threatening to file suit. If that doesn't get him moving then at least you have someone on retainer in case you need to follow through.
Yes, we actually did contact a lawyer and it would have costed us $2500 just to send out a demand letter. Because this was blatant fraud, we highly doubted the contractor would be spooked enough to pay up. We deemed it would’ve been a waste of resources. However, if we weren’t lucky enough to recoup our expenses from our CC company we were definitely prepared to follow through with litigation but that was our last resort as it would’ve been timely and costly. Luckily for us, our CC company paid us back every dollar that was paid to this contractor.

Try to go to a real estate meet up or get in touch with a local investor who does a lot of deals with a specific contractor. At times referrals are hard to come by as people don't like sharing their ace in the hole but if you build enough relationships and provide some bigger investors enough value they will typically offer some introductions to their good contractors.
I hired a contractor once who ghosted me, I called a larger investor he also worked for and let him know his contractor wasn't showing up. luckily for me the investor was a man of principle and he called the contractor and told him he would pull all of his work from him unless he showed up to my property.
there is power in numbers !
This is a great idea! Thanks, I will definitely be looking into that here in Cincinnati.
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Alfath Ahmed:

Quote from @Katelynn Malivert:

Hi All,
My significant other and I recently bought a duplex with the intention of house hacking back in August of this year. We knew that the unit we were going to occupy needed significant renovations. After interviewing several contractors in our area, we thought we chose the best fit. We were terribly wrong. In the beginning, the contractor was very responsive and attentive to our requests. He said he was going to have our renovations done by the end of October 2023 (he started in Sept). Instead, he has been dragging his feet, dodging our calls and honestly has stopped working on the unit all together. I have already incrementally paid him a total of 36k (w/ credit card) and I don’t know what to do. At this point, I’m considering disputing some of the payments with my bank as he has not provided the agreed upon services. We want to settle this amicably but at the moment this contractor isn’t picking up our calls. As you can imagine, we are racking up expenses as we have to rent elsewhere because the unit is uninhabitable. I greatly appreciate your advice. Thanks in advance!

I would have fired the contractor after the first couple times that he was slacking. You guys dragged it too much. But it is okay because it is your first deal. Find a new contractor. Look in real estate facebook groups from contractors, hvac, etc in your city.
Your right! This was/is a huge learning experience.
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Gabe R. Gonzalez
Property Manager · Chicago · Member since 2021 · 61 posts · 32 votes
2y
@Katelynn Malivert It looks like others have given you some good pointers. If nothing else works, tell him you'll write off any work he hasn't done by issuing him a 1099. He'll have to pay taxes on this and might put him on the radar of the IRS. Might be a good scare tactic to keep in your pocket.
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John Patterson
Contractor · Canton, GA · Member since 2015 · 111 posts · 81 votes
2y
@Katelynn Malivert do you have his business license or address? Go see him and confront him with your agreement that you both signed. Ask for reparations or there will be a court date in small claims. May or may not work, but you going to his business shows that you know where he lives… and not going away. Your other option is to send him a certified letter with a notice to stop, and find the higher priced better contractor.
Contractors are like Toyotas; the good ones are usually more expensive , well seasoned from a few years of use , start when you want them to, and run long and hard. But you still need to make sure they have insurance.
1 Reply
Katlynn Teague
Real Estate Agent · Atlanta, GA · Member since 2022 · 352 posts · 219 votes
2y
Hey Katelynn, first off love the name!!

I am so sorry this situation happened. I know you probably did not go into it expecting the worst to happen. You need to do everything you possibly can to get that money back and hopefully give that crook what he deserves. You have had a lot of good advice given to you up top, just a matter of turning it into action now!

My boyfriend and I are looking at doing the same thing. We found a duplex that was severely fire-burned. Probably looking at a renovation budget of $130k. Trying to find reliable licensed contractors is the hardest part. However, we will not work with anyone who cannot provide at least 5 quality referrals and is fully licensed. I know some investors work with unlicensed contractors and get great work with cheaper cost but its all about liability.
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Katlynn Teague:

Hey Katelynn, first off love the name!!

I am so sorry this situation happened. I know you probably did not go into it expecting the worst to happen. You need to do everything you possibly can to get that money back and hopefully give that crook what he deserves. You have had a lot of good advice given to you up top, just a matter of turning it into action now!

My boyfriend and I are looking at doing the same thing. We found a duplex that was severely fire-burned. Probably looking at a renovation budget of $130k. Trying to find reliable licensed contractors is the hardest part. However, we will not work with anyone who cannot provide at least 5 quality referrals and is fully licensed. I know some investors work with unlicensed contractors and get great work with cheaper cost but its all about liability.

I agree! Thankfully we have gotten all our money back via our bank; now we are moving forward with qualified and Licensed contractors. Thanks for your response and good luck on your house hack!
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @John Patterson:

@Katelynn Malivert do you have his business license or address? Go see him and confront him with your agreement that you both signed. Ask for reparations or there will be a court date in small claims. May or may not work, but you going to his business shows that you know where he lives… and not going away. Your other option is to send him a certified letter with a notice to stop, and find the higher priced better contractor.
Contractors are like Toyotas; the good ones are usually more expensive , well seasoned from a few years of use , start when you want them to, and run long and hard. But you still need to make sure they have insurance.
Hey John, great advice! We did confront him via a call with a police officer (which he answered( but of course he denied everything. He never had a place of business but we do have a residential address. Instead of potentially putting ourselves in harms way we went ahead and filed a fraud report with our bank (I made payments with a CC). We recently were refunded 100% of the charges that was made to this contractor. Now we are in the process of working with Ohio’s DA in order to prevent this from happening to other people. A demand letter was going to cost us $2500 and we figured it wouldn’t be helpful as this guy was blatantly scamming us. We are now working with new licensed contractors that were vetted thoroughly and we are dividing the work between several business instead of having one do everything.
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Gabe R. Gonzalez:

@Katelynn Malivert It looks like others have given you some good pointers. If nothing else works, tell him you'll write off any work he hasn't done by issuing him a 1099. He'll have to pay taxes on this and might put him on the radar of the IRS. Might be a good scare tactic to keep in your pocket.
Thanks Gabe, never thought about this. As of 12/11 he refuses to respond to any correspondence from us so that may not work in our situation, but I will keep that in my back pocket for future reference. All in all, we were able to get all our money back from our bank. So as of now, I’m just working on reporting his ***! Thanks for your response.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Katelynn Malivert:

Glad you got your money back and hope the original scammer gets what is due him.

When you say you're dividing work between Contractors, do you mean you hired more than one General Contractor? Hope not.... More likely you are acting kinda as an Owner/Builder and hiring the Sub-contractors (Plumbers/Electricians/Hvac/Etc) yourself?
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Bruce Woodruff:

Quote from @Katelynn Malivert:

Glad you got your money back and hope the original scammer gets what is due him.

When you say you're dividing work between Contractors, do you mean you hired more than one General Contractor? Hope not.... More likely you are acting kinda as an Owner/Builder and hiring the Sub-contractors (Plumbers/Electricians/Hvac/Etc) yourself?

Hey Bruce! No I just hired one GC to do one area of the unit, the bathroom. We hired someone else to finish up the dry wall and we’re going with a local flooring company to do our floors. All were vetted and licensed. Yes, we are hiring our own plumber and will use the electrician that the GC has recommended. This is all for one area of the house, the bathroom. Once the bathroom is done and if the experience goes well, we will most likely hire that GC to do our kitchen. But right now we are taking baby steps. Great question!

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Benjamin Sulka
Cleveland, OH · Member since 2022 · 826 posts · 578 votes
2y
Katelynn,
So relieved that you got your money back. Your persistency through this adversity is extremely commendable!
What was your process for interviewing contractors?
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Account Closed
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
2y
@Katelynn Malivert
I'm so happy to hear you got your money back!!...and I would totally pursue your legal options since they tried breaking in! One other thing I'd add is that I never pay my contractors in full before the work is done. If anything, consider breaking the payments up into chunks. Agree on payment after X is done...then another payment after Y is done...etc.
The problem with some contractors is they work many projects at once. If any of those fall behind or cost more, they take money from another project to cover it...thus causing another investor(s) issues.
Anyway, my two cents :)
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Account Closed:

@Katelynn Malivert
I'm so happy to hear you got your money back!!...and I would totally pursue your legal options since they tried breaking in! One other thing I'd add is that I never pay my contractors in full before the work is done. If anything, consider breaking the payments up into chunks. Agree on payment after X is done...then another payment after Y is done...etc.
The problem with some contractors is they work many projects at once. If any of those fall behind or cost more, they take money from another project to cover it...thus causing another investor(s) issues.
Anyway, my two cents :)
Thanks CJ! Yes we learned that quickly. I appreciate your response.
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Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
2y
Hi @Katelynn Malivert - I am super sorry to hear about this tough experience, but believe me you are not alone. This is too often a story I hear about contractors and it really stinks because they are giving the rest of us a horrible name.
I have a couple of questions that can help us understand exactly where you are at.
What was the original contract value?
What was the scope of work?
What % of the scope of work is completed/remaining?
Was there a contract signed?
How much do you think it will cost to finish it?
What area/state/city are you in? Here in Illinois in Chicago it is quite difficult to recover money and the state makes it easy for contractors to put in place a mechanic lien.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Account Closed:

The problem with some contractors is they work many projects at once. If any of those fall behind or cost more, they take money from another project to cover it...thus causing another investor(s) issues.
Any decent General Contr will have a few jobs going at once. They need to keep their crews and their subs busy and there are always delays on jobs where you need to take your guys over to another jobsite to work.
Examples - The lumber does not arrive when it was supposed to. Or the customer does not pay when they're supposed to.....You can't have your guys standing around all day, so you get them over to other jobs.
1 Reply
Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Jonathan Klemm:

Hi @Katelynn Malivert - I am super sorry to hear about this tough experience, but believe me you are not alone. This is too often a story I hear about contractors and it really stinks because they are giving the rest of us a horrible name.
I have a couple of questions that can help us understand exactly where you are at.
What was the original contract value?
What was the scope of work?
What % of the scope of work is completed/remaining?
Was there a contract signed?
How much do you think it will cost to finish it?
What area/state/city are you in? Here in Illinois in Chicago it is quite difficult to recover money and the state makes it easy for contractors to put in place a mechanic lien.

Hi Jonathan,
I believe in my original and updated post these questions were answered; however it can get lost in all the replies etc. I am happy to answer your questions nonetheless.
The original contract value and monies paid was $43k (I originally wrote $36k but that was an error).
The scope of work was a full home renovation including bathroom, kitchen, flooring, electrical, plumbing, demo of half-walls, & lighting.
The percentage of work completed couldn’t have been more than 20%. Demo was done, some electrical and plumbing (however by an unlicensed person -we found this out after the fact). A few pieces of tile work in the bathroom (which was done incorrectly and was completely gutted by our new contractor). The unit was left uninhabitable.
Yes, there was a signed contract.
It will probably cost us approx $50k to do the entire home. We are already putting in almost 20k in the bathroom, as everything that was previously done had to be gutted and redone to meet quality standards.
I am in the Cincinnati area. Luckily we found a new licensed contractor to work with. Right now he is only doing the bathroom, we will see how everything goes but right now we are happy with the progress.
Hopefully this answers your questions Jonathan. Thanks so much for your response!
1 Reply
Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Benjamin Sulka:

Katelynn,
So relieved that you got your money back. Your persistency through this adversity is extremely commendable!
What was your process for interviewing contractors?

Hey Benjamin! Thank you so much. I consider myself very lucky to have the outcome I did. The process of interviewing was mainly done by my boyfriend. He interviewed about 6 contractors, half never got back to us with an estimate after viewing the property. In Ohio, a license isn’t required for a GC so we weren’t adamant about our contractor having one (although we should have been). The contractor we chose was initially very professional; he communicated with us efficiently and quickly. He had reached out to my boyfriend via a post my boyfriend made in his real estate group.
2 Reply
Tracy Ross
Member since 2022 · 75 posts · 73 votes
2y
Quote from @Katelynn Malivert:

Quote from @Tracy Ross:

I agree with @Chris Seveney. And potentially look into hiring a real estate attorney who can at first send a letter to the contractor threatening to file suit. If that doesn't get him moving then at least you have someone on retainer in case you need to follow through.
Yes, we actually did contact a lawyer and it would have costed us $2500 just to send out a demand letter. Because this was blatant fraud, we highly doubted the contractor would be spooked enough to pay up. We deemed it would’ve been a waste of resources. However, if we weren’t lucky enough to recoup our expenses from our CC company we were definitely prepared to follow through with litigation but that was our last resort as it would’ve been timely and costly. Luckily for us, our CC company paid us back every dollar that was paid to this contractor.

That's amazing- It is truly horrific what some of these contractors are out here doing to people.
1 Reply
LaTonya Clark
Real Estate Broker · NY · Member since 2020 · 70 posts · 27 votes
2y
great advice Steven!
0 Reply
Jerryian Francois
Investor · Miami, FL · Member since 2017 · 84 posts · 37 votes
2y
Quote from @Katelynn Malivert:

Quote from @Tracy Ross:

I agree with @Chris Seveney. And potentially look into hiring a real estate attorney who can at first send a letter to the contractor threatening to file suit. If that doesn't get him moving then at least you have someone on retainer in case you need to follow through.
Yes, we actually did contact a lawyer and it would have costed us $2500 just to send out a demand letter. Because this was blatant fraud, we highly doubted the contractor would be spooked enough to pay up. We deemed it would’ve been a waste of resources. However, if we weren’t lucky enough to recoup our expenses from our CC company we were definitely prepared to follow through with litigation but that was our last resort as it would’ve been timely and costly. Luckily for us, our CC company paid us back every dollar that was paid to this contractor.

Wow that’s awesome glad you got your money back ! What awesome cc company allowed the refund just curious !?
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Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
2y
@Katelynn Malivert - Totally my fault didn't realize I was on the 2nd page and coming to the party late!
Anyway, that is awesome that you were able to get your money back - God is good! Also super smart to take baby steps to get it finished up.
Most importantly thank you for taking action and filing a report. I wish more people in my area (Chicago) would do that because so many of these general contractors just go from person to person to person robbing them.
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Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Jerryian Francois:

Quote from @Katelynn Malivert:

Quote from @Tracy Ross:

I agree with @Chris Seveney. And potentially look into hiring a real estate attorney who can at first send a letter to the contractor threatening to file suit. If that doesn't get him moving then at least you have someone on retainer in case you need to follow through.
Yes, we actually did contact a lawyer and it would have costed us $2500 just to send out a demand letter. Because this was blatant fraud, we highly doubted the contractor would be spooked enough to pay up. We deemed it would’ve been a waste of resources. However, if we weren’t lucky enough to recoup our expenses from our CC company we were definitely prepared to follow through with litigation but that was our last resort as it would’ve been timely and costly. Luckily for us, our CC company paid us back every dollar that was paid to this contractor.

Wow that’s awesome glad you got your money back ! What awesome cc company allowed the refund just curious !?
Hey Jerryian, Bank Of America!
0 Reply
Katelynn Malivert
OP
Member since 2023 · 24 posts · 34 votes
2y
Quote from @Jonathan Klemm:

@Katelynn Malivert - Totally my fault didn't realize I was on the 2nd page and coming to the party late!
Anyway, that is awesome that you were able to get your money back - God is good! Also super smart to take baby steps to get it finished up.
Most importantly thank you for taking action and filing a report. I wish more people in my area (Chicago) would do that because so many of these general contractors just go from person to person to person robbing them.
Hey Jonathan, no worries at all! And yes I agree, God is good!
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Tracy Ross:

It is. But it's really a small percentage. Let's remember that we only hear about the horror stories....the great guys that do the awesome work never even get a thank you :-)
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