Out of State Rehab: Contractor Ghosted Me

25 Replies

Hello Everyone, 

This has been a great resource for me as an amateur real estate investor. I'll jump right into my dilemma. I purchased a fixer upper in Dayton, OH (4bd 2ba) in April of 2017. I chose the same contractor that successfully finished a smaller rehab for me. Long story short he has been promising me for months that it'll be ready next week. I finally got a third party contractor to inspect the property and about 30% of the work has been done.  So in summary within 11 months only 30% of the work has been done. I already informed him to issue me a refund of the money not spent. I have not heard from him since (about 4 days).

What is my course of action? I am in CA and the property is in OH.

Any info would be appreciated.

@Bonifacio Capuyan Im very sorry to hear about your situation. I'm hoping you receive you money back, but be prepared not to get any of it back. You will need to hire an attorney and literally take the contractor to court. The contractor may act right once they realize you're serious. Also, you will need to get another contractor to complete the work if he run with your money. Did you have a contract in place? Do you you have any written communication between you and the slimy contractor? Do you have any records of how and when you paid contractor? Document all the times you think you conversed with the contractor. This is the part of real estate investing that make you experienced and wiser (and "poorer" - if I can inject some humor). PM me and I can get you other advice. Im sorry to hear about these type of situations... Good luck...

@Bonifacio Capuyan - Sorry, you got taken. If you’ve paid money for work not done, assume you’ll never see it again. The cost to get it back is too hard.

Hire someone else and get it finished so you can bring in the rent. Send a written notice to cancel the remaining contract / scope of work and request a refund for the line items not accomplished. If you had a verbal or generic $15,000 for everything deal, it’ll be hard to assess how much he theoretically owes you back. Unless he gets square with you, which is unlikely because A) he’s been lying for 11 months and B) he spent all the money for materials on other stuff already... You could only get that money if you took him to court and doing so isn’t worth the time. (I’m IN town and got taken for $15k and it’s hard to get paid even knowing where they live.)

I have my contractors send me daily pictures, especially before payment draws. Though I had a guy lay out a rooms worth of ungrouted/unthinset tile once when I was out of town to pretend he finished the floor to get a $$ draw from my husband.

@Bonifacio Capuyan @Natalie Schanne Yes. Daily pictures and written descriptions of work is what I do for my clients. Also, video calls and plain videos are effective. It's a tough loss. In this industry, both sides have been burned. The more engaged the contractor or investor is throughout the process, the better it will turn out. Out of town rehabs need a third party inspector to be involved, and you need to find a benchmark of completed work for payments. Always get a copy of their trade license, licence plate, and driver's license. Having them obtain a permit also connects them to the job. Become additionally insured on their general liability insurance policy, and for extreme measure, ask to get a performace bond in the beginning. In Illinois, this will cover the cost if they dont finish the job.. But in your situation, as @Natalie Schanne mentioned, it's going to be hard to get the money. Do what you can to recover it, but get a new guy on the job...

@Bonifacio Capuyan Please PM me with the contractor's name. I'll see if their reputation precedes them here locally.

Your odds of recourse on this situation are unfortunately very slim. I'm sure it's of little consolation to you at this point, but we've all been there. Assuming you have something in writing you can always sue, but in the end most of these guys are uncollectible, so you're just throwing more good money after bad.

Depending on what the property still needs, I can give you a few people who might be able to help you out on the work side at least, including a few reputable property managers.

@Bonifacio Capuyan
When contracting from out of state always hire a 3rd party individual - either an agent , property manager or another contractor to inspect the property and take a lot of pictures. Never trust your contractor.

Originally posted by @Lee Lockhart :
@Bonifacio Capuyan Im very sorry to hear about your situation. I'm hoping you receive you money back, but be prepared not to get any of it back. You will need to hire an attorney and literally take the contractor to court. The contractor may act right once they realize you're serious. Also, you will need to get another contractor to complete the work if he run with your money. Did you have a contract in place? Do you you have any written communication between you and the slimy contractor? Do you have any records of how and when you paid contractor? Document all the times you think you conversed with the contractor. This is the part of real estate investing that make you experienced and wiser (and "poorer" - if I can inject some humor). PM me and I can get you other advice. Im sorry to hear about these type of situations... Good luck...

Hi @Lee Lockhart, I did not have a traditional contract in place, I did have an invoice from the contractor and he emailed me a target date to get his work done. I gave a lot of leeway to this contractor since he did successfully complete a previous rehab for me. (It was a small house 3 bed 1 bath). I do have a lot of emails back and forth from me and the contractor. I do have records of how I paid the contractor. I actually paid him with a business credit card so I contacted my credit card company to issue a chargeback. We'll see how that goes. I do have evidence of the work not being completed based on photos a 3rd party contractor gave me. I admit I was not on top of this project like I should have but I have so many other projects in play I let this one slip off my radar.

Originally posted by @Natalie Schanne :

Bonifacio Capuyan - Sorry, you got taken. If you’ve paid money for work not done, assume you’ll never see it again. The cost to get it back is too hard.

Hire someone else and get it finished so you can bring in the rent. Send a written notice to cancel the remaining contract / scope of work and request a refund for the line items not accomplished. If you had a verbal or generic $15,000 for everything deal, it’ll be hard to assess how much he theoretically owes you back. Unless he gets square with you, which is unlikely because A) he’s been lying for 11 months and B) he spent all the money for materials on other stuff already... You could only get that money if you took him to court and doing so isn’t worth the time. (I’m IN town and got taken for $15k and it’s hard to get paid even knowing where they live.)

I have my contractors send me daily pictures, especially before payment draws. Though I had a guy lay out a rooms worth of ungrouted/unthinset tile once when I was out of town to pretend he finished the floor to get a $$ draw from my husband.

 Thanks Natalie for your reply, I've started reaching out to other contractors to quote me on getting the work completed. I may just have the place cleaned up and sell it as is. I don't want to dig myself into a deeper hole. Sorry this happened to you :-( Looks like I needed a wake up call to get me more serious in managing my business projects. 

I did pay him through a business credit card so I have already initiated a chargeback. If that doesn't fall through I will contact an attorney. 

Originally posted by @Christina Carey :

@Bonifacio Capuyan Please PM me with the contractor's name. I'll see if their reputation precedes them here locally.

Your odds of recourse on this situation are unfortunately very slim. I'm sure it's of little consolation to you at this point, but we've all been there. Assuming you have something in writing you can always sue, but in the end most of these guys are uncollectible, so you're just throwing more good money after bad.

Depending on what the property still needs, I can give you a few people who might be able to help you out on the work side at least, including a few reputable property managers.

 Hi Christina, thanks for your post. I will send you his name via PM. His wife was my realtor and he was my home inspector and general contractor. Yes, I have come to the realization that my chances of getting the money back are not too good. If he was dishonest in telling me that he would be done every week for months, the chances are he'll be dishonest about getting my money back.

I would love some recommendations on reliable contractors and property managers in Dayton. I am already using Real Property Mangagment to manage some units I already have in the area.

Originally posted by @Chris Seveney :

Bonifacio Capuyan
When contracting from out of state always hire a 3rd party individual - either an agent , property manager or another contractor to inspect the property and take a lot of pictures. Never trust your contractor.

 Thanks Chris, Yes I have learned now the hard way that you cannot fully trust a contractor in this business. Already another contractor quoted me $4500 just to dump the existing debris at this property. He said it would be 3 40yard bins and 5 guys for about 4 days. I think he was trying to pull a fast one on me knowing I got duped by the previous contractor.

@Bonifacio Capuyan You have my sympathies. Unfortunately, this is all to common when people are trying to do rehabs remotely. If you PM me the guys name & company, I'll let you know if he's part of the ones on our "list" of people you'll never hear from or collect from. You should certainly pursue them aggressively. Get a local attorney involved on your behalf.

When anyone is doing substantial work remotely, you ABSOLUTELY have to get a 3rd party to oversee or verify the work. While there are a large number of honest contractors, I see far too many who are not. Adding in the distance makes it easy for them to work your project last, or worse just take your money and leave you hanging.

Originally posted by @Darrin Carey :

@Bonifacio Capuyan You have my sympathies. Unfortunately, this is all to common when people are trying to do rehabs remotely. If you PM me the guys name & company, I'll let you know if he's part of the ones on our "list" of people you'll never hear from or collect from. You should certainly pursue them aggressively. Get a local attorney involved on your behalf.

When anyone is doing substantial work remotely, you ABSOLUTELY have to get a 3rd party to oversee or verify the work. While there are a large number of honest contractors, I see far too many who are not. Adding in the distance makes it easy for them to work your project last, or worse just take your money and leave you hanging.

Thanks Darrin, Gotta learn the hard way i guess. I'll take this event as an investment in my real estate education. I'm paraphrasing what they always say on the podcast. I'll PM you the name and will now follow your advice on getting 3d parties to audit/oversee. I'll also pursue legal action if they do not refund my money within the week.

@Bonifacio Capuyan If this contractor remains unresponsive and doesn't settle soon, I am a big believer in making his fraud public - naming and shaming.  Here on BP is a good way to do that but other websites too.  It may help you get a settlement, but even if not, it can be a way for other investors in the area to be aware to avoid this contractor.  I would also consider reaching out to his wife and seeing if you can apply pressure there.  She may have some liability that makes her vulnerable to reporting to her broker and to the state real estate commission.  Use all the leverage you can.

@Bonifacio Capuyan , can you please PM his name to me too. I know local family (wife is a broker and husband is a general contractor) but I heard only good references about them.

Bonafacio,

I know a trusted contractor in the area who generally works on larger projects than yours, but if you need a second opinion or someone who can verify work being completed by your contractor PM me and I'll send you his info.

Originally posted by @Larry F. :

@Bonifacio Capuyan If this contractor remains unresponsive and doesn't settle soon, I am a big believer in making his fraud public - naming and shaming.  Here on BP is a good way to do that but other websites too.  It may help you get a settlement, but even if not, it can be a way for other investors in the area to be aware to avoid this contractor.  I would also consider reaching out to his wife and seeing if you can apply pressure there.  She may have some liability that makes her vulnerable to reporting to her broker and to the state real estate commission.  Use all the leverage you can.

 Hi Larry, all good options to consider and some of them I may use if I don't get cooperation from the opposing party. Some local Dayton real estate industry people have already reached out to me and I've told them privately who they are. If anything the local industry is being made aware.

Originally posted by @Sant Li :

Bonafacio,

I know a trusted contractor in the area who generally works on larger projects than yours, but if you need a second opinion or someone who can verify work being completed by your contractor PM me and I'll send you his info.

Would love the info I'm opening it up to any and all local contractors. 

Originally posted by @Bonifacio Capuyan :
Already another contractor quoted me $4500 just to dump the existing debris at this property.

You can get a new roof to a house of this size cheaper than that :)

Anna Mills is a great contractor. She runs the Toledo REIA and serves on the board of National REIA.

@Bonifacio Capuyan , I accidentally came across this discussion and I am sorry to hear about your situation. Looking at the pictures it seems like you were probably paid to buy this house and not they other way around. Fun aside, as others have mentioned, I still don't see you putting the contractor's name out here in public for everyone to see. Hope to hear your story to see how you were able to overcome this situation -  I am sure you will. Good Luck!

Put his information on blast( Home advisor, Angie’s list and any other websites etc. ) on the web and word of mouth to any other real estate investors not to use that company.

Originally posted by @Rich Lopes :

@Bonifacio Capuyan, I accidentally came across this discussion and I am sorry to hear about your situation. Looking at the pictures it seems like you were probably paid to buy this house and not they other way around. Fun aside, as others have mentioned, I still don't see you putting the contractor's name out here in public for everyone to see. Hope to hear your story to see how you were able to overcome this situation -  I am sure you will. Good Luck!

Hi Rich, I will gladly send the contractor's information via PM. I don't want to publicize it yet for fear or retaliation. If this person is willing to essentially steal and lie they may vandalize or damage the property. I am in CA and the property is in OH. Just mitigating my risk as I'm already in the hole.

Originally posted by @Gregory Hatcher :

Put his information on blast( Home advisor, Angie’s list and any other websites etc. ) on the web and word of mouth to any other real estate investors not to use that company.

 I've let people know privately who are in that City and State and may publicize that data within that regions private FB group.

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