Investor · Lawrenceville, GA · Member since 2016 · 3 posts · 1 vote
Hello BP community. Just closed our first rehab deal 13 days ago. We got a few bids and decided to use contractor referred to us by wholesaler who also does several flips in the same area. Prior to closing on property the contractor was very responsive and was waiting on us to tell him when to start. We met with him 7 days ago to sign contract and gave deposit for 10% of total project with additional partial payment due after completion of phase 1. Contract has work schedule attached indicating what will be worked on during specified dates and target dates for completion. Since signing contract the contractor is less responsive to phone calls and texts. He and his workers have only been by the property once and done minimal prep. The contractor replies at his convenience and gives excuses for the workers not being present. Technically he will not be off schedule until 2 more days, however I do not feel good about how things are starting off. I would love to hear suggestions and tips as to how others deal with this circumstance or tips to avoid in the future. Thanks!
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
7y
It won't get better, it will only get worse. Not starting even close to the day you're supposed to is a huge red flag. Move on now and save yourself some trouble.
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
7y
It won't get better, it will only get worse. Not starting even close to the day you're supposed to is a huge red flag. Move on now and save yourself some trouble.
@Sonja Regis I agree with @Aaron McGinnis , contractors do not get better over time if they're starting out this poorly. I know of a service that helps manage the contractors for you so that if this happens they can go back and coordinate with other contractors immediately. Let me know if that seems useful.
Flipper/Rehabber · Davie, FL · Member since 2016 · 101 posts · 136 votes
7y
@Sonja Regis it’s no better here in Florida. I’ve gotten so frustrated that I’m working towards my own GC license.
It’s too late now, but I recommend including penalty clauses in the contract for missing target dates. Many contractors have penalty clauses for clients who are late on payments, so this makes it go both ways.
Contractors make sure they always have work by overloading themselves with projects. I think many are just poor at time management and don’t really do it to screw over clients, but you have to protect your investment as every day costs you money.
Call him and let him know you intend to cancel the contract and seek a full refund if he falls behind the schedule that he created.
Investor · Lawrenceville, GA · Member since 2016 · 3 posts · 1 vote
7y
@Aaron McGinnis
I have been thinking this is what we should do, planning to consult our attorney to figure out the logistics in regards to receiving our deposit back. I am sure he will likely say he has already spent it on supplies, etc.
Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
7y
@Sonja Regis He's using your down payment to finish the previous project he didn't finish. You'll likely be in the same boat when you get to the end and he can't complete the work on the last draw.
I was burned by a contractor like this once and never again. They get no money up front and you pay for all materials yourself. They get paid for completing projects. If they don't agree, don't hire them.
Developer · Dallas, TX · Member since 2015 · 84 posts · 79 votes
7y
@Sonja Regis
Fire him and move on. In the future make sure you ask to speak with his prior clients. At least 3. Then go by one of his jobs to see how he works before you how him. And like what was mentioned, build in a penalty clause for missed deadlines. Good luck! Besides buying at the right price, Managing contractors is really where the money is made or lost in flipping and is a constant battle for all of us.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
All those sister companies sketch me out. References are everything. Sorry this happened to you. At least you were smart and didn't give him much up front. I agree with what others have said. Get what materials you can back, try to meet him in person, and hire a new contractor. Unfortunately, this will probably cost you some money.
I would start messaging all the big players on BP in your area and asking for references. They would gladly give you their contractors name rather then see you lose tons of money on this property.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
7y
We write the contract with our attorney. No money changes hands until our attorney approves all work completed & receipts. Arms length & it worked, his para-legal is a 100lb bulldog who also owns a lot of property. On a new build we did the GC bailed & walked away from a $7 hold back. He complained & threatened but we finished it for about $1,500 in materials & he was history.