Should contractor still be working on the rehab during pandemic?

Rehabbing & House Flipping
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Should contractor still be working on the rehab during pandemic?

Stephen Kunen
Rental Property Investor · Bedminster, NJ · Member since 2014 · 217 posts · 60 votes

For those of you who are in the middle of a rehab project, are you still letting your contractors work on the project? In our case, there are no more than 5 people working there at the same time. If not, can we request the lender (specially a hard money lender) to extend the term of the loan? We are in Allentown, Pennsylvania.

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Bill Kramer
Contractor · Evansville, IN · Member since 2019 · 142 posts · 208 votes
6y

I'm not stopping. As long as home depot is open, I'm headed to work. It's not that I am desperate for $ or work, but the utilities dont want to hear how you cant pay, or the credit card companies, etc...housing may be giving a break on mortgages/rent but no one else is.

Also, I learned this lesson painting apartments. You keep that cash flowing at all costs, because once you stop that train it takes a while to get it moving again.

If we get a shelter in place order, go ahead and try to enforce it...Bath doctor offers sanitary services, so boom I'm in the critical field and leave me alone.

This should come as a blessing to penny pinching landlords, there's ALOT of factory workers out of work now, so cheap labor is plentiful. That's my only concern, now I am bidding against these guys and losing work (already lost 2 major remodels) because these clowns are coming in at 25% of my prices. Sorry, I'm not gonna work for $10/hr before taxes like those guys.

So I'm gonna make as much as I can before losing too much money to these idiots who are happy with a $400/wk cash payday to supplement their unemployment benefits.

Shameless plug: I am always looking for more work, help me hire these guys so I dont have to compete against them haha.

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  • Mauricio A.
    Bronx, NY · Member since 2017 · 94 posts · 14 votes
    6y

    I recently had a few contractors back out of a rehab project in my home (currently vacant - getting it rent ready) due to COVID-19 concerns.  Seems like contractors themselves are unwilling to do work during this period. 

    1Reply
  • Will Wright
    Rental Property Investor · Grand Prairie, TX · Member since 2019 · 5 posts · 1 vote
    6y

    @Stephen Kunen I’m in a similar predicament here in Dallas. My contractors want to work, however with the new shelter-at-home order that was given, I’m still not sure if it’s even legal for them to do so. I’m also in the middle of rehab using hard money.

    1Reply
  • George W.
    Investor · NJ · Member since 2018 · 869 posts · 921 votes
    6y

    I think people are going to have a tough time finding good contractors for a little bit. Smart business savvy contractors who dont want to risk getting sick are taking some time off. I think the only ones actively looking for work are desperate ones who've got financial issues and come with other issues. Two problems  

    #1 alot of building departments are closing so you cant drop off permits. They're still inspecting large commercial "essential" projects though. 

    #2 contractors are having a tough time convincing their workers and subs to show up.

    Personally as a plumbing and heating contractor I want to limit my exposure to absolute emergencies only for existing customers.

    5Reply
  • Fred Shatzoff
    Lender · Member since 2019 · 604 posts · 160 votes
    6y

    Talk to your contractor and see what they want to do.  @Stephen Kunen  you are an Attorney what would you recommend to your client.  I know it is tough decision.  We can not be selfish now.  What kind of fine would you incur.  My personnel opinion put the work on hold.  

    1Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Stephen Kunen:

    For those of you who are in the middle of a rehab project, are you still letting your contractors work on the project? In our case, there are no more than 5 people working there at the same time. If not, can we request the lender (specially a hard money lender) to extend the term of the loan? We are in Allentown, Pennsylvania.

     You should definitely get in front of this and discuss the situation with your hard money lender. They typically grant extensions for a fee. Hopefully they will waive it and be reasonable due to the situation but they are not regulated or backed up by the banks so they do not have to work with you.

    2Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    6y

    For states with shelter-in-place order, contractors can not be on-site. As that lifts, I would still be putting in precautions as to how many people are on-site and making sure they have cleaning supplies to disinfect all areas while working and after. I have some workers who are available, but I don't want to start projects until I have a better idea of the longevity of the shelter-in-place in my state since, as most said, permit inspections are unavailable now. You can still file for permits where I am, if you can do it electronically, which you haven't been able to do in the past, but they aren't closing permits indefinitely so even if you were to finish a renovation, your permits would not get closed.

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    4Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    The contractor can't do the work on their own (you said max of 5 people on site).  If they could do it on their own and had everything they needed on site and the place was livable, they could just stay there if they wanted to. If I was doing a reno that is what I'd do.  My guess is it depends on your location, what is happening and how contractors are classified (essential service or not).  I've received emails from some companies I've used for work and some are still working as they can maintain distance between workers by using separate trucks and on the ground and work outside.

    1Reply
  • Bill Kramer
    Contractor · Evansville, IN · Member since 2019 · 142 posts · 208 votes
    6y

    I'm not stopping. As long as home depot is open, I'm headed to work. It's not that I am desperate for $ or work, but the utilities dont want to hear how you cant pay, or the credit card companies, etc...housing may be giving a break on mortgages/rent but no one else is.

    Also, I learned this lesson painting apartments. You keep that cash flowing at all costs, because once you stop that train it takes a while to get it moving again.

    If we get a shelter in place order, go ahead and try to enforce it...Bath doctor offers sanitary services, so boom I'm in the critical field and leave me alone.

    This should come as a blessing to penny pinching landlords, there's ALOT of factory workers out of work now, so cheap labor is plentiful. That's my only concern, now I am bidding against these guys and losing work (already lost 2 major remodels) because these clowns are coming in at 25% of my prices. Sorry, I'm not gonna work for $10/hr before taxes like those guys.

    So I'm gonna make as much as I can before losing too much money to these idiots who are happy with a $400/wk cash payday to supplement their unemployment benefits.

    Shameless plug: I am always looking for more work, help me hire these guys so I dont have to compete against them haha.

    9Reply
  • Brett Peters
    Specialist · Lancaster, PA · Member since 2018 · 152 posts · 66 votes
    6y

    @Stephen Kunen I'm actually in the middle of a major rehab in Reading, Pa. I have shut down all operations mostly due to the lack of motivation on behalf of the contractors. As you know, all non- life essentials have been mandatory to desist. It is safer to you to avoid anytime of fine or penalty to desist. If one if your workers contracts the virus and claims it occured on the premises it could pose major ramifications. I have already seen lawsuits within business establishments taking place. To answer your question in regard to the hard money lender, you would have to draft an amendment to the private money contract and have the lender sign it. Best of luck!

    3Reply
  • James G.
    Investor · St Louis, MO · Member since 2017 · 250 posts · 181 votes
    6y

    @Stephen Kunen I am in the St. Louis market. My projects are still moving along, just as they had been in the past. However, I am only a week away from completion and my contractor has a big payment waiting for him. Finding ways to keep your contractors motivated, especially in times like these is going to play a big part in your ability to keep construction moving along. 

    2Reply
  • Bob Floss II
    Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
    6y

    I've seen very mixed reactions. Some clients are saying contractors won't show, others are still moving forward. I may depend how many people are on site. If you are doing a house, I think it's possible to only have one or two contractors in the house to avoid concern and keep getting work done. If you are trying to work within a condo building or complex, you might have to just put the project on hold. 

    1Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    I called all 3 of the customers I have jobs working on . I told them I am still working BUT I need cash today so I can get materials stocked . Only one balked and I told him due to the state of emergency his completion date will be open ended then .  He agreed . 

    1Reply
  • Sati Ah
    Member since 2020 · 5 posts · 4 votes
    6y

    First thing I did was speak with my contractor. He was very adamant that he wanted to complete the job. It is the last few days until completion. No more then 3 people on the site per day. Everyone has there own comfort level around risk. Conversations are good to have at this, of course from a distance. As I keep moving my business forward, I may hold off to start the next one which is set to close escrow next week. 

    Be Well. 

    2Reply
  • Bryan Devitt
    Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
    6y

    We're still working on our projects. Even states that are issuing shelter in place are deeming construction workers to be essential employees from what I have seen in MA and CA, not sure about other states. There are a lot of "essential" employees that can go to work, but somehow everyone we employ with our taxes locally (that rarely are face to face with people and collect their checks no matter what) aren't on the list. Funny how that works. 

    1Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    @Stephen Kunen

    I am still working but on a flip for a client and I’m by myself. It’s 1/4 mile from my house, I’m making as little trips to Home Depot as possible, and not going to do anything in an occupied house that isn’t an emergency, also not quoting jobs while this is going on. While I’m not sure if I’m a life-sustaining business or not, I need to keep working both for my sanity and financial reasons. I will only stop when my wife says no more (or I get arrested).

    My 17 y/o asked me the other day if I will collect unemployment if I can’t work. Sorry kid, self employed dad can’t collect unemployment.

    @Mauricio A. I’ll still gladly take a look at your work when this sh*# slows down! Bethlehem had a handful of new cases today.

    1Reply
  • Mauricio A.
    Bronx, NY · Member since 2017 · 94 posts · 14 votes
    6y

    @Matt M. let me know when you're ready!  Let's talk again. 

    1Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    I have one place with 2 painters painting.  I delivered extra paint yesterday.  

    Another house started laying hardwood floor today.  It has 2-3 people at a time working.  I delivered the hardwood last week so it could sit in the house for a few days before laying.  

    We are not on lock down in TN.  Recommend staying in, food and drinks pick up only, etc.

    1Reply
  • Alicia Zazirski
    Santa Clarita, CA · Member since 2020 · 3 posts · 5 votes
    6y

    @Stephen Kunen my understanding is that construction is an essential job. A friend is in the middle of a kitchen renovation and they have not stopped working. They can't leave her without a kitchen for an unknown period of time.

    2Reply
  • Jacob Graves
    Investor · Cleveland, OH · Member since 2019 · 64 posts · 29 votes
    6y

    @George W.

    I'm not trying to pick apart your post but dont assume that because a contractor is in a bad financial spot that they are not a quality contractor?

    We all have our own struggles, I'll admit I'm personally set back because of some very unexpected vet Bill's and none of us had really anticipated this slowdown.

    I agree with you that some contractors are nervous but dont label those of us who need to work as sub par.

    Take care.

    5Reply
  • Kanwar Sodhi
    Real Estate Agent · Chantilly, VA · Member since 2016 · 245 posts · 61 votes
    6y

    As long as they keep their distance from each other, it's not like the virus will stick to the walls, let them finish. Good for them to get paid while all this going on

    1Reply
  • Dutch Langley
    Flipper/Rehabber · Matthews, NC · Member since 2019 · 198 posts · 239 votes
    6y

    I still have my subs working...an addition for a client and a flip property we own.  No issues so far.  Inspectors showing up 

    1Reply
  • Mark Fries
    Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    @Stephen Kune

    I have basically shut down to about 10% operation ...just keeping a skeleton crew. Nothing like a forced vacation!

    1Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    @George W.

    I disagree George. I am a quality contractor, and the only issues I come with are that I have 3 mortgages and child support. Have no idea if my tenants will be able to pay April, and child support doesn’t stop no matter what. So yeah, even quality guys might be out looking for work if need be. Luckily for now I’m good, no stay at home issued in my county yet.

    2Reply
  • Steven Lowe
    Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
    6y

    I feel, and this is just my personal opinion, that certain projects are musts. Example, someone's furnace goes out. Then there are wants. Like someone wants to get their bedroom painted. The must projects absolutely need to get done as they are quality of life, health and safety concerns. The wants should be put on hold for now, especially if it involves people working indoors in close quarters.  If there is a project that can be done outside with minimal contact by 2-3 workers, that would probably still be ok.  Again just my non medically qualified opinion.  

    2Reply
  • Brandon Cooper
    Rental Property Investor · Winston Salem, NC · Member since 2019 · 63 posts · 54 votes
    6y

    @Stephen Kunen im in NC and am a subcontractor myself. Im at the end of a flip right now with a few subs in and out of the house and have had no problems getting it done. I imagine this is situational to the location. We havent been hit hard yet and people are acting like nothing is happening. Im just hoping i can sell this house relatively fast and get liquid again before it gets worse. The problem i just found out that i have is that an FHA buyers is not eligible to purchase my property until ive owned it for at least 90 days. Kind of sucks for me

    1Reply
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