All Forum Posts by: David B.

Thank you everyone! Very helpful. 

I've reached out to a real estate attorney and the lender to coordinate the transaction. Hopefully this will be the set up to a very successful purchase (and sale) of the property. 

Gracias 

DC

Hi all, 

I have a property I'm flipping that my Contractor has decided to buy directly. I linked him with my lender and they are now coming up with a plan for the purchase.

In this particular situation, there won't be agency commissions on the deal. I have never sold a home this way. What would be the most efficient way to structure this transaction? Do I find title company? Does the lender provide one? Not sure how to actually commence a sale without actually having an agent involved.... which makes me feel silly but it's true. lol 

Any advice would be appreciated. Thanks!

Hi there! 

I’m a former LA resident who is interested in investing in the city - potentially to even find a new home there for myself. 

I’m curious what strategies local investors are using given the high price points and rates. I know the market has cooled off a bit, and I suspect there are probably some value add plays that are starting to pop up in quality areas. 

One strategy I was considering was finding a house I could live in flip - say in the 1.5 to 2 million dollar range - where I could force appreciation and potentially sell (or 1031) in five years. 

Would be very interested what strategies you’re using to have success in the current market. Thanks for your insight! 

Quote from @Theresa Harris:

Quote from @David B.:

Actually - one specific questions now that I’m getting into some details with him…

he’s claiming we spent (or agreed to spend) 48,500 on demo electrical plumbing drywall framing stucco and windows. 

However, Iv only given him 40k in draws. And none of these overages were cleared with me. So do I have a right to cut him and not pay the additional 8,500? 

I’m not trying to rip the guy off. He hasn’t provided a single invoice and it seems as though he pledged money to people that supersedes the scoped of the budget without telling me. He also said - in text - that he added things BACK into our budget without adequately informing me, hence why costs went up (insane) 

So am I on the hook for what he’s pledged his subs? Obviously I could put that 8,500 back into the house and help move this along. 

Thanks guys 

 If you have a contract with everything itemized, he can't change things without you signing off.  It doesn't matter how much you agreed to spend on A or B, rather that you agree to $X for a set job.  It is up to him to make sure it gets done.  If you change things or there are unexpected problems, that is another story.

Hi Theresa 

we had a set contract with everything itemized. Upon looking at the contract, his wording on change orders is a little sneaky. It says - basically - that if I issue a change order it’s a 100 dollar charge to me. And then it doesn’t necessarily say the same in reverse.

However the contract does say that any and all changes to the scope of work / budget will be addressed before hand. Which they were not. 

It seems to me that this wording still allows me to deny their claim I owe more money than I agreed to in the draws. But in hindsight, it’s a little loose that they don’t state they ALSO need change orders to shift the job. 

However, from my side, the only thing I ever asked changed is we added an additional 1000 bucks in tile. which we discussed and I’m happy to pay. 

His drywall, electrical, stucco and DOUBLED. Without discussion. 

I think I’m gonna have to tell them to pound sand. 

Actually - one specific questions now that I’m getting into some details with him…

he’s claiming we spent (or agreed to spend) 48,500 on demo electrical plumbing drywall framing stucco and windows. 

However, Iv only given him 40k in draws. And none of these overages were cleared with me. So do I have a right to cut him and not pay the additional 8,500? 

I’m not trying to rip the guy off. He hasn’t provided a single invoice and it seems as though he pledged money to people that supersedes the scoped of the budget without telling me. He also said - in text - that he added things BACK into our budget without adequately informing me, hence why costs went up (insane) 

So am I on the hook for what he’s pledged his subs? Obviously I could put that 8,500 back into the house and help move this along. 

Thanks guys 

Quote from @Shafi Noss:

You should look at your contract. If you have a fixed price contract, he is responsible for getting the job done at the agreed on price. If he is not financially strong himself he may not be able to cover his mistakes. 

That said, you should ask him where the overages came from and understand what happened before doing anything else. 

If he is cooperative and it's possible to find a way through, you might be able to work together to exit the project and limit losses, even though it's not ideal it may be the lesser evil. 

 Shafi!

definitely tried to resolve it with him as opposed to cutting and dealing with the devil I don’t know. 

seems like he’s chosen to walk. 

My suspicion is he realized that he may be in legal liability zone (with the taxes he was charging and the overages without change orders) and decided safer to cut ship. 

Quote from @Colin Kelly-Rand:

Hey @David B. What day and time does this saga release on HGTV? 

I'm glad your looking into this 40k in and not 120k in. I have hope for this project yet. 

waiting on the next update.

#RenosAintCheap

I too have hope Colin. 

we have healthy margins. We can probably save it. 

Quote from @Carlton B.:

General contractors scare me because of this very reason. I'm by nature a pessimist. I would be walking the site as much as possible asking questions and reviewing invoices. At this point the only way to know if he is being honest is to review the books number don't lie. I would also speak with another contractor who is reputable and get their opinion. With that said it would probably cost more to stop and start again with someone else. If you find out he is playing games you can go after his reputation by letting people know what he did wrong. I'm very interested in how this turns out please post a follow up.

Update above 

UPDATE 

After expressing my concerns via email to the contractor - where I laid everything out very clearly - he said he would provide receipts and respond via email. He also said “I’m sure we can figure this out and finish this together”. 

Then - a day later - he asked if i would resend the two bids we had… his initial bid that we cut down and then the formal bid we signed off on… apparently he couldn’t find them. 

So I sent both of those. Didn’t hear anything for a day. Still no invoices.

Today, he sent me a text recommending I fire him. He said I would save “several thousand dollars” that way, and that he would stay with me pro bono to help me with his subs and negotiate their prices down to finish the job. He said he was frustrated and dejected by how things had turned out, and that he wanted to make sure I was taken care of. 

… He has yet to provide receipts and invoices. 

I asked if the 40k we were out of pocket was all gone. Haven’t heard back yet. 

Very strange situation. I’m not sure if he’s just trying to save face saying he’ll help me if I fire him (and assuming I won’t take him up on it). Or if he’s genuinely bummed out by what happened here, and somehow lost control of something along the way. 

Maybe it doesn’t matter. 

Does anyone have any tips on how to clean up from here? I’m debating getting another contractor or subbing the work myself. O Iv never worked with subs, and not sure exactly where to start, but for $ I’ll figure it out. 

Thanks everyone. 

Everyone this is really great feedback - thank you.

let me ask this - does anyone see any reason why there would be a significant downturn in prices in the area? Or even Columbus generally? 

again - I’m generally bullish. But just playing devils advocate with my own ideas. 

it’s conceivable that the market drop in the next year (I suppose) with a recession and financial markets in turmoil. But I think supply is low enough, demands is high enough, and business development is ideal to keep Columbus humming along. 

but happy to be challenged on this