Contractor/Permit issues and questions (My first property)

[Tom Casey]

Hey BP community,

So I am really excited to finally be a homeowner! Just closed on a condo unit in the Roger's Park neighborhood of Chicago and I am planning to use it as a BRRRR property. We are currently living in it... well, living at a friend's house right now because we are doing a full gut on the kitchen and a few other dusty projects. Anyway, I guess I'll just get right to the point.

Since I'm completely new to the game, I contacted whoever I could think of that had any experience with rehab or knew anyone involved (should have posted on BP, I know). I got a great flooring guy who just laid some new hardwood in the kitchen and will be refinishing the existing floors in the rest of the unit for a very reasonable price ($2,000). However, I also got in contact with a cabinet guy who said he would basically act as the GC for the project for me. He seemed very confident that he and his contacts would knock out the project very quickly and at a good cost, so I gambled and put my trust in him. This was in late July/early August. 

Since then, I've just been feeling less and less confident that I am going with the right person. One red flag to me was that he didn't really want to pull permits for the work. Not sure if this is common in Chicago (he said it is), but seems like it may be playing with fire and risking losing a lot more than whatever it will cost to apply. He said it's fine, we'll pull permits but it doesn't seem like he wants to. Another red flag is that he is not technically a GC and we are going through another GC whose info I still don't really have, all I know is that his name is Enrique. Just requested that the info be sent to me, but just seems sketchy that he didn't already send all that to me. I should be able to check the contractor's status and history online right? The third red flag is the dreaded "pay before any work is done" thing that everyone says you shouldn't do. Well, first I paid for the cabinets almost a month ago, which was $4,000 total (he said install will be under $1,000, so $5,000 total). He said getting the cabinets will be no problem once the other work is done. And then about two weeks ago, I paid him $2,000 for work to be done. But no work has been done yet. He says that he has had trouble finding a plumber for the job. He already cancelled at the last minute twice when we had let the association know that we would be shutting off the water. And today, I decided to cancel for tomorrow because I am feeling uneasy due to lack of a permit and because I don't have any info on the plumber or the contractor.

As you can probably tell, I have no experience in any of this and it would be so great if anyone could give me some advice on this situation. Do you think I am overreacting or do you think that this is maybe not the right guy to be handling this job? Any good references for tradesmen in Chicago would be highly appreciated as well, if not for this project definitely for future ones. And finally, probably most importantly, what is the best way for me to do my due diligence on contractors and other partners? I think this is going to be one of the most essential skills to have moving forward as an investor.

Thanks so much for reading and I am so grateful for this community!

[Prashanth Mahakali]

@Tom Casey, the most important risk you run with a rogue contractor is him filing a lien on your property. I assume he has been fired already or you are going to. When you get a new GC on board, it’s necessary to document all work that was done incorrectly and copies of all communication with the ex-false-Gc.

Pull permits with a new crew. Even if it's an easy permit (EPP) to start with. Permits protect you and your investment. If you need references ask your HOA about the last contractor who worked there. Use websites like Homeadvisor or angies list to get contractors with good references. Verify licenses and insurance being current. Talk to their references.

I always suggest everyone documents their first experience since it will be a guide for following projects. Do something a bit better or different until you Have a team or system that works.

This is an amazing community but can get overwhelming with the amount of information. Take a step back and restart the project with a new team. All the best.