How to be scrammed in Columbus Ohio on flipping houses

[Gaby Liu]

    typo on subject

correction * How to be scammed in Columbus Ohio on flipping houses


 Rene and I (two Californians)met a girl S on BP back to October 2019, she came to talk to us and promote herself as a realtor /flipper/investor in Columbus ,and she told us that she had many successful partnership deals with OOS investor.

Basically the structure is she and her partner R will find deals and manage the project and get it sold.

Capital investor (Rene and I)bring the money, then split the profit once house sold.

We flew to Columbus and met her and her partner R ,a guy who said he is a general contractor( we found out he is not licensed later on and he pull out the building permit as owner when he rehab the house) ,we had good talk and they also showed us few properties they are working . Sugar coating.

At beginning of October ,She brought us a deal, 77k purchase price ,80k rehab and ARV 275k, she wanted 4 of us partner up on the deal, so we signed JV.

we formed a LLC together ,Rene 50%, Me 49% ,S 1%.Ownership.

And we use that LLC bought this house with hard money lender.

Our LLC also signed JV with S&R LLC that we bring capital and they manage the project and we split the profit 3 ways. 66% S&R , Rene and I 33%.

Rene and I paid 20k downpayment at closing with HML and 8k interest from October 2019 to August 2020 ( we paid off the loan 120k on August,2020 )

From November 2019, Rene and I wired the first 15k cash to S&R'LLC ,And R started to take rehab money from our lender , our lender released total 68k to S&R LLC business bank account by march 2020.(thats 85% of the rehab budget)

On March,2020, after 5 months the house closed, the rehab project still so slow and only did 20-30% of the work.

S then contacted us saying R and her no longer working together,She finally went to visit the house and found out the house barely had work.

She told us they are dissolving their LLC , R is no longer doing the work, we should dissolve the JV with their LLC, remove R and just 3 of us to continue the project and she will manage the rehab.

R emailed us the scope of work that he finished that he already pent 68k and he stated actual cost will need 20k more .

He told us the cabinets he bought got stolen in the house, he need take more draw from lender to complete the house but Lender has stoped to release the draw cuz it didn’t finish as he scheduled.

So means we have to give him more cash to complete.

Later we found out actually the scope of work he only did 40%, yes ,he steal half of our money.

Then Rene emailed to R and S to request them to terminate the JV, S present both our LLC and their LLC signed company name and date , however nobody's signature on the termination JV, Rene and I didn't sign though. they also signed and notarized the lien waiver and release then emailed to us.

S also claimed that she will put 5k to the house to complete , no proof that ever happened.

And then S brought second unlicensed contractor J on board, they both lied to us he is licensed . we signed contract 40k ish to finish the house , 3 phase .

And 10k to put appliance /AC is excluded.

At first I wanted the rehab money should be like :I wire to contractor business account directly and we wanted pay 50% upfront and the balance we pay upon complete.

However S insisted the rehab money has to wire to her personal account and she will pay to the contractor ,she said contractor don't want to talk to us ,just want to work with her, if she manage the project ,we have to wire her money and let her to do the work ,so we wired 50k ish to her.

The second contractor J quit at phase 2 and S showed me the check that she paid J 2 phases full amount $29k even contractor didn’t finish the job, S blame on contractor J and they are not longer working together so she can not get him back to finish the job or refund the unfinished job money.

And then she hired third contractor to finish the house , cuz the money has already spent most of it, therefore the house is incomplete when we put in the market. Such as all bedrooms has no closet doors , 3 bathroom has no mirror and no fans, fence is unfinished. Garage is incomplete ,floor is not level, basement has crack, many missing brick around the buiding, etc So many little things that showing this house workmanship is so poor.

S present as our realtor and listed our house ,at that time our cost spent on the house was already 220k and we list 275k

We got a first offer 255k we took it ,that make us break even ,we were satisfied.

House went to inspection failed , we offered 10k remedy but buyer still terminate the contract cuz the house has so many issues she don’t want to deal, roof/hvac/electric is 100mp/plumbing.etc

Then S quit to be our realtor and also she wanted end the partnership.

she sees the house has no profit and hard to sell. Then We had her sign off to give up the 1% ownership of our LLC .

We hired second realtor to list our house, He is very good and professional.

House back to market ,we lower to 260k , we also spent another 4k to fix the hvac and roof, cuz AC was not working and roof was so bad.

Later we lower the house to 250k, we got another offer 242k , we took it, but buyer terminated the contract after inspection , too many issues.

we had lots of showings , over 20 showings with 28 days. Get many bad feedback and no more offer as of today.

I was so mad that I started to call each contractor screwed me , I called second Contractor J ask him to install the closet doors that we paid him , but he refused and yell at me:” I didn’t work with you, I worked with S , and I m no longer work with her , sue me whatever you like ,I don’t care.’

And S said :” J quit and took the money ,I had no control on it, I m no longer working with him ,I can’t get him back to install the doors.

I have filed complaint agains J to BBB /General ATTY. request him to remedy $3000.

I also called R to ask him to see what he can do to fix the house make it sellable and he refused saying we terminated the JV , he is no longer involved.

Our Atty told us that R is sued/suing by many people and he transferred his houses to his kids/wife name.

I also contacted the other people who sued/suing R, they are with me, too

Our cost on the house as of today is 240k and our listing price is 240k , if we can get sold our listing price ,we will just take 20k loss. But I know its unlikely .

that’s the story how S and R,J brought to us.

To be continue ……