Having issues with my General Contractor

[Johana Villamil]

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

[Shervin Golgiri]

Hi Johana, sorry to hear about your experience. Things going south with GC is more common than  think. 

I would change my tone with the old contractor and notice him in writing he's not welcome back to the property and you are looking into option to hold him accountable. (assuming you don't have a contract, Its unlikely) Make the notice in form of text message, and I suggest you add an family member to the group Text. 

These are expensive lessons and you will gain alot from it. Always have a contract in writing with GC. 

Continue with project and dont let him slow you down more, deal with him along the way. Best of luck,

[Chris Seveney]

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

 Very common. Hopefully you have a contract and can follow the terms of the contract. get an attorney, give them notice they are behind schedule and place them in default. you need to terminate them the proper way to make sure they do not come back after you for additional costs.

[Jacob Sherman]

Are you ahead on the work that you paid for already ?

[Johana Villamil]

Quote from @Jacob Sherman:

Are you ahead on the work that you paid for already ?

Thanks for your reply , well There is some work he has done that I have not paid him for yet but he also does have a deposit which I gave to him in the beginning of this project. The deposit is about 2K more then what I owe him. I was even thinking of when I send him the termination letter asking for those 2K back. Would this be a good idea though? I know he won't be too happy with me. I mean I have invested a pretty good amount of money in this property already that I can really those 2k right now.

[Johana Villamil]

Quote from @Shervin Golgiri:

Hi Johana, sorry to hear about your experience. Things going south with GC is more common than  think. 

I would change my tone with the old contractor and notice him in writing he's not welcome back to the property and you are looking into option to hold him accountable. (assuming you don't have a contract, Its unlikely) Make the notice in form of text message, and I suggest you add an family member to the group Text. 

These are expensive lessons and you will gain alot from it. Always have a contract in writing with GC. 

Continue with project and dont let him slow you down more, deal with him along the way. Best of luck,

 Thanks for your reply. I actually did not have a contract in place. I know stupid mistake, I did look into it but never presented it to him as I felt things would continue to move smooth as they were at one point. Also, Im not sure if the contract I have is completely legal and wanted to have it reviewed. If you have used one I would love to take a look at it. I did take your advice and sent him that text. I am moving forward with someone else and I would have to send my old contractor a termination in writing. 

[Shervin Golgiri]

Quote from @Johana Villamil:

Quote from @Shervin Golgiri:

Hi Johana, sorry to hear about your experience. Things going south with GC is more common than  think. 

I would change my tone with the old contractor and notice him in writing he's not welcome back to the property and you are looking into option to hold him accountable. (assuming you don't have a contract, Its unlikely) Make the notice in form of text message, and I suggest you add an family member to the group Text. 

These are expensive lessons and you will gain alot from it. Always have a contract in writing with GC. 

Continue with project and dont let him slow you down more, deal with him along the way. Best of luck,

 Thanks for your reply. I actually did not have a contract in place. I know stupid mistake, I did look into it but never presented it to him as I felt things would continue to move smooth as they were at one point. Also, Im not sure if the contract I have is completely legal and wanted to have it reviewed. If you have used one I would love to take a look at it. I did take your advice and sent him that text. I am moving forward with someone else and I would have to send my old contractor a termination in writing. 

I don't have a contract sample that I can share, but if I was going to need one, I would work on drafting one. 
next time you need help with drafting a contact, reach out to a fellow investor friendly agent in your area and ask for help with drafting one. 
You learn though the ups and down, the key to success in this journey is not to make the same mistake twice. 
best of luck, Johana.

[Crystal Smith]

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

At this point in the process it's time to protect your asset.  If you have given the contracdtor a deposit and that deposit has been used to purchase materials, & those materials are in your property I would;

1. Secure the home and all of the materials left in the home.  By secure I mean change the locks, install security,..... Ensure that the old contractor cannot get back in the property

2.  This one's a little tougher but when sending the termination letter you should also see if you can get Lien Waivers signed.  The objective:  Prevent the contractor from putting a mechanics lien on the home.

3. I would not communicate directly with the contractor.  At this point all communication between you and the contractor should come through your attorney.  You have to send a message that you are serious and nothing says serious more than a communication coming from your legal representative.  This includes requesting return of your funds.

[Johana Villamil]

Quote from @Crystal Smith:

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

At this point in the process it's time to protect your asset.  If you have given the contracdtor a deposit and that deposit has been used to purchase materials, & those materials are in your property I would;

1. Secure the home and all of the materials left in the home.  By secure I mean change the locks, install security,..... Ensure that the old contractor cannot get back in the property

2.  This one's a little tougher but when sending the termination letter you should also see if you can get Lien Waivers signed.  The objective:  Prevent the contractor from putting a mechanics lien on the home.

3. I would not communicate directly with the contractor.  At this point all communication between you and the contractor should come through your attorney.  You have to send a message that you are serious and nothing says serious more than a communication coming from your legal representative.  This includes requesting return of your funds.

Thank you for your insight Crystal. I did Contact an attorney today and he will work on this for me. But I still need more funds to continue with this rehab because hiring the new contractor I will be exceeding my rehab budget. I personally don't have enough funds to come out of pocket. Would you happen to know what I can do to get some more cash and finish this project?

[Peter Mckernan]

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

 I saw you need more funds, think there was another post like this a while back. Great info on the responses. Cut ties with the one you have now, and get that other contractor in there that can finish the job fast. There are many contractors that as you mentioned just like the one checking on permits can do this and then never finish the property. I would pay them in draws, and inspect their work every step of the way. Before you higher the next go to some of their active sites of projects and see how they are going. Once you interview them, and find the right one. Do the draws and inspect that work as you go along, and do not pay them unless they do the work. You can even bring a check that same day, and bring someone that has done flips to make sure the scope is done right. 

Now for the current guy, yes you hired an attorney, make sure you put a lien on his house to recoup your costs (this may not be possible if he does not have one, go after him civil to pay the amounts). 

For the money situation, you may need a partner to finish out the deal. Either a family member, friend, or business partner. I would sign an agreement with this partner if you do find one and make sure that a contracts attorney drafts it up. If that is the case, this is what I would do.. Hey partner, I need $20,000 to finish the deal, if you put in $20K I will give you 10% return on your money so you get back 22,000 once I close *just an example but have whatever you do in writing.*

The other option is do a HELOC on a property you own or a personal line from a bank.

[Johana Villamil]

Quote from @Peter Mckernan:

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

 I saw you need more funds, think there was another post like this a while back. Great info on the responses. Cut ties with the one you have now, and get that other contractor in there that can finish the job fast. There are many contractors that as you mentioned just like the one checking on permits can do this and then never finish the property. I would pay them in draws, and inspect their work every step of the way. Before you higher the next go to some of their active sites of projects and see how they are going. Once you interview them, and find the right one. Do the draws and inspect that work as you go along, and do not pay them unless they do the work. You can even bring a check that same day, and bring someone that has done flips to make sure the scope is done right. 

Now for the current guy, yes you hired an attorney, make sure you put a lien on his house to recoup your costs (this may not be possible if he does not have one, go after him civil to pay the amounts). 

For the money situation, you may need a partner to finish out the deal. Either a family member, friend, or business partner. I would sign an agreement with this partner if you do find one and make sure that a contracts attorney drafts it up. If that is the case, this is what I would do.. Hey partner, I need $20,000 to finish the deal, if you put in $20K I will give you 10% return on your money so you get back 22,000 once I close *just an example but have whatever you do in writing.*

The other option is do a HELOC on a property you own or a personal line from a bank.

 Thanks for your reply Peter!

Very helpful information thank you!

[Crystal Smith]

Quote from @Johana Villamil:

Quote from @Crystal Smith:

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

At this point in the process it's time to protect your asset.  If you have given the contracdtor a deposit and that deposit has been used to purchase materials, & those materials are in your property I would;

1. Secure the home and all of the materials left in the home.  By secure I mean change the locks, install security,..... Ensure that the old contractor cannot get back in the property

2.  This one's a little tougher but when sending the termination letter you should also see if you can get Lien Waivers signed.  The objective:  Prevent the contractor from putting a mechanics lien on the home.

3. I would not communicate directly with the contractor.  At this point all communication between you and the contractor should come through your attorney.  You have to send a message that you are serious and nothing says serious more than a communication coming from your legal representative.  This includes requesting return of your funds.

Thank you for your insight Crystal. I did Contact an attorney today and he will work on this for me. But I still need more funds to continue with this rehab because hiring the new contractor I will be exceeding my rehab budget. I personally don't have enough funds to come out of pocket. Would you happen to know what I can do to get some more cash and finish this project?

 We work with a National Contractor that operates on a business plan where they get paid after a property sells, which means no $ out of pocket for a homeowner or investor. Here are the ground rules for this contractor.

1. They will not work on properties that have a Hard Money Loan in first position

2. The After Repair Value of the property must naturally be more than the cost of any liens and the cost to renovate so they get their money back.

3. They will only work through realtors. Why? They require the property to be listed on the MLS once the renovation is completed.

I can't guarantee how competitive they may be but it's a solution that we have used on some projects.