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Updated 4 months ago, 08/30/2024

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Tony Sherman
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Delayed Projects Tips

Tony Sherman
Posted

Have you ever had to deal with major delays in a renovation project, and how did you manage the situation?

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307
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103
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Jason Taken
  • Lender
  • Chicago, IL
103
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307
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Jason Taken
  • Lender
  • Chicago, IL
Replied
Quote from @Tony Sherman:

Have you ever had to deal with major delays in a renovation project, and how did you manage the situation?


 From the lender side, I'd say if you're getting delayed communicate early and often with your lender. In some cases, your lender may be able to assist (as a courtesy) to help you get the resources you need to get back on track (e.g., other borrowers in your market, contacts for tried and proven contractors, etc).

Of all things to do, you should not hide and ignore phone calls.

And last but not least, if none of that works, list the property in hopes to recoup your losses and let another investor take over and get out of the project and take the lessons you learned and apply them to the next one.

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Replied

Hi Tony,

Depending on what the full story is your lender might be able to provide you with a refinance so you have time to finish your rehab or extend your existing mortgage. It is very important that you are transparent with the lender and give them the full picture so they don't feel like there is something they're not aware of. Lenders want to get as much information as possible to feel comfortable with an extension. That's my best advise on it.

It is quite common to have issues with permitting or with the removal of tenants so the lender will understand if that's what's going on. If you're having issues with your GC or suppliers make sure you let the lender know.

Also, there are some cases in which you might be having issues with the lender giving you draws for your mortgage, in which case I would advise to find a new lender so that you can move forward with the project more smoothly.

Feel free to reach out if you have more questions. Regards,

Jackson.

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829
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Alan F.
  • Flipper/Rehabber
  • California
649
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829
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Alan F.
  • Flipper/Rehabber
  • California
Replied
Quote from @Tony Sherman:

Have you ever had to deal with major delays in a renovation project, and how did you manage the situation?

Many times, permits, utilities delays and material issues are but a few. It's my responsibility to be aware of these delays and underwrite accordingly

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Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
1,036
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2,122
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Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
Replied
Quote from @Tony Sherman:

Have you ever had to deal with major delays in a renovation project, and how did you manage the situation?


 The delays happen all the time, lender, contractor, seller, and more! The delays are a part of the business. There really are a lot of things that can be done on the upfront, but as they happen.. You need to think/act fast so that you do not have deeper issues on the construction side to the point that you start to lose on profits or cannot get the deal sold and lose all your money.

1. You need a solid team (lender/deal finder)

2. You need a solid contractor 
3. You need a great project manager (if that is yourself, you need to stay on top of all the people)
4. You need a great agent to sell the place for you and not allow the listing to sit for long periods of time. 

  • Peter Mckernan
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The McKernan Group
5.0 stars
32 Reviews

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188
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155
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Michael Diossa
Pro Member
  • Investor
  • Rhode island
155
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188
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Michael Diossa
Pro Member
  • Investor
  • Rhode island
Replied
Quote from @Jackson Ebersole:

Hi Tony,

Depending on what the full story is your lender might be able to provide you with a refinance so you have time to finish your rehab or extend your existing mortgage. It is very important that you are transparent with the lender and give them the full picture so they don't feel like there is something they're not aware of. Lenders want to get as much information as possible to feel comfortable with an extension. That's my best advise on it.

It is quite common to have issues with permitting or with the removal of tenants so the lender will understand if that's what's going on. If you're having issues with your GC or suppliers make sure you let the lender know.

Also, there are some cases in which you might be having issues with the lender giving you draws for your mortgage, in which case I would advise to find a new lender so that you can move forward with the project more smoothly.

Feel free to reach out if you have more questions. Regards,

Jackson.


 Good point here

  • Michael Diossa
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    Evan Polaski
    Pro Member
    • Cincinnati, OH
    3,380
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    Evan Polaski
    Pro Member
    • Cincinnati, OH
    Replied

    @Tony Sherman, yes.

    Closing delays on buy side with title issues
    Material delays, which can compound into contractor delays when you try to keep schedules tight

    Contractor delays because prior jobs are not wrapping on time
    Contractor delays because you need to fire one and hire a new one

    Scope of work issues, i.e. no signs of moisture intrusion prior to buying, but all of a sudden you have a wet floor after a good hard rain.

    Closing issues on sale side

    How do you manage?  I guess it depends on the issue.  Latest flip, we had flooring ordered and paid for, then it sat in a warehouse (with the fedex label created) for over a week (was supposed to go out within 2 days of order).  Our flooring guy fit us in, but had other jobs lined up after ours.  We, thankfully, had a friend of a friend connect us to a delivery person, who directly picked up flooring and delivered to us, then we worked with flooring company to get a credit back on price.

    Or, we did Ikea cabinets, which came with both more pieces than we ordered, and not all the pieces we ordered.  So, again, called in a favor from a friend to grab a couple cabinet doors from the store 2 hours away, while he was up on business trip anyways, so we could get them on site before installer was "done" and onto another job.

    Ultimately, as Alan notes, you just have to accept this, and figure it out on the fly.  I cannot think of a single flip I have done that hasn't had some delay.  Maybe one, out of the roughly dozen or so.

  • Evan Polaski
  • [email protected]
  • 513-638-9799
  • User Stats

    519
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    Steven Goldman
    • Lender
    • Pennsylvania
    451
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    519
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    Steven Goldman
    • Lender
    • Pennsylvania
    Replied

    Hi Tony, 

    Bringing the project in on time is one of the keys to successfully flipping houses. There are many sources of delay. if it is your contractor you need to vet the contractor more carefully. If it is materials you need to know the availability of certain materials before you order them. Should the municipal inspections be the cause of your delay? You need to know someone in the L&I office or in politics who has some influence to keep your project moving. Others have pointed out delays may require further negotiations with your lender which is almost certain to cost you more money. Planning and careful execution should reduce your risk of delay. If you have been delayed do not hope you will get back on track start planning your response and face the consequences that the delay will cause.