Construction Project Management-Flippers Cancel last minute

[Jen H.]

Hi All, I am project managing my construction crew on a house flip. The investors have been very difficult to work with from the very beginning with grinding us down on our prices to a very very slim profit margin (almost making the job not worth taking but we got so far in deep we accepted any way). We originally asked for a 50% deposit prior to work starting as we have never worked with this particular investor and then we would collect the remaining balance once work has been completed. They had two other bids but decided to go with us because of the quality of our work as showcased in the portfolio we presented to them. Well, they managed to get us down to 25% of deposit (initially they asked for 10%). Then they delayed in providing the deposit to us on Friday even though I had already (stupidly) booked our crew to start work Monday without the signed contract or deposit. After some pushing we finally got the signed and approved itemized bid along with the 25% deposit on Saturday ( 2 days before we start work...) later in the day they asked if we were licensed and bonded. I explained yes however we are not pulling any permits and to save you on costs we are not using our insurance. Furthermore, we don't feel comfortable accepting liability after one of the partners told us they would not be properly capping off exposed live electrical wires in the wall even though we advised them it is a hazard and you cannot just "plaster over it" as he said he would do. He also made mention of jerry rigging the oven gas line(which we also expressed concern over) Then they wanted us to fill out a w9 and I let them know the original bid did not included taxes but that I would have to add that. They didn't get back to me all day until hours later and said they want their deposit back and they were cancelling on us. (48 hours before we are to start a 2 week project) I let them know I would have to talk to our crew as I already gave them the deposit and that they booked out 2 weeks of their schedule to work on this job. They called me back and said ok we will keep you on the job but need to delay the startdate for another week....because we are having some other work done first..... To me this last statement they said sounds like total BS. And my gut tells me they are already going with their other bids to start Monday... So because I don't trust they will keep us on the job or that they will even pay us the remaining balance once work is complete... I asked for an additional 25% deposit since they were delaying the job and expecting our crew to book out another week. They declined and said it's not "industry standard" and they won't pay more until after work has been completed.... Are we about to get scammed here? What is going on??

[Jen H.]

@Brian Pulaski Thank you Brian.  That is correct. VERY basic work. Literally painting, powerwashing house, and cleaning gutters. No electrical, no plumbing, no structural. BASIC.  

[Jen H.]

If you read carefully which clearly you didn't @J Scott I never said I was  GC nor ever claimed to be. I never said all of the work was exterior, Painting is on the INSIDE. I never complained about a W9 or paying taxes. Lastly, I am not sure why people like you bother to comment and put your 2cents in on forums asking for advice when you do not read the entire thread?? Totally baffles me. Get off your high horse. 

[Manolo D.]

Jen H. Why are you complaining? YOU ARE DOING AN ILLEGAL CONTRACTING ACTIVITY. You are one of the people who make us real contractors look bad. If your investor is smart, I will have you paint everything and clean the gutters half way and launch a complain, I will then (as the investor) get all my money back plus interests, CSLB will do it for me, all I have to do is launch a complain.

[Greg H.]

With the speed at which the OP is backpeddling, I hope she is not injured

[Hugh Ayles]

@Jen H.

"I am project managing my construction crew on a house flip."  That statement led most of us to believe you were GCing the project.  When you stated you were not pulling permits, we all assumed you were cutting corners as your first psot did nto indicate your scope of work.

In my experience on commercial projects, when the GC asked me to cut my price, their jobs were not run well and they were slow pay.  How did I avoid that moving forward?  If I was asked to cut my price, I declined the project.

The project you describe sounds like a good project to pass on.

As other contractors have pointed out in this thread, if you are asked to compromise your business practices, those are customers to avoid.

And I have to agree about insurance.   Unless you falsify reports to your insurance company, you cannot pick and choose which projects have insurance.  If your insurance carrier finds out you are doing this, they will drop you very quickly.

If one of your employees gets hurt on the job, the courts do not care if you have insurance or not.  You will be on the hook.

[J Scott]

Originally posted by @Jen H.:

Lastly, I am not sure why people like you bother to comment and put your 2cents in on forums asking for advice when you do not read the entire thread??

Agreed.  I'm not sure why I wasted my time replying either.

Good luck to you.

[Manolo D.]

@Hugh Ayles Depending on amount, we usually practice to our subs paid when paid, but if it is a small ticket, it's no big deal. The issue is, the OP doesn't own a real business. Practices are way off, the investor is correct, it is not industry standard, collecting 50% puts me on a red flag, if a sub asks me for 50% down, it takes me 5 seconds to block their number. I would bet the OP was expecting for the transaction to be under the table, all cash, no taxes, no insurance, no W9, no reporting -- which is not that uncommon in LA. If I collect a deposit, it is only used as security that I get paid, there are as many shady investors as contractors in LA.

[Dewey Jurich]

Originally posted by @Jen H.:

@John D. We never stated anywhere to them that we are a licensed and bonded contractor...if they are use to using licensed and bonded contractor's they would know that the contractor's license number would be located on the actual bid. 

 I'm not sure what services you are even providing if your not a licensed contractor.  Are you providing "labor" (and i use that lightly) that you expected the investors to pay cash so there's no trail?  

[Brian Pulaski]

I guess when I, and most others hear mention of a Project Manager, we probably don't assume basic labor type jobs. Personally I don't see the need for a PM until you have multiple trades (not basic labor, cleaning, painting, etc) that need to be coordinated, scheduled, and the job lasting longer than a couple weeks.