Quote from @Karen Margrave:
What are your numbers? How much will it cost to complete the work, and what would the ARV be? What is the value as it sits? The problem you have is that it's very hard to get a contractor to come in behind another contractor, as there's too much liability. Also, you should get lien releases from the contractor and any subcontractors that have done work on your property. How long has it been since any work has been done?
The simplest solution is to talk to the contractor. Tell him you know things happen, and ask what it would take to get things pulled back together to finish the job. If you have to put more money out for materials because he doesn't have the money to buy them, make sure you pay for the materials and have them delivered. Control your money and your job, don't rely on the contractor to do it, because obviously he can't.
If it's not possible for him to do it, ask him for a detailed list of the work that still needs to be done, a list of the subcontractors, etc. and see if you can act as your own contractor, schedule the subs, and get the house finished.
We live in CA, NOTHING is illegal here anymore, and if it is, it's never prosecuted. You can file a complaint with the Contractors License Board and that may help recover some of the damages.
My numbers going into the property:
- Purchase Price = $45,000
- Rehab = $45,000 (the contractor did work and I'm going to assume a quarter of this was actually utilized for the project)
- Estimated Selling Price/ARV = $145,000
I reached out to other contractors to get this project at least cleanup/sellable condition which would be $25-35k. The estimated value that my selling agent was able to find without this property having utilities working is $49k at the highest. The liability part is what one contractor stated when I was doing my search for a new contractor to finish the work. How do I get lien releases from the contractor? It has been over a month since he last did work. I've had this property for about four months now.
I actually did try to reason with my original contractor to which he keeps replying with reassurance and excuses for why he wasn't able to get back to me right away (sick, weather, time off, etc.). He's been really weird as he asked me for an advance before starting this project which I denied as I wouldn't want to pay someone for work they haven't even completed and I didn't have a project at the time. I will definitely be very tight with my money going forward.
I did have other contractors go into the property and show them the scope of work that was put into place by the original contractor so they have an idea of what to expect.
Would this work for an out-of-state property? TN is where this investment fix and flip is located. I do agree things are getting out of hand in CA and really hoping for better times.
