All Forum Posts by: Andy Schwaderer

Hello BP!

I am renovating a 17 unit apartment in the Muncie area and my general contractor may not be able to finish. At this point it's mostly interior cosmetics and bathrooms (full gut) remaining, about 8 units.

Any recommendations for contractors? Looking to do B class finishings.

Thanks!

Andy

Hello BP!

I am renovating a 17 unit apartment in the Muncie area and my general contractor may not be able to finish. At this point it's mostly interior cosmetics and bathrooms (full gut) remaining, about 8 units. 

Any recommendations for contractors?  Looking to do B class finishings. 

Thanks!

Andy

Everyone, thank you so much for your responses.  My family is overwhelmed (in a good way!) by this outpouring of support. 

@Mary K. brilliant suggestion. I did speak w an attorney this morning, and will consider that plan. The more we dig, the more it looks like this was the contractor fishing for more payment 

@Christina McManaway: you're correct in that there is a clause covering additional work, details in the first post. Where this departed from that is, he did not notify me ahead of time about that additional work--I didn't approve it. In essence, at the very end he is asking for an extra 17k.  He says its for labor for vinyl siding installation, and rot discovered during window swap outs. 

@Account Closed: he is licensed, I'd have to check my notes on insurance though. 

Hi guys-

I hired a contractor to do exterior and interior renovations at an apartment I own. Exterior work was to be completed first, then move to the interior. Cost of the exterior was estimated (agreed to and signed) at $24.5k. The estimate included language that any unforeseen items discovered that led to overages would require written notification, a new signed agreement to that work, and payment up front. 

That estimate was signed in May, flash forward to September. I had been in weekly contact w my contractor, there had been no notice of unexpected overruns. Suddenly though, he sent an email detailing over 17k in overruns (so, a total of ~41k). The costs are for labor, material but are not accompanied by invoices, receipts or anything that can be verified.  He refuses to send proof. 

I've let the contractor go, work has stopped. I previously sent $18k for stage draws that met work completed. I plan to verify work was completed and will pay the remaining $6k (brings paid to 24k per original estimate), but these overages are troubling. I cannot just pay him without more proof. I've asked repeatedly for him to provide documentation on these alleged charges. This morning he sent a final invoice, stating he "will not provide any additional information to you in the form of labor costs, receipts, etc. Those will be provided in court, if/when necessary."

The whole thing seems like a bit of bait and switch. I certainly would prefer to avoid legal fees, but cutting him a check under the circumstances just isn't happening. He's asked me to pay the remainder, and then promises to complete the remaining work. I will not have him do anything more, we just have lost all trust with each other. 

My plan right now is to verify the work is done, issue payment for the agreed upon portion, and ask him again to show invoices/receipts for the overages. If he will not, I'll have to find an attorney.  The property is located in Indiana. 

Thanks for reading!  Appreciate your insight!  Language from signed estimate is below. 

"If unforeseen rot, deterioration, insect damage or poor structure is found and is found that it is necessary to replace the disturbed area, not included in this scope of work, an Additional Work Agreement will be written at such time for such repairs and costs will be due payable prior to work being completed. Payment due prior to repairs being made."

All work is to be completed in a workmanlike manner according to standard practices. Any alteration or deviation from above specifications involving extra costs will be executed only upon written orders, and will become as extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, tornado and other necessary insurance."

Thanks guys, I think the answer is to go with the original answer which is to pursue financing after renovations are completed and the property is leased at improved rents. 

I love reading posts on here but rarely have cause to write, hoping to enlist some of the excellent experience out there!

I've got a 15 unit apartment complex in central Indiana. Currently have it on a 3 year carry w the seller. It's a mix of 3 bed (8) and 1-2 bed (7) units, came 75% occupied and with a lot of deferred maintenance. I'd originally thought to fund the renovations (ballpark 135k) out of pocket but we just finished the exterior and I'm now considering financing options. Any thoughts on lenders/loan programs?

It's grossing about 5k right now, operating income about 3k. Post rehab, gross about 9k. 

That's very interesting...  Thanks Dmitriy

Thanks Sean. My start was in 2003 I bought a condo near the base I was stationed. After a year or so I wanted to move to be closer to the city. I explored rents in the area, and found I could make my payment with the rent. Seemed like a no brainer--I kept the benefits of home ownership (taxes, future profits if any, access to that neighborhood) while the tenant paid the bill. Plus, I enjoyed the interaction/process. 

Earlier you start the better, but it's wise to be conservative on the first play. I know plenty who've been burned. I've long been part of the 2% crowd (first one was NOT lol). The VA is an amazing tool...sac can be tough to find cash flow, but if its a buy and hold equity plan it could work!

Land trust is an excellent move. We purchased property in an LLC last year, paid cash for 3 properties. Banks wouldn't give us the time of day once we mentioned the LLC. Until the LLC has proof of income (multiple year tax returns) they are very limited for financing.