Hey everyone here's my story which almost sounds like it comes from a movie: we bought a house close to Atlanta airport through a wholesale company for $139,250 in August 2023 and we used a fix & flip loan to fix it up, refinance, and rent out. We have a friend/business partner who would give us $37,000 and we thought we would put about $10,000 and we'd split profits as 63% for our friend and 37% for us. We hired a contractor who had previously done few projects with other investors from the wholesale company and they gave good reviews. We paid this guy $12,000 in August and he was able to do some demolition but according to him, his crew got arrested and he had other projects at the same time and he took about 2 months to finally reply to us and tell us he would finish the demolition and install a new roof (which was the quote he gave us for those 2 things). He ended up not replying to our calls, texts, emails and basically never returned the money. We hired another contractor (a church friend of a realtor that we'd used in the past and we trust this realtor 100%) and paid him $15,000 to start the same project and everything went great; he completed demolition, installed the new roof, and got some permits (roof permit, electrical, and plumbing). Then we paid him an additional $17,500 to complete the next stage of the project (plumbing, floors, etc) but that's when everything went south. The city told us that the previous owner of the house owned a lot of land made up of 6 houses, he submitted a subdivision application with the city but they declined it and told him all the requirements he still had to meet. He ignored these requirements and he went straight to the County with the same paperwork and the county approved the subdivision; therefore he was able to sell 5 of the 6 properties to different investors. The city told us that all the owners of the 6 properties had to submit and sign a new subdivision application so that the city could issue permits and turn utilities on for the investors that were requesting it. We hired an attorney and paid another $5,000 for legal advice. Additionally, we asked the new contractor for the $17,500 back since he wasn't able to complete any of the project after the demolition and the roof and he declined to give it to us because he said he'd already spent the money. Needless to say everything became a nightmare because we had a vacant house that's always been uninhabitable and now we have to sue 2 contractors, pay attorney fees, and keep paying the monthly interest-only mortgage payment of approximately $1,300. As of last week, our partner has given us $44,000 and additionally we have paid about $49,300 into this project. The mortgage is about to expire in one month and 10 days, the house only has a new roof and the city gave us new requirements where we hired an architect to complete a survey and he should have that completed next week but then the city has to review the subdivision application and hopefully approve it so that we can start getting permits, fixing the house, and sell it. I've told my wife I'd rather cut the losses at this point since now we have to refinance again, pay about $10k-$12k of closing costs, find a new general contractor who can work with us in a timely manner, and still the run the risk that anything can further go wrong. My wife wants to finish the project and sell the house once it's fixed but I told her that could take at least 5-8 months from now and I rather cut the losses. Our friend/business partner has been very supportive and completely understands these issues and we're still great friends after all. What would you guys do in our case?
