All Forum Posts by: Pete Harper

@Pete Harper I thought of another angle. The GC has insurance. I asked for a copy when we signed to original contract. Can I make a claim against the GC’s insurance? I called the agent and they are emailing me a claims packet.

@Braden C.

The electrician signed the building permit listing his license #. The GC also signed the permit. Can I use the signed building permit plus the signed contract with scope of work as proof? I would make the electrician a co-defendant.

I have an issue with a GC on a remodeling job. He has abandoned the job unfinished and refuses to answer phone calls, txt or emails for over a month now. I sent him certified mail terminating contract for default. I have also filed a claim in small claims court to recover what I have paid him already. Likelihood of recovery is very low. I hear GC has three other jobs in a similar abandoned state as mine.

I have tracked down the subcontractors independent of GC. The plumber is owed funds by the GC. After negotiations he has agreed to complete the job if I agreed to cover what he is owed by GC. The plumber and I now have a new contract. I will pay what he is owed by GC plus add on to fix what GC has done. GC cut waterlines in the slab so we need to run all new lines.

I also tracked down the electrician. Turns out electrician is a relative of the GC. At first he denied he was connected to the job. Then I pointed out he is listed on the building permit that was part of the original contract. That refreshed his memory. He now admits the GC owes him money too. The electrical is roughed in and passed inspection. We updated electrical device and he needs to bring power in from the pole to the new panel and wire outlets, switches etc. I made him the same offer as the plumber. Finish the job and I will pay what is owed by GC. He is refusing to finish and not cooperating.

My question is can I sue the subcontractor in Texas small claims court? He has more at stake than GC. He is an established business, state licensed and Google and Yelp Business profiles.

@Justin G. Killeen is very different compared to other small cities in central Texas. The old downtown can be pretty rough. There was a recent article about North Killeen becoming a food desert. Grocery stores have closed moving to the East and South parts of town. Anyone interested in investing needs to tour the area before investing. Drive around and get a feel for the different neighborhoods. A block or two can make a big difference. Also talk to a local PM and ask if they will manage properly in that area.

@Cameron Davis

I misspoke, the properties are going to be in Coppers Cove. They are just listed as pre-construction.

@Pete Harper

Update on the saga. I was able to contact the plumbing sub. He was a great source of information; all bad. He said there are at least three other jobs in a similar situation to mine. He referred one customer to him for a $200k major remodel. The contractor is no longer showing up and not retuning phone calls. On another one the job site is abandoned with trash in the front yard.

The plumber is owed $2800 on my job. He said to collect his last payment he drove to the contractors house to confront him face to face. He eventually got some money but not all. I had to agree to play the plumber to get him to finish.

On top of all that the contractor screwed up and cut the water main inside the slab. Inspector will not let us make repair in the slab so we are running new lines in from the meter.

I officially fired the contractor this week. I visited the court and have the forms for small claims court that I will file next week.

Anyone else following the Killeen market? I just noticed a bunch of new pre-construction duplex's listed on MLS. They are being listed in tracks of 6-12 units. All 3/2's with an advertised future rents of $1350. Back of the envelope shows a 0.73% deal.

Anyone have any insights?

@Thomas Weidner

Very creative to get the bank to agree to loan based on renovated value. Most banks won’t do that.

On the appraisal did you try and challenge the second low appraisal using the first appraisal? Often if you have data to back up your challenge you are able to win. Depending on the appraiser they can have difficulty appraising a house + land. I had a situation with a 1600sqrft house on 58 acres. The 1st bank appraisal was dismal. I looked at his comps and he was using a “shack” on land. I found another lender who agreed to appraise just the house on the 3 acre parcel, ignoring the other parcels with 55 acres. The appraisal came in significantly higher without the land. The difference the comps changed from “shacks” to homes. The best part was after refi I now owned the land free and clear with no lien. My lesson was to make the deal look as cookie cutter as possible to the bank.

@Caleb Haynes

You are right, the numbers don’t make sense. I think there are multiple factors at play.

1) Traditional investments; Stocks, Bonds, CD etc yields are low. Traditional investors are chasing higher returns.

2) Mortgage interest rates are at historic lows. Your mortgage payment dollar buys more.

3) Chip and Joanna factor. Real estate is now “cool”.

All this has moved more less experienced investors into the market. People are no longer looking for 1% deals. Instead people are counting on appreciation for returns. We will see how this shakes out in the long term. Will new investors be able to survive long enough to capitalize on appreciation?

@Caleb Haynes

Texas market is super hot right now. Inventory is low and demand high. As others have noted due to Covid, average homeowners are just not moving. We are seeing very little turnover of existing inventory. My guess is local demand is being driven primarily by investors.

I have an investor friend who recently bid on a completed flip in Round Rock. The property was listed less than a week with multiple offers. He bid $35k over asking and was not even in the running.

Personally I’m sitting on the sidelines, keeping my powder dry. I’m focused on improving my properties and raising rents. Coincidentally rents are rising fast too. My last vacancy I had three renters looking and I hadn’t even listed for rent. All word of mouth referrals and drive by. Tenant moved in before the paint was fully dry. I could have rented four more units if I had them.

The market is crazy right now. I’m guessing there will be a correction in the second half of this year as we see the benefits of the Covid vaccine.