Disappearing Act

Bathroom (Before)

Bathroom (Before)

Sunday marks the official end to the third week of the Philipsburg Phlip project.  During the second week of work, my contractor did a few things which caused me to question if he should remain on the job.  Over on BiggerPockets, some more knowledgeable people suggested I fire the contractor after the first infraction.  I still wanted to give the contractor the benefit-of-the-doubt, so I let him continue working this week.

(Note to self: Should have listened to the sages over on BP and fired the contractor after the first infraction)

However, I didn’t. I figured the contractor simply needed some more direction with more defined parameters from which to work.

I was wrong.

On Monday of this week, I had a discussion with the contractor regarding the bathroom on the 2nd floor.  My contractor has wanted to almost gut the entire room; I only wanted to remove and replace most of the major components.  Close to the end of our conversation, I said “Do not touch the plumbing or flooring until we’ve reviewed everything with my partner.  We’ll talk Tuesday evening about this issue.  Do not touch the plumbing.”  The contractor acknowledged this request.

Tuesday morning, I received a phone call from my contractor.  He had a few questions regarding some of the other work occurring this week.  At some point in the conversation, he let slip “well, you’ve got all the flexibility you want in that bathroom.”  To which I replied: “John*, I said we’re not touching that plumbing.”

He replied “Well, I figured it would be easier to replace it with plastic and people would rather plastic than cast [iron]. It only took me four or five hours yesterday [Monday] to remove the plumbing and flooring.”

Me: “John, you’re kidding right?”

John: “No, it was relatively easy, and its only going to take like two or three hours to put it all back and about $100 in materials.  It’ll add like $3,000 to the value of the house.”

Me: “No, it won’t add anything to the value of the house because no one really cares what is under the floor.  It will subtract from this flip’s profitability.  Don’t do anything else to the 2nd floor, finish the framing on the first floor and don’t plan on any more days this week until I get a chance to review the work.”  At this point, the room was nearly spinning around me.

So I was hemming and hawing about what I should do, and finally decided to fire the contractor and not pay him for the removal work and reduce his final check by the estimated amount of the repairs (time and materials).  This morning, I met with him to square up our accounts (I hadn’t seen the bathroom yet).  Strangely enough, John apologized for the ‘miscommunication’ regarding the bathroom.  Fair enough, but still not good enough to sway my mind.

A few other red-flags rose during our squaring of the books this morning.  Twice, John said “Well, I didn’t bill you for that tool.”  The second time, I finally replied, “John, you’re a contractor, you’re supposed to have tools.”  I was also accused of not knowing the price of gasoline because I refused to pay mileage to and from the job site each day.  I would have considered mileage if John had put in a good solid 4×10’s weeks for a minimum of 120 billable hours.  John only has about 80 billed hours over three weeks.  I reminded John that if he didn’t show up on site, he wouldn’t have work.

At the end of the meeting, John began to discuss work this coming week.  I stopped him and forced myself to look him in the eye and say “John, I’ve given this a lot of thought and I need to terminate this project.  This project is stressful enough for me that I don’t need to worry if you’re going to follow the plan.  I need to know you’re going to follow the plan and I am just unable to do so now.”

John vented at me for a while and I let him.  I know he’s in a very tight spot right now and I feel badly about that, but I need to protect 1) my investor’s money and 2) my own sanity.  John was, and I’m sure is, very upset.

After leaving my meeting with John, I headed up to assess the damage with my partner and formulate a new plan forward. When I got to the house, my partner asked me “How much did you ask John to remove?” I said “just the tile and backer board, why?  I know he removed all the drywall, but you already saw the bathroom since then.”  This is what I was expecting to see:

IMG_20140216_150048112

My partner replied: “Well, the bathroom is gone.”  I didn’t believe my partner, but this is what I saw:

My brother is a magician and I don’t think he could have done a better job at making something disappear.  (The pictures above are taken from almost the same position as the photo at the top of this post)

My partner and I are both contractors, so we were able to quickly formulate a new plan.  A little sweat equity on our parts will right this ship, but jeeze-oh-man, this is not how I wanted to start this flip.  I figured better to quickly cut ties with John then let the problems persist any longer.

As a learning experience, I should have 1) visited the site BEFORE I cut ties with John.  That would have allowed me to make a determination as to the extent of the damage, therefore how much to reduce the final paycheck to compensate for the damages and  2) Followed my gut on John’s abilities.  I wanted to believe he was capable of handling this project, but my gut was telling me to be VERY cautious.  My gut was right.

*not his real name

4 Thoughts.

  1. There is a reason I have a white collar job, but know how to renovate a home (electric, plumbing, tile and other flooring, drywall, etc.). Dealing with contractors is usually a terrible experience. There are tons of hacks out there while the good guys are impossible to find or know they are good and you pay for it. If you find someone decent, hold on to them like they’re your firstborn in a hurricane.

    I will not buy a flip unless I can do all of the work myself.

    • I agree there are a ton of hacks out there. I knew this guy on a personal level and wanted to give him a shot. As for my background, I’m an environmental engineer by training that decided to help start a ‘green construction’ start up. We build highly energy efficient homes (one of our clients was complaining about their high annual utility budget of $500/year). Through my field experience, I’ve learned how to wire a house, plumb a house, install heating systems, frame, tile, lay flooring, etc.

      Between my day job and my promise to my wife to not spend every evening working on this flip, I need to use a few other guys to keep this moving forward (my co-owners at my day job aren’t interested in flips). The flip is being purchased through my LLC, so my investors will be 1099’d, and my profits will be partially offset by other business activities. I’m currently at the lower end of the 15% tax bracket (married filing jointly), so I have a ton of upward growth before I need to consider other methods to shield the income from these activities.

      • Wow, $500/year in utilities? That is pretty incredible.

        I’ve read a lot on the green homes and would like to do it myself someday. I wish more people would do it so prices would come down a bit though. Perhaps tougher building codes down the road will force more of it? I’m in Colorado and the insulation requirements are tougher than they were in colder Wisconsin where I’m from.

        Nice, it seems like you have your act together regarding the flip. Can’t wait to see how it turns out.

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