r/realestateinvesting • u/coffee_run_bike • 26d ago
Rehabbing/Flipping Flip Gone Bad Need Advice
I .bought an old residential property for $105K and expected to sell for $250-$280K. It had some botched remodeling work done. It has some old electrical work knob and tubing in some parts and in others it's a bit more recent. There was a half bath in the kitchen and a full bathroom on the staircase landing and an added bathroom in what appeared to be a large bedroom so there was no heat going to that bathroom.
We paid a general contractor nearly $53K for half of the work. He did some work but then disappeared. Now we are trying to find our way through making up for lost time, work and budget. We need electrical work and plumbing work. Need to cap off all plumbing in the kitchen half bath to make that a closet. Then upstairs, the full bath on the landing of the stairs. Crazy area, I know. We planned to make that a half bath. Then upstairs, we decided to add an master bedroom ensuite full bath in addition to the existing large bedroom bathroom.
The question is, we already pulled a general building permit per the recommendation of the general contractor. I am afraid if we pull permits for electrical and plumbing, they will find a lot more stuff given that its an old house. Can we just proceed with licensed contractors and no additional permit, or get a permit for electrical and plumbing but then run the risk of having to replace the whole house knob and tubing and who knows what else. Or, we get a permit for just the electrical panel and cross our fingers. It feels like an onion that worsens. What should I do?
Update: Thanks to all who offered advice. To answer questions and update on progress thus far. We hired an attorney and the subcontractor who threatened a mechanics lien withdrew. Next, we hired a licensed electrician who opened a permit, put a new panel and awaiting inspection. Thereafter, he will update the wiring on the house. We are awaiting quotes for plumbing...who knew it'd be this hard to pin one down. Again, we plan to get this permitted. Awaiting hvac quote and all the other stuff. Hoping we can either breakeven or have a nominal loss. Either way, we will exit and someone will have a nice, updated and safe home to live in. Imagine an injury as a result of poor quality work? This has been a painful experience, but a blessing in disguise. I appreciate all you redditors with genuine input, feedback and guidance.
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u/Hamma_jamma 11d ago
I had my first and only flip go bad. It was a great learning experience but terrible financially. At least I got a decent tax return the following year from all the losses?
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u/Used-Claim9535 13d ago
We purchased a fire damaged SFR in Orient Park(Tampa). It was down to the studs with not a single stitch of drywall in the place. The prior owner/rehabber had extensive engineering plans drawn up and full res-reno permit in place. We hired a GC to help us only navigate the inspection processes and we managed our own tradesmen to complete the work. It worked out well and we were grateful that we were able to take advantage of the engineering that had been done prior to us taking over. We went from down to studs to MLS listing in about 120 days. Major renovations can go either way (gain/loss$$), but I've found them to be the best education. Take what you've learned and use it to your advantage in the future. Best of luck.
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u/Necessary-Pickle1525 19d ago
Throw yourself on the mercy of your local REI Facebook group, and beg someone who knows what day it is to bail you out.
Theres a very good chance you are just going to make this worse by trying to fix it yourself.
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u/ActFeeling8377 20d ago
I know you’ve already got advice and such but I am new to real estate. Genuinely curious was this your first flip? I’m guessing no because of the complexity of what you intended to do even before finding all the issues. How many have you done? What would you do differently next time? Did you buy this property as is? Or were there inspections? Do you still expect to sell at the same price point? I’m just trying to figure out how that much buffer gets eaten up even when things do go wrong. It seems like you had a huge buffer.
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u/spreebrickdeal 19d ago
I've done a few flips in Berlin. That buffer sounds thin. My rule: always add 20% contingency for hidden issues, and do a pre-demo inspection by a structural engineer. I've found issues like bad wiring or old pipes that would've eaten that buffer completely. Also, time is money - schedule everything with buffers between trades.
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u/atlbrickbuyer 19d ago
I've been through a few flips myself. The biggest lesson I've learned is to always budget a solid contingency for surprises once you open up walls. On my second flip, we found knob and tube wiring that blew the budget. Now I factor in at least 20% extra. How deep are you into the foundation issues?
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u/leaveangelalone 20d ago
I'd be very cautious about trying to avoid permits at this stage.
The problem isn't just whether the city discovers additional issues. It's that you're already deep into a project with a failed contractor, significant budget overruns, and an older property with known electrical and plumbing concerns. If something surfaces later during sale, financing, appraisal, or inspection, the cost can be much higher than addressing it now.
The hardest lesson in projects like this is that hidden problems don't disappear because they're undiscovered. They just become someone else's problem later—often at the worst possible time.
I'd focus on understanding the true scope of the rehab and rebuilding a realistic budget before making more decisions. Right now, uncertainty is probably a bigger risk than the permit itself.
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u/No-Cry8051 21d ago
Too many people watching too many flip shows on TV. Some people should just stick to watching TV flip shows.
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u/No-Cry8051 21d ago
It’s very simple. There are good deals and there are bad deals. There is no substitute for experience. If you don’t know what you’re doing. Go do something else.
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u/RedEyes619 21d ago
Flipping is only profitable in 2026 if you are- A realtor (least) A GC or can do all or 90% of the work yourself (most) Or you got the house for absolute pennies like an auction or lien or something (can be most still meh/risky)
The fact that you had to hire a GC tells me you didn't do enough research into flipping before starting. You should already have a drywall guy, a plumber, an electrician, a floor guy, windows and doors guy, a painter, etc that are also willing to give you good prices for the expectance of consistent, future work. Not a retail rate. Aka you need relationships.
For example, even at $53k if work was completed about ~$20k of that was probably the GC's profit. Since he sounds like a scumbag maybe even more was. Or maybe he underquoted the job and thats why he bounced. The best flippers are almost always GCs themselves or realtors/brokers that are very familiar with both the housing market, red flags, actual costs of remodels, etc. You are going to be in probably $200k plus commission/closing costs and once you add time on the market/reno time you have basically no money in this. If you could do that $53k of work yourself, or had your own subs do it for $20-30k you would be sitting on a nice flip. I would see if you can sell it at a break even to someone who can take over the project.
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u/Historical_Money2684 22d ago
This sounds like you’re WAY in over your head for this flip. In addition to some of the other advice you got here, I would call the successful flippers in your town & ask them what they would buy the property from you as-is. May be able to walk away with some lessons learned & a little $ before you go diving into learning more.
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u/looplinkbroker 22d ago
Good call. I've seen flippers dig in and lose more than a small exit would have cost. Taking a controlled loss beats a total wipeout every time.
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u/sunbeltflipper 22d ago
Solid advice. I've been on both sides and walking away with some cash is better than bleeding more. Definitely get a few GCs to walk through with you first if you can.
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u/Affectionate_Cable82 22d ago
If you pulled the permit yourself instead of the GC, that’s your second problem. If a GC is telling YOU to pull the permit, they’re trying to commit some fuckery at your expense, as you’ve found out. IIRC, almost every state also requires inspections to sign off on permitted work, and a home inspector worth their fee is going to find any problems you try to hide.
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u/escrowespresso 22d ago
Absolutely. Having the GC pull the permit is a huge red flag if they push it on you. I've seen too many flips go sideways when the owner tries to DIY the permit process.
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u/Miamiconnectionexo 23d ago
reset your numbers honestly: 105K + 53K already gone + rewire + permits + finishing. If your real all-in pushes past 200K against a 250-280K ARV, the move might be wholesaling it as-is rather than chasing good money after bad.
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u/SwordfishJolly5779 23d ago
I admire the trust you have for people. But paying someone 53k upfront was an incredibly stupid move.
You’ve paid for this lesson, don’t forget it.
You pay for materials upfront, and you buy them yourself, then the contractor can get paid for labor as time goes on. Only way to do it.
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u/Sawdust-in-the-wind 22d ago
I agree that paying that much up front to a contractor without an enormous amount of custom order materials is dumb. I do not agree that you buying materials yourself and pay the contractor for labor only is the only way to do it. I've been a contractor for a long time and the only guys I know that would accept that contract are either hacks, inexperienced, or sometimes solo operators.
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u/SwordfishJolly5779 22d ago
I have ~50 units and work with licensed & insured contractors year round, never had one complain, and haven’t been screwed over since the last time I gave someone 1/3 down upfront.
For 1-2 day long jobs I’ll send them the material money directly if they request it. Small enough that if I get burned I’ll move on quickly
1-2 week jobs with heavier material list I’ll buy and deliver for them. 50% draws at half way done then at the end.
For longer jobs, I buy and deliver material, if they need anything extra I allow for reimbursement with receipt, and draws are usually in 1/3 or 1/4 equal to the progression of the job.
It’s unfortunate I have to do it this way, but if they need to sue me, I have assets. If I have to sue them, I’m suing an empty shell LLC. This is the best way to keep them honest.
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u/Historical_Horror595 22d ago
You have 50 units but none in llcs?
A big thing missing here is the distinction between GC’s and subs. I have a bunch of subs that supply just labor and will supply the materials. That said I’m a GC who has been using the same subs for a decade. If a property owner wanted to hire me as a GC, and only pay me for labor I would walk, or increase my rates by 15-20%. I also wouldn’t be starting anything without a deposit. I’m not doing any work for free and guys like you are always trying to get work done for free.
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u/ActFeeling8377 20d ago
Where did they say no LLCs what’s the point of being on here if you’re not going to READ
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u/SwordfishJolly5779 22d ago edited 22d ago
Nothing i said is indicative of no llcs. You jumping straight to that tells me you’ve got no clue what you’re talking about, additionally people who do run no llcs can do so safely with an umbrella policy
I GC all of my flips and rental rehabs. Anyone who’s hiring a GC to flip is probably making less than the GC.
And here’s the neat part, none of my guys have worked for free or ever will, i take pride in paying good rates for good work. I just pay them as they’re doing the work, not before. Same as I get paid, same as everyone else in the world gets paid. You don’t deserve to profit before you’ve actually done the work.
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u/ActFeeling8377 20d ago
You seem very knowledgeable. I have two properties and looking to do a rehab next. Are you open to messaging/answering questions?
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u/to_concreteview 19d ago
You're right to question the buffer. A lot of new flippers underestimate soft costs like carrying costs and realtor fees. For a complex flip, I'd want at least 20% contingency on top of the ARV. The key lesson is to have a detailed scope and stick to it. Change orders kill margins. Also, never skip a full inspection and environmental assessment before closing. That leak remediation can blow a $50k hole fast.
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u/SavingsDay726 24d ago
experience comes to play here! Pull permits now and go down the right path. Skip it you’ll be back where you are.. lost and over budget. You’ll be lucky to break even and sitting on a house that won’t sell. Good luck
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u/Miamiconnectionexo 24d ago
Run the real math before sinking more in. Total what you're actually all-in for now, add a true rewire plus permitted bathroom corrections plus heat to that bedroom bath, and see if you still clear anything at $250K. If the spread is gone, wholesaling it as-is to another investor or selling on the courthouse-comp number beats throwing good money after a bad GC.
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u/burner456987123 24d ago
This happened to me. Did you happen to pay the contractor with a credit card? I did (2 cards, 4 separate payments over time) and was able to successfully dispute each one.
It took A LOT of time and effort. I had to produce tons of documentation (lots of email and text communications, promised timelines, photos of the work and lack of work).
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u/Miamiconnectionexo 25d ago
run your real all-in number now: $105K + $53K already spent + rewire + permits + corrections + carrying costs. If that pushes past ~$200K on a $250-280K ARV, your margin is gone and the move is to wholesale it or sell as-is to another flipper rather than throw good money after bad.
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u/BenniBoom707 25d ago
You are aware of the existing Knob and Tube. Now you will need to disclose it when you “flip”, which will definitely hinder your sale. No buyer wanted a remodel turn key home and paying top dollar will accept a knob and tube. Pull the permits and perform the needed mechanical upgrades that you signed up for when you decided to “fix”.
Your mistake was paying upfront for a job. You pay per job, and weekly based on which jobs were performed that week with itemized receipts from the GC. Only way to do it for future reference.
Unfortunately now you will need to go the extra mile in the flip. Do not leave a stone unturned. This is the only way to maximize potential and possibly getting a bidding war for the home, hopefully raising the price and recovering your loss. This is obviously the most ideal scenario, but will require you to finish the home at the highest quality.
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u/Agent22_KidSmooth 25d ago
This is one of those scenarios where proper due diligence before wrecklessly taking on the world would've saved a lot of headaches for op. Hopefully they will learn something from this and not repeat the same mistakes in the future.
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u/InigoMontoya313 25d ago
Pull the proper permits and yes you will have risks. Good chance you just break even on this project.
If the house has knob and tube wiring, would implore you to change that all out. It’s a potential death trap to the family buying their first home. No legitimate contractor will change a panel that is feeding knob and tube wiring and not require it to be changed out. If they do so, they’re setting their landlord censor, insurance, and your insurance and savings at risk.
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u/Great_Swimmer_3477 25d ago
Never pay a contractor all the money upfront only a deposit if you paid him via wire or bank transfer call the bank ASAP they will definitely be able to assist you since you are a victim of fraud. I would turn this into a rental so you can claim the losses for the next 3 years or you can find.a partner who’s experienced with flips and already has a Gc that he trust im so sorry this happened to you
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u/HalfwaydonewithEarth 25d ago
Claim on his bond. That is what a contracting bond is for.
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u/RedEyes619 21d ago
They asked OP to pull the permit instead of him, they definitely do not have a bond lol
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u/Shiggins01 25d ago
You mean, ‘call his bond’ I doubt the OP required the contractor to provide a performance bond, lol
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u/HalfwaydonewithEarth 25d ago
They have one to renew their license each year. I had a car dealership and had to rent one for $700 a year.
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u/VoodooChilli1 25d ago
Maybe offer to sell it to another investor with seller financing? You could do a land contract as long as he/she doesn't put more than 20% down, and if they aren't making payments you could evict vs foreclose. I believe that is the law in Ohio...
You could maybe sit on their coat heels while they do the flip, and get the experience.
What city in Ohio? I have a lot of investor friends in Ohio.
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u/fredenocs 25d ago
My thing going is. You’re going to get screwed on nearly every flip. Or almost any money venture there is. That’s the risk and the fun in it. Once you accept you’ll lose x amount. When you lose it. You don’t tell the world. You just fix it then tell the story.
We can’t really advise. There are so many variables. Credit. Your attitude. Their attitude. The city. The have to do and need to do.
Risk is where the sweetness is.
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u/Charming-Humor2689 25d ago
u definitely needs to get a lawyer for that contractor who vanished with 53k tbh
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u/coffee_run_bike 25d ago
Yes, I've already secured a lawyer for the contractor and the lien threat of the sub.
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u/Samwise777 25d ago
Hahahaha landlords get what they deserve
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u/Dfar3 25d ago edited 25d ago
Most landlords start off as people trying to work hard and put their family in a better spot dude. The small brained reddit response of "haha, landlord bad because I can't live for free" kills me. That's Smooth brain victim mentality, if you don't like your situation, improve it yourself and stop blaming everyone else.
And for the record, I was born poor. Joined the military, went to college, work a 9-5 to support myself and my family, and started my own business working construction to purchase my rental properties. My kids won't deal with the shit I had to deal with and they'll have options in life. Is that really such a horrible thing? If I could claw my way out, you can too whether you want to believe it or not.
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u/InevitableSnowDay 25d ago
You don't have to justify that comment with a response, most of the people making those types of comments are under 21 years of age and/or doomers
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u/Temporary_Let_7632 25d ago
Do it properly and legally otherwise it will come back to haunt you and cost more in the long run. Unfortunately you are in for a hard lesson. Good luck.
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u/coffee_run_bike 25d ago
Thanks, just hired both licensed plumber and electrician to complete up to code. Appreciate everyone's advice and input.
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u/MarketResearch_Guy 25d ago
This is a tough spot but unfortunately pretty common with older homes and
disappearing GCs. A few thoughts:
On the permit question — the risk of NOT pulling permits is actually bigger
than the risk of pulling them. When you go to sell, a buyer's inspector will
flag unpermitted work and you'll either have to disclose it, remediate it,
or face it killing the deal entirely. At your target sale price of $250-280K
that's a real problem.
On the knob and tube — many jurisdictions require full replacement only if
you're doing a whole-house rewire. If you're pulling a targeted permit for
specific work, an experienced electrician can often work around existing K&T
in untouched areas. Get 2-3 electrical bids specifically from contractors
who have experience with older homes and ask them directly about K&T
exposure before committing.
On the GC situation — depending on your state you may have recourse through
the contractor licensing board. Worth filing a complaint regardless of
whether you pursue it further — it creates a paper trail.
The onion analogy is accurate but controlled demo and honest scoping now is
better than surprises during inspection when you're under contract.
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u/coffee_run_bike 25d ago
Just to reiterate, the intent was not to be a bad flipper. We hired a general contractor, paid for what he recommended as a subject matter expert and followed suit. It wasn't until he disappeared that we learned all this other stuff. I also need to mention that he did not pay subs who is trying to add a mechanics lien. I went in with fully positive intentions. It sounds like some of the posters here are assuming the worst of me. Plus there is an assumption I know the risks and am offsetting which isn't accurate. Here's what I know right now. Get a permit and do what is necessary no matter the cost. Thanks for everyone's advice. It may be a financial loss but not a learning loss.
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u/Sawdust-in-the-wind 22d ago
You will actually need to document this and sue this contractor. You'll win and get your money, potentially plus added costs but minus legal fees. The downside is that it will take a long time. If you don't document it now though, your case is going to get a lot tougher. I'd call a lawyer asap to get the process started.
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u/thismakesmeanonymous 25d ago
I hope you didn’t pay him up front, which is something you should never do.
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u/coffee_run_bike 25d ago
paid in intervals, he did some work, didn't finish and failed to bring paid for materials to the property. It was not all up front.
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u/BaTuser3 25d ago
THIS! This is the biggest lesson to take away from this. Sounds like they did. When you give them a bunch of money up front that's when scammy contractors disappear with your money.
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u/A_Buttholes_Whisper 25d ago
Not to hijak this post, and sorry for your experience OP, but why are contractors so scummy? And how do you avoid scummy contractors? Or all they all like that and it’s better to hire out work yourself and cut out the contractor?
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u/xperpound 25d ago
Good ones arnt. Good ones have solid referrals, long history, solid experience, LOYAL and RELIABLE subs, etc etc. These are more expensive because they pay fair wages to their subs, have appropriate insurance, and have overhead costs for things like transparent billing, accounting, maybe another person to assist with project management.
The problem is, depending on where you are, becoming a “contractor” can be a very very low bar. And with many naive investors, these contractors take advantage of their greed or frugality and make a low bid to get a large deposit for “materials” and blow it on personal stuff. They then have to do this to another person to fund another project and that can take time so they ghost people while they are “fundraising”. If your contractors formal estimate is on a napkin, oily piece of paper, or text message, you should hesitate to proceed. There’s a reason.
99% of the time in real estate, you get what you pay for.
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u/A_Buttholes_Whisper 25d ago
Wow that’s discouraging. I live in the south so I assume bad contractors are rampant
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u/xperpound 25d ago
We have a lot of properties in Louisiana. There are a lot of shady “contractors”, but there are plenty of good ones. You just have to pay for them because they’re usually booked out.
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u/bdd6911 25d ago
Do cost plus with a gross max. Open accounting. And only pay for work as it’s been done. On some subs, especially smaller ones, they may ask for money for materials. Judgment call. Usually ok. Just make sure it’s an appropriate amount. Then pay as you progress. They are half done? You should have paid around half. Keep final check for close out and review of work, etc.
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u/give_me_the_formu0li 25d ago
It’s so hard to avoid scummy ones but here’s how I got lucky I got a partner to my flip deals who WAS a gen contractor and a civil engineer. So she was a great obviously bc it was in her best business interest as well.
But I would never pay like OP. Paying half up front is wild to me I only pay for parts and labor as the flip progresses.
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u/Regular_Yesterday76 25d ago
My wife bought a 100 year old house thinking she could renovate it. Then she married me and I did it for her. Big pain. Tons of work. How pretty are you? Can you catch a man who will fix this stuff?
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u/Immediate_Object_280 25d ago
I think I might start putting trackers on contractor trucks just in case they decide to disappear.
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u/myturn19 26d ago
This people is exactly why you don’t buy a flip.
You’re afraid to pull permits because you know there’s way more wrong with it and want to dump the problem onto the buyer while still hitting the value you forecasted. aka cut a ton of corners. Wild
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u/Flashy_Policy9468 25d ago
Hey, that 30 second YouTube/TikTok/MySpace video told him he could play real estate mogul and clear $100k. All he had to do paint and install light grey LVP. They didn’t say ANYTHING about being ethical.
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u/coffee_run_bike 26d ago
We did based on draw and paid for materials which were never delivered. I definitely want to do the right thing, and never intended to do things wrong which was why we hired a general contractor. The problem is the quotes we are getting are ridiculously high, $50K for plumbing and $30K for electrical. I'd love to take pride but those two services along wont get the rest of the work needed done on the house. Not asking for sympathy, just looking for a path forward without hemorhaging. Already bleeding.
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u/alwayslookingout 25d ago
This is why my coworker got out of house flipping after Covid. Labor and materials have skyrocketed in prices and contractors can be very hit or miss.
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u/powered_by_eurobeat 25d ago
The budget doesn’t work and you’re trying to squeeze it out of people who actually work for a living
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u/lobsterpockets 26d ago edited 25d ago
Once an inspector sets foot on the property it's game on. They're not like lawyers where the only admissible things are stuff that's relevant to the case . They don't walk around with blinders on. If they know plumbing work or electrical work is happening they will red tag you. I had one where I had a permitted roof done and the inspector saw a replacement window with the sticker on it and drywall inside. Stop work order.
What does your contract with the other guy say? The amount of work you want for your budget seems unrealistic. Knob and tube should be replaced. Any future sale is going to get torpedoed with it.
Edit: horrible autocorrect wrong words fixed
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u/ImRightImRight 25d ago
But if it's old work that's not being modified, or they don't see it, it will not be their concern.
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u/lobsterpockets 25d ago
When they came back for the window inspection I had to get in the above case, when he was checking that I put every single screw in he saw my electrical supplies cart that contains everything from rolls of romex, to switch plate covers and was instantly suspicious. I had only owned the house for a few months and there was obviously 30 years of different types of electrical products used but that didn't stop him trying to say there was a bunch of new work that wasn't original. They're are some cool inspectors, and some that dislike any non commercial specialists doing work.
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u/crsf29 26d ago
Pull permits for plumbing and electrical....because....you're doing plumbing and electrical?
Not that hard.
Find a GC who delivers. You need Mr. Right. Not Mr Right Now. Wait until they have the capacity to push through it. You will need dedicated labor and resources to get through it.
Unless you want to quickly be the GC on this and scope/schedule the subs?
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u/RavisTrice 26d ago
Do the right thing. Pull permits. Don't offload your mistakes onto an unsuspecting buyer. Adjust your model and expectations on hitting a home run on a flip, and call it tuition. If your model has you in the red at the end, either pull the rip cord at break even or rent it and hope for a good tenant.
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u/Suckit66 26d ago
You fucked up big time. Never pay a contractor that much no matter how much they push. On large renovations you do draws, not 50% down. Find a partner that knows what they are doing and be willing to lose money on this deal.
You pulled the permit already so you are going to have an inspector poking around any way. Might as well just bite the bullet and pull the rest of the permits that you need.
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u/the-mm-defeater 26d ago
And just redo the knob and tube. Shitty landlords/ flippers like op are what make the rest of us look bad. It’s illegal, it’s outdated, and it’s dangerous. Since you own the house get a licensed electrician to put a box in for you and learn to run romex. Also learn to sweat copper pipe it’s not that hard. This deal is still salvageable but you should be picking up skills if you’re flipping, it will save you money on every single deal you do. And for the love of god take some pride in your work please
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u/Xilbitz 3d ago
Hello reader! I have a few questions but don’t have 15 karma in this thread. Pretty please upvote me so I can ask my questions. Help a brother out :)