The Tale of the Fix-n-Flip Nightmare!.....Part 2

For anyone not seeing part 1, here's the link......http://activerain.com/blogsview/235955/The-Tale-of-the.  Here we go, part 2!!

So Investment Partners show up, help pull out the kitchen cabinets still remaining and a few other things.  All of what they removed from the house they left in the front yard!!  Why?  I don't know, we had a dump truck sitting in the driveway. to lazy I guess.  Actually, we thought they'd return to clean it up!   They never did!  

So by now we are about a month into the project, windows had been replaced, by Travis.  Exterior painted, by Travis.  Backyard Big Toy Play-system dismantled and yard cleaned up with a Bobcat, by Travis.  Are you getting the picture???  Mind you we all had regular day jobs, except Mrs. Investment Partner.  I was also planning my daughters surprise 18th birthday party.  There were days my boys didn't even see their dad because he'd leave for work at 6am, go to the investment house from there and work until midnight or 1am.  All total, Investment Partners might have put in 20 hours total between the two of them at this point.

On a particular weekend when we were working on the backyard, my husband was in a Bobcat moving dirt.  My brother-in-law was building a new section of fence, my two sons and nephew were trying to stay out of the way and I was moving a wood pile from the house to the dump truck.  At one point Chandler, my 8yr old, came to help me and was jumping on a piece of plywood that was put down on top of some of the wood.  Now.....I know rats live in wood piles, but I figured with all the construction we'd been doing and the Bobcat running they would have vacated a long time ago.  The movie Stuart Little came to mind and I imagined them packing up their little suitcases and moving on.  Well......I pulled the last pieces of wood from the pile and had the final piece of plywood to go.  I got a good grip and as I lift it.........there they were two HUGE RATS!!!!

I dropped the plywood and started screaming mouse, mouse.  I was totally freaked out!!! I couldn't stop screaming, it was completely uncontrollable.  I also thought I was going to wet my pants!!!  Travis could hear me screaming over the Bobcat and counted heads thinking he'd run over one of the kids!  My brother-in-law came running just in time to see one of the buggers run away and said "that's no mouse, did you see the size of that thing?"""  I finally calmed down and said "there may still be one under the board cuz I just dropped it on it's head!!"  Tim checked it was gone.  That's it, I was done working outside, FOREVER!!  Every-time I looked at that area of the house, I got the heebie jeebies!!

At the end of September we had a sit down.  Investment Partners said they would put $25k of their own money into the project as well.  We were pretty much on track to finish in 30 days, they said they were going to be at the house more to help get it down, things seemed to take a turn for the better.  Mrs. Investment Partner and I were going to go to Lowe's to buy the kitchen cabinets the next day.  They were against the slab granite idea, but I told them about a company I'd found Affordable Extras and they had given me a quote for $3100 and some change for the 1-1/4" granite, 4" back splash and installation.  Mrs. Investment Partner said she wanted to get a bid from her tile guy for 12" squares (YUCK).  I said OK, let me know what he says.

We meet at the next day and Mrs. Investment Partner decides that the off the shelf cabinets are not good enough!  She wants to custom order cabinets!!  For anyone who knows about ordering cabinets, that's a 3-6 week order time.  I tried to tell her the cabinets were fine, builders were using the same product, but nope she won't hear of it!!!  Two weeks pass before she's free to go out to order cabinets.  So now we are six weeks into an eight week project.  We find a company that says they can get us cabinets in three weeks so we go in to pick them out.  At this point Mrs. Investment Partner informs the sales person that she's the one with the money and she'd be making the decision.  Hmmmm, what happened to equal partners???  She finally decides on something, the order is placed and we spent $2000 more for the custom order cabinets then we would have if we got the off the shelf cabinets.  AND we have to wait three weeks for them to be delivered.  So there will be another HELOC payment and we are now going to be well over the 8 week turn around time.  But....what can I do.

The next week I ask about the tile bid and get the "oh I havn't heard yet" response.  So I decide to call Randy myself.  The quote was for $2722, only $500 less then slab granite.  I'm ordering the slab.  I tell Mrs. Investment Partner what I'd learned, and that I need a 50% deposit for Affordable Extras.  First she tries to say she'll come in and lay the tiles herself.  I almost laughed in her face.  Everything she'd done up to that point was AWFUL.  Even her husband thought she should just stay home, because she was making more work for them.  She proceeds to say, fine then that's all I'm paying, 50%.  Period.  Trying to stay nice and calm I ask why when the difference is only $500 and she says because she doesn't think we should do slab granite so she's not going to pay for it.  I said FINE I'll pay for it and get reimbursed in the end.  She said FINE!

So now we are at about mid October, fall is setting in , and the last time I'd seen or heard from Mrs. Investment Partner was when we discussed the granite.  Mr. Investment Partner had been laid off from his job about this time, so he was making a little bit better effort to show up and help out.  However, his skills weren't much better and Travis, who's a perfectionist, had to redo a bunch of stuff.  We were informed at this time that the budget had been cut in half because they had now decided to take the HELOC payments from the remodel budget!  Travis wants to walk but I begged him to just keep going.  This was going to be our big payday!

We were onto the recroom and when the cedar paneling was removed the old glue remained so the entire room had to be resheetrocked.  We got a bid for $4100 and Investment Partners said NO we'll have to do it ourselves because there wasn't enough left in the budget.  So, a job that would have taken 5 guys one week to complete, took Travis six weeks to complete.  More HELOC payments!  Never once did Investment Partners show up to help hang sheet rock, mud/tape or texture.  When Mr. Investment Partner was asked about Mrs he said "oh she's really busy."

Fast forward it's now December.  I had noticed that market starting to turn and prices were coming down.  I told Mr. Investment Partner we NEEDED to get this house on the market, even though we were only about 95% complete.  We could finish while we waited for closing.  He agreed.  Prior to giving him the listing agreement at the advice of my team leader/broker, I gave them a Quit Claim Deed adding mine and Travis' names.  You'd of thought I was asking for the moon!   Mrs. Investment Partner called me up (remember I hadn't seen or heard from her in two months by this point) and chewed me up and spit me out!!!  She threatened to give the listing to someone else.  She told me it was my fault my kids weren't seeing their dad because I wanted to do to much.  Funny thing is, everything we did, they agreed to and wrote the checks for.  She said there was no way they were going to add our names to the deed!  I didn't really respond to her except to say she had reneged on the agreement to help, that Travis was doing all the work and that I'd hire an attorney if she gave the listing to someone else.  She hung up on me!  Shaking, I called Travis, told him what she'd said and wanted him to talk with Mr. Investment Partner who was at the house working with him.  Travis is so non-confrontational that he didn't say anything.  Mr. Investment Partner upon returning home and hearing what Mrs had to say, proceeds to send me an email and the long and short of it was that the one with the gold makes all the decisions and he's the one with the gold!!!!  Can you believe it????  I did not respond to his email because I just wanted to get things done and move on.  Obviously we wouldn't be forming an LLC with them and there wouldn't be any other projects!!

I completed the listing agreement, delivered it to Mr. Investment Partner, he pulls it out, looks at it and says "you'll need to change it to DRS, LLC"  I thought I was going to be sick. I was physically ill.  They had gone behind our backs and formed their own LLC.  Keeping my composure, I said OK, changed the name and redelivered it.  Then Mrs Investment Partner decides she's holding the agreement hostage until I give her all the receipts.  I was doing a spreadsheet and hadn't had time to enter everything in.  I'd said I'd be happy to get them to them by the end of the week.  Mr Investment Partner then calls me the next day and says only one of them has to sign the agreement and he's president so he'll meet me at Starbucks with the listing agreement.  So now it's obvious he's had enough too and just wants to get it listed and sold!  Then they were off to their $10k/week stay in Hawaii for Christmas.  And no the house still wasn't 100% complete.  We had cancelled our summer campouts to work on the house and spent New Years Eve there ringing in the new year with paint brush in hand!!

When I got home to enter the listing, enclosed was a piece of paper with all their demands for closing.  No where was there any compensation to Travis.  They were now saying my commission was part of my profits.  They thought the 6% was going straight to me and wanted to match that before splitting any profits.  Because  they had said they'd run out of money, we put $10k of our own money into completing the remodel.  It was not going to be repaid because they never "asked" us to put in any money.  I sent them an email explaining the 6% was LOC and SOC, asked about Travis getting paid for his time (about $40k in labor) and said what happened to you getting an extra $1000 for financial risk taken and the rest was split 50/50?  I never got a response.

Well long story short we sat and sat and sat.  Thought we had an offer and I was going to do both sides (there's some redemption for us) but they backed out because the neighbors had told them some lies.  Finally got an offer and closed May 31st, 2006, 10 looooong months after successfully bidding at the auction. Finished product!  With the exception of 2 toilets & a jetted tub everything was new.  There ended up only being a $6k profit because of $14k paid in HELOC payments and do you think they paid Travis?  Nope.  In their minds it was my fault and Travis would have to take it up with me.  We did not get our $10k back either, so essentially my commission covered that so neither Travis or I received anything for all our hard work.  I developed tendinitis in my elbows and worked in December with pneumonia.  Travis missed out on time with his kids and his back went out a couple times.

Moral of the tale:  NEVER NEVER NEVER TRUST ANYONE WHEN IT COMES TO BUSINESS!
I knew we should have formed an LLC from the git go.  It's just smart business, but my husband felt like he knew them well and truly believed they wouldn't have done anything to screw us!  After-all they regarded him as family.  At the end I thought I'd hate to be part of their family if that's how they treat them.

My good friend Matt said when emotions and money got involved it was impossible to reason with them.  That project nearly cost me my marriage for a myriad of reasons.  My boys got yelled at way to much for getting into things they shouldn't have, but what else were they to do?  Mr Investment Partner even had the gull to get on Chandler one day and I phoned him later and said I'm done bringing my boys over to get yelled at.  He'd need to help Travis finish up.

I did contact an three in fact, but the bottom line was without anything in writing it would be a tough case to prove.

Would I do another?  ABSOLUTELY!!!  I would love to do another fix-n-flip.  It was very exciting even with all the drama.  Obviously I'd do things very differently.  I think it would actually be a waste to never do it again and apply what we learned.  I'm a firm believer in learning from one's mistakes.  Plus there is the new Flip book with better guidlines to follow    Travis says no way, I'm oughta here!!    The crux of it is that Investment Partners were not independently wealthy.  They'd gotten where they were financially because of inheritance money from his family.  I also believe it was VERY difficult for them to go from hiring someone to remodel to doing the work themselves.

Months later Travis was at a another local hardware store and in walks Investment Partners.  Mrs says "oh look it's Travis" and waves as if nothing happened.  Mr walked to the back of the store.  Travis was just thankful he was next in line at the cashier and turned his back to them.  He said he started shaking and felt sick and was surprised by his reaction.  I asked him if he'd read this post and he said No!

Sorry this is soooo long, but thank you to everyone for reading.  It's like therapy for me! 

Sandy Noll
Realtor, eAgent
Keller Williams Realty
425-890-0878
sandranoll@kw.com
http://www.letsachieveyourgoals.com/
Woodinville, Kirkland, Bothell