“Is this the homeowners at 167 West River St? We want to talk to you about something. Call us back today.” Yeah, that call’s gonna get returned right away. It’s 6:03pm on a Saturday. We’re just back from my daughter’s first soccer game, I’m exhausted after a day of housecleaning and trying to make supper. And my husband just left in a rush to handle some other crisis (don’t worry, I’ll tell you about that, too!) I’m just not in the mood to handle a confrontation with a neighbor complaining about my tenants. It’s the young boys who just moved into Apartment 1, I’m sure of it. Or maybe the young girls who are moving into the back apartment this weekend. Sorry, it’s after hours on a Saturday, the office is closed until Monday morning.
But while the chicken was baking, I noticed the little Grasshopper icon on my phone – that’s the virtual phone service we use for tenant maintenance (and eventually for everything else, unless we decide to go with Verizon’s version.) A similar message was left there, but this one says, “This is the homeowners at 167 West River St. Something is up with the sink.” The “homeowners” are actually our tenants! It was the young boys in Apartment 1. I laughed about it with them when I returned the call. You said “homeowners” and I was sure it was the neighbors complaining about you. I’m thinking, “Oh no what did they do now?” He said he wasn’t sure what word to use. Tenants, residents, your name – not homeowners. Calls from a homeowner to a landlord are never good news!
They got their sink repair scheduled for Monday morning. I got to not have a dreaded Monday morning phone call hanging over me the rest of the weekend. Most crises are usually not what they seem. We humans have a tendency to create drama where none really exists. Next case in point: the crisis my husband was running off to when I got that call.
Bad contract workers – worse than bad tenants?
One of our newer lines of business is helping other investors fix up their properties, updating the dilapidated into good cash-flowing rentals. We use contract labor for the jobs. We have a couple of guys who are awesome that we keep giving work to, and we are searching the region for more guys like them. (One of our awesome guys is a gal, just to assure the readership that we are an equal opportunity employer.)
The problem is for every awesome guy (or gal) we cycle through 10 or 15 fly-by-night hacks. Every house-flipper we know has this problem. It’s kind of like bad tenants – every landlord has that problem. It’s good to know we’re not alone, that it’s not something we’re doing wrong. But still!
They usually start off pretty good, and we have high hopes. Could this one be another member of our team? Only time will tell, but I always start off with that optimism. And nine times out of ten, I’m left disappointed. It used to really hurt, but now I just shrug my shoulders and go “NEXT!”
Sometimes they work great for 3 or 4 days, then they don’t show up for a day or two. Or they show up and spend most of the time on their cell phones or smoking cigarettes, and nothing gets done. Or they do a subpar job not at all up to our standards and stop showing up when we demand they fix it right. And they all still want to get paid. Full rate. As if they did what they were supposed to.
Every contractor goes through this with their crew. Even the big guys with the logos on their trucks who do a large volume of business. We’ve hired contractors for flips – and they have the same labor problems we do when we do it ourselves. Simply hiring a professional contractor and walking away won’t solve this problem. In some cases, it’ll just make it worse because we don’t have the control to do something about it.
We’re getting better at spotting the fly-by-night hacks quicker and getting them off our job sites. We give far fewer chances than we used to. When we finally pull the trigger, we get sob stories similar to that of deadbeat tenants. My favorite: if we don’t pay him right now, in cash, he won’t have enough gas to get home. Guess you’re walking, buddy!
Well, this one particular guy didn’t like that answer. He got smart. He sent a certified letter to the building’s owner to scare her, said he’d put a mechanic’s lien on the building. Asshat spent all of $3.49 at the post office. I’d say he got his money’s worth. Steve had to run down to Nanticoke and miss supper last night to calm the owner down.
Do Not Fear The Mechanic’s Lien
This tactic has been used on us at least three times before, all by disgruntled contractors who did crappy work (or no work) and still expected full payment. It used to scare us. It felt like a gun being held to my head. But like every other class I’ve taken in the School of Hard Knocks, it gets easier with every test.
All a mechanic’s lien can do is cloud the title. Liens get settled when you sell the property. In the case of my rental property, a lien could sit unpaid until my great grandchildren decide to sell the buildings. But my descendants actually don’t have anything to worry about. Here’s why.
Any idiot with $250 can go down to the courthouse and file a lien against your property, whether or not it’s bogus. That’s scary. BUT that’s not the end of the story. You need to be served properly. There are some legal ways you can be served without really knowing it, such as an advertisement being placed in the legal notices section of a newspaper. So if you find there is a lien against your property, get the case file and find out how you were “served.” If you weren’t served that way, the lien gets thrown out then and there.
Even if you were served properly, Asshat has 12 months to commence the lawsuit against you, or the lien goes away. Lawsuits are expensive. The guy who can’t afford the gas to go home isn’t going to file one. I’m actually not sure where he’s going to find the $250 to file the lien in the first place.
You can speed up this process by filing a “Notice of Contest” with the county real estate office. Then, you spend the $3.49 to send a certified letter to Asshat. He then has just 60 days to commence his lawsuit. Less time to find cans at the side of the road to sell to the recycling center to come up with the money for a lawsuit.
Feel better now? I sure do! No one is ever going to hold that gun to my head again!
A word to house-flippers – always have your contractors and subs sign a Waiver of Liens. It won’t stop them from spending the $250 at the courthouse, but it will help if the case ever does get to court. And in the case of flipping houses for immediate resale, you may consider negotiating with the terrorists. We paid off a contractor (less than he wanted, more than we wanted) to settle a dispute over a flip. We decided paying him off was better for our bottom line then delaying a sale to go to court. 60 days is a lot of time when you’re flipping a house. Keep in mind – we only did this because the guy did enough work to maybe have some sort of a case.
In the case of the investor who hired us to rehab her property – she has nothing to worry about. The guy threatening the lien is a subcontractor of ours. Thus, he can’t put a valid lien on her property. Once she has an Affidavit of Payment from us, Asshat can only sue us, not her.
Soldier on, real estate warrior! We will encounter many types of dragons in these woods. As I slay them, one by one, I will blog about it so that you may do the same.
But while the chicken was baking, I noticed the little Grasshopper icon on my phone – that’s the virtual phone service we use for tenant maintenance (and eventually for everything else, unless we decide to go with Verizon’s version.) A similar message was left there, but this one says, “This is the homeowners at 167 West River St. Something is up with the sink.” The “homeowners” are actually our tenants! It was the young boys in Apartment 1. I laughed about it with them when I returned the call. You said “homeowners” and I was sure it was the neighbors complaining about you. I’m thinking, “Oh no what did they do now?” He said he wasn’t sure what word to use. Tenants, residents, your name – not homeowners. Calls from a homeowner to a landlord are never good news!
They got their sink repair scheduled for Monday morning. I got to not have a dreaded Monday morning phone call hanging over me the rest of the weekend. Most crises are usually not what they seem. We humans have a tendency to create drama where none really exists. Next case in point: the crisis my husband was running off to when I got that call.
Bad contract workers – worse than bad tenants?
One of our newer lines of business is helping other investors fix up their properties, updating the dilapidated into good cash-flowing rentals. We use contract labor for the jobs. We have a couple of guys who are awesome that we keep giving work to, and we are searching the region for more guys like them. (One of our awesome guys is a gal, just to assure the readership that we are an equal opportunity employer.)
The problem is for every awesome guy (or gal) we cycle through 10 or 15 fly-by-night hacks. Every house-flipper we know has this problem. It’s kind of like bad tenants – every landlord has that problem. It’s good to know we’re not alone, that it’s not something we’re doing wrong. But still!
They usually start off pretty good, and we have high hopes. Could this one be another member of our team? Only time will tell, but I always start off with that optimism. And nine times out of ten, I’m left disappointed. It used to really hurt, but now I just shrug my shoulders and go “NEXT!”
Sometimes they work great for 3 or 4 days, then they don’t show up for a day or two. Or they show up and spend most of the time on their cell phones or smoking cigarettes, and nothing gets done. Or they do a subpar job not at all up to our standards and stop showing up when we demand they fix it right. And they all still want to get paid. Full rate. As if they did what they were supposed to.
Every contractor goes through this with their crew. Even the big guys with the logos on their trucks who do a large volume of business. We’ve hired contractors for flips – and they have the same labor problems we do when we do it ourselves. Simply hiring a professional contractor and walking away won’t solve this problem. In some cases, it’ll just make it worse because we don’t have the control to do something about it.
We’re getting better at spotting the fly-by-night hacks quicker and getting them off our job sites. We give far fewer chances than we used to. When we finally pull the trigger, we get sob stories similar to that of deadbeat tenants. My favorite: if we don’t pay him right now, in cash, he won’t have enough gas to get home. Guess you’re walking, buddy!
Well, this one particular guy didn’t like that answer. He got smart. He sent a certified letter to the building’s owner to scare her, said he’d put a mechanic’s lien on the building. Asshat spent all of $3.49 at the post office. I’d say he got his money’s worth. Steve had to run down to Nanticoke and miss supper last night to calm the owner down.
Do Not Fear The Mechanic’s Lien
This tactic has been used on us at least three times before, all by disgruntled contractors who did crappy work (or no work) and still expected full payment. It used to scare us. It felt like a gun being held to my head. But like every other class I’ve taken in the School of Hard Knocks, it gets easier with every test.
All a mechanic’s lien can do is cloud the title. Liens get settled when you sell the property. In the case of my rental property, a lien could sit unpaid until my great grandchildren decide to sell the buildings. But my descendants actually don’t have anything to worry about. Here’s why.
Any idiot with $250 can go down to the courthouse and file a lien against your property, whether or not it’s bogus. That’s scary. BUT that’s not the end of the story. You need to be served properly. There are some legal ways you can be served without really knowing it, such as an advertisement being placed in the legal notices section of a newspaper. So if you find there is a lien against your property, get the case file and find out how you were “served.” If you weren’t served that way, the lien gets thrown out then and there.
Even if you were served properly, Asshat has 12 months to commence the lawsuit against you, or the lien goes away. Lawsuits are expensive. The guy who can’t afford the gas to go home isn’t going to file one. I’m actually not sure where he’s going to find the $250 to file the lien in the first place.
You can speed up this process by filing a “Notice of Contest” with the county real estate office. Then, you spend the $3.49 to send a certified letter to Asshat. He then has just 60 days to commence his lawsuit. Less time to find cans at the side of the road to sell to the recycling center to come up with the money for a lawsuit.
Feel better now? I sure do! No one is ever going to hold that gun to my head again!
A word to house-flippers – always have your contractors and subs sign a Waiver of Liens. It won’t stop them from spending the $250 at the courthouse, but it will help if the case ever does get to court. And in the case of flipping houses for immediate resale, you may consider negotiating with the terrorists. We paid off a contractor (less than he wanted, more than we wanted) to settle a dispute over a flip. We decided paying him off was better for our bottom line then delaying a sale to go to court. 60 days is a lot of time when you’re flipping a house. Keep in mind – we only did this because the guy did enough work to maybe have some sort of a case.
In the case of the investor who hired us to rehab her property – she has nothing to worry about. The guy threatening the lien is a subcontractor of ours. Thus, he can’t put a valid lien on her property. Once she has an Affidavit of Payment from us, Asshat can only sue us, not her.
Soldier on, real estate warrior! We will encounter many types of dragons in these woods. As I slay them, one by one, I will blog about it so that you may do the same.