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It's been a pretty crazy summer, but really, a lot of it is a culmination of the last 6 months or even one year. One thing I learned this year is how hard it is to find a good crew!
Last year I got involved with a really terrible property manager who really set us back. I only mention him because not only was he a cancer in our lives, but every contractor he got us involved with turned out to be a huge problem for us as well.
I don't know if this is a truism or just anecdotes, but it seems like people attract others like them. If you have a bad actor, chances are most of the people he's surrounded by also have some issues.
Last year we started a major series of projects across our portfolio to upgrade our units. These were mostly interior upgrades but there were a number of projects for major electrical work as well.
We hired this one contractor based on a recommendation from our property manager at the time. To be totally fair and honest, this contractor actually does amazing work. His prices were reasonable and he seemed like a decent guy too. A number of the best photos I showcase right now for our apartments is actually his work. Like this one.
Then, he disappeared in the middle of a job.
It sounds ridiculous as I write this... I had a contractor disappear on the job and then I hired him again for another job. I must have some serious judgment problems or I'm just totally inept at this real estate thing, right?
Hear me out.
It was strange that all of his tools were left at the job site, and it was a huge hassle finding someone to take on a different contractor's job. It set us back a couple months as we tried to reach him, send emails, letters, etc.
Finally, I decided to sue him for damages.
Months went by and the court date was approaching, and I got a text message out of the blue.
He wanted to sit down and talk.
I thought about it for a bit and figured that it was pretty respectable to ask to sit down and try to talk things out, so I agreed.
During our conversation, he explained that he fell off a roof, broke his back, then his wife filed for divorce while he was still bedridden. She stole his phone and trashed it so he lost his contacts and he didn't have that number anymore.
He came armed with a stack of medical files, court documents, etc as evidence that it was all true.
You can't make this stuff up.
Well, being the kind-hearted person I am, I agreed that he could pay me back by working another job for me. He had done a number of very good jobs for me in the past and his story seemed to jive.
What I didn't think about at the time (which seems pretty obvious now) is we did send him emails and he never responded. Later, as we moved forward with the new job, he used the same email address as the one he used before. It should have been a big red flag, but it was overlooked.
I won't go through every detail. But, suffice it to say that it seems like emotional problems just follow some people. Every few weeks it was something different that was catastrophically wrong with his life.
...and it was affecting my business. The project dragged on, he was finding ways to upcharge me (I assume to pay his attorney fees and other issues), and he would disappear for a week at a time.
I thought about firing him several times. But, his infractions never really rose to the level of fireable. Every time it got close, he'd be back at the job working. It was just easier to go along with it to get the job done.
Then the deceit came. He asked for progress payments when the flooring and then again when the painting was done, but the floors weren't done, the paint wasn't done, trim wasn't in, etc. Somehow I missed that in the pictures he sent and many were positioned to avoid the obvious deficiencies.
Then he disappeared for a month. Granted, he fell on yet another hard time, it was the 5th or 6th time in a row and my 8 week project had dragged on to about 20 weeks at this point.
So, on the 17th of July, I decided to just go there and figure it out myself. I landed in Boston on the 18th.
Just to put it into perspective, we hired him in February. He expected about 2 months of work, but padded in an extra month into the contract just in-case. So, the contracted end date was May 15th.
I flew to Boston 2 months after the project was supposed to end, and it was no where near being completed.
I always complain about heading to the northern tundra, aka the arctic north, aka Massachusetts (see what I did there?). But, the truth is the area is a great place to visit.
The problem is that it's cold most of the year and I only go there to work, never for vacation.
But I did get to have some Clam Chowder!
Obviously, any trip is worthwhile when you get clam chowder.
The day after I arrived in MA, I went to check the progress of the apartment....and it was basically not even close to rentable.
While it wasn't in bad shape, at the speed this contractor was going, I'd be waiting until October to have it finished.
I landed in Boston on the 18th but I didn't start working on the rental until the 25th.
During my time as an Infantry Officer in the Army, there is something we called Tactical Patience. Even when bullets are flying and there are explosions all around, you sometimes need to just pause and let the situation develop before taking action.
Moving too early might mean your supporting unit is not in position, or the enemy hasn't expended enough ammunition. Sometimes the conditions are just not there yet to achieve victory while minimizing potential loss.
Tactical patience is waiting for the situation to develop even when every cell in your body is screaming for you to move forward.
It was agonizing to sit around and not work on this project (though I did find other important things to do during that time), but, it was essential.
I got word that the contractor was back in town. I wanted to give him every opportunity to get back to work. He had left the state for about a month to attend a funeral for a family member.
While this was one event in a long line of personal tragedies that kept him off the job for half a year, I wanted to be as respectful as possible. I totally understand that a month is way beyond reasonable for a funeral and the expectation is to get back to work (or at least answer the phone), but I always want to be the reasonable one when possible.
But, we discovered he was back in town for over a week and still had not answered any calls or texts.
So, I had my "foreman" (handyman, property manager, project manager, and everything else) call, text, and even go knock on his door.
He was home and refused to answer the door. No response to any calls or texts.
...until, finally, we heard from him! On Monday the 23rd (after about 2 weeks back in town) he said something like...
I don't care about any job. I don't need the money anyhow.
Alright, game on.
At this point, he had specifically told us he was off the job. He was very close to getting fired, but he told us he was off the job before I got to the point of firing him.
I often say that I fired him simply because it's an easy way to explain the situation for everyone to understand without using 2,000 words to explain it. Since this is a 2,000 word article explaining it, I can be thorough!
If he didn't respond and get back to work, he was going to get fired, that's true. But, if he did get back to work, I would have let him continue (and I would have been at the job every day to make sure it got done).
So, here is the reality of the situation. I felt this coming and positioned myself accordingly to be prepared to solve it regardless of what happened.
If he worked, I'd oversee. If I had to fire him, I was available to handle any issues. I didn't foresee him quitting, but I was in position to deal with that too.
Once in position, I just needed to pause and see what direction the events went. That was the hard part. Once in position, you want to take action.
I gave him every opportunity to work. We called and texted a dozen or more times and after a month we finally reached him. Then he quit. In my opinion the damages are on him now.
I couldn't get my team together for the following day, but we were on the job by 25th working 10-12 hour days. I came back to Texas on August 1st, but my team kept working and will get wrapped up by the end of the week with the exception of some touch up painting doorknobs and other odds and ends.
So, just about 7 working days later, the problem was solved. Granted, we will have put in about 170 man-hours of labor, but our 5 month headache was over and done with.
It's a really sticky and difficult situation dealing with someone with problems in their life.
On one hand, it is their job to stay professional and make sure those problems never bleed over into their business. It's definitely not right for my business to suffer because of one contractors personal problems.
One the other hand, we are all human and we all fall on hard times.
I can imagine that someone who is living through difficult times will feel I wasn't lenient enough (just as this contractor feels I'm completely wrong in every way and is threatening to sue me).
On the other hand, someone who is a business owner like me will feel like I was a total pushover and should have just fired him months ago.
So, what would you have done? Comment below.
Eric is an investor that achieved financial independence at the age of 30. He started in 2009 with the purchase of his first triplex and now owns over 470 units. He spends his time with his family, growing his businesses, diversifying his income, and teaching others how to achieve financial independence through real estate. Eric has been seen on Forbes, Trulia, WiseBread, TheStreet, and other financial publications.
I started out as a full-time student, over $60,000 in debt, and didn't even have a full-time job (two part-time jobs).
Learn the system I used to create a 6-figure passive income.
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