2 Unit Condo Conversion — Emerton St., Salem — Complete!

Rehab on November 5th, 2015 Comments Off on 2 Unit Condo Conversion — Emerton St., Salem — Complete!
*Ext21Emerton-2 (3 of 23)

Rehabbed exterior of Emerton St., Salem, MA

[Sigh.] Like many of you I know, we here at the AARE Group have been having trouble retaining good contractors over the past year and a half. And by good, I mean contractors who both meet our pricing model and can get the job done in the appropriate time frame. We lost our first good crew 3 years ago when the general contractor became a building inspector in southern NH, and our 2nd good crew saw the opportunity to make lots more money in retail and commercial work as the market turned and did not see the benefit of our constant stream of work as enough of an incentive to stay.

So fast forward to today. We’ve been interviewing many crews, but as they are all insanely busy with retail work (Mrs. Jones’ deck now costs 8 times as much as it did 3 years ago — yikes!), it has been difficult to find a crew that communicates well, has reasonable pricing, and that we feel is a good fit for our jobs. Our Salem project is no exception to this.

This contractor was a referral from one of our previous contractors and his work met our standards. He had done a couple small projects for us with good results and claimed he had the capacity to handle a big project. Though he didn’t fit within our pricing, I realized that my pricing models in this hot market had to be adjusted slightly to keep a contractor even remotely interested. We also a added a bonus feature tied to deadlines to provide motivation. So with that in place, we made the leap and gave him the job. And then we started to get the calls. First it was a heads-up that he was struggling to retain his laborers because of this market, leaving him in favor of higher-paying retail work. Usually we would say “this is not our problem — that’s why we pay a project manager (i.e. YOU) to handle it.”  But like everything in this business, it all BECOMES our problem, as we’re the ones left with responsibility for the job, AND the holding costs.

In my experience, delays are typically caused by three things:

  1. Permitting and inspection delays;
  2. Weather (and those Acts of God insurance policies tell you about); and
  3. Contractors who dawdle on the job, or take too much time off.

Emerton St. after heavy rains courtesy of Hurricane Joaquin

We did have some weather issues thanks to the heavy rains associated with Hurricane Joaquin, which cost us about a week, and I acknowledge is beyond human control.  And the process with the building inspectors went really smoothly on this project. So that leaves one source remaining.

As the job progressed, we started to realize our guy was falling behind schedule and my concern grew during my site visits because he was never on the job site. But he was frequently in communication with us, telling us the state of the job, so we let him do his thing. And then on one surprise inspection, I walked in and found that his newest laborers made significant errors in their workmanship on many of the finish items, including a horrible install job on the bathroom tile, kitchen cabinets, and doors. This is when the real issues began and caused lots of red flags for me, knowing that this PM had not been overseeing the job as closely as he should have been — and now I had to visit more often than I had planned to start cracking skulls and holding people accountable. In our follow-up discussion with the contractor, he admitted to having multiple and various crew and laborer working issues because of the hot market and they all went to do side work, “’cause it paid better.”

Me:  “I thought this was your A-Team, and you’ve been working with them for years?”
Him:  “I have, and they are — since they left, I’ve been hiring and firing people every week. It’s been rough.”
Me:  “Sorry to hear that — you know you’re way over your deadline, right? And maybe if you were here more, these issues would have been found sooner, so I wouldn’t have to make you tear out all the bathroom tile and start over ?”
Him:  “You’re making me do WHAT?”

(I would have chuckled if I didn’t feel like screaming at this guy, knowing that if he were just on the job more all this would be a non-issue.  NOTE:  We used to restrict the number of jobs contractors can work on simultaneously while working on ours, since the distraction might take them away, but since it’s been tough to get a crew to agree to that, we upped our penalty clause instead, which would hold them accountable no matter what.)

Finally, he agreed this was his responsibility and he would do whatever it took to remedy the situation. And to be very clear, when we fall behind we don’t cut corners, but do whatever is needed to get the job done right. SO — it took another 8 weeks to get the proper crew in there, plus the extra work to rip out everything and do it again — and then go through 2 long punch lists during the Halloween season when no one wanted to drive anywhere near Salem.

Since we do include a penalty clause in our contractor agreements (see above), on paper, the contractor owed us $13K in penalties due to his missed deadlines. We could enforce this, but in order to get the job done and keep the peace, we worked out an agreement whereby any and all extras (both from us and from prospective buyers) on the punch list would be covered by the contractor. And he definitely knows he’s winning that side of the deal.

We’re finally at the point when we’re ready to put it on the market, but not until after a huge learning curve for our new contractor (who we may or may not ever work with again — I’ll let you be the judge) as well as us, the people who footed the bill for the extra holding costs.

All that said and done, there are now 2 beautifully rehabbed condos that we’re proud to have on the market, and we’re just hoping the witches don’t curse it and leave us holding them for the winter!

View before photos here, and then compare with the beautiful after photos below.

I’m trying to come up with a “moral to story” to end this post, and I’m coming up empty. Except that if you have a crew that you like and they’re doing good work for you, keep’em close!  And if you don’t have enough work to keep them busy and you don’t want them to stray, please send’em my way!  I’ll even help train them!

Onto the next…
Keep calm and rehab on.

*Kit1.21Emerton-1 (9 of 13)*DinLivRm21Emerton-1 (6 of 13)*Bed1.21Emerton-1 (12 of 13)*Bath1.21Emerton-1 (11 of 13)

*DinKit2.21Emerton-2 (11 of 23)

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