Mikey Tenarelli entered a real estate flip expecting approximately $90,000 in renovation costs. Delays, permit requirements, contractor problems, inspections, and change orders pushed the final cost to roughly $137,000 and nearly eliminated the entire profit. Mahmoud Faisal Elkhatib and Mikey examine what went wrong, why construction schedules matter, how permit surprises affect the budget, and what investors should do when a general contractor stops delivering.
Mikey Tenarelli had already completed several successful flips and owned multiple rental properties when he entered a project that appeared manageable. He understood construction, evaluated properties regularly, and had experience estimating renovation work.
Despite that background, the project nearly lost money. The renovation budget increased by almost $50,000, the work required two different general contractors, and delays extended the time before the property could be listed and sold.
Experience reduces risk, but it does not remove the need for active supervision, written expectations, and financial contingency.
A purchase price and renovation estimate do not tell the complete story. EV Häs helps Chicagoland investors review contracts, ownership issues, construction obligations, closing risks, and the legal structure surrounding an investment property before the project becomes more expensive.
Mahmoud Faisal Elkhatib is a Chicagoland real estate and foreclosure attorney, investor, entrepreneur, and former real estate broker. His work includes real estate transactions, distressed properties, foreclosure matters, building code cases, and complicated disputes involving ownership and construction.
Through The Bow Tie Edge, Mahmoud examines the practical decisions that affect whether a real estate investment succeeds beyond the purchase contract.
Mikey Tenarelli is a real estate broker and investor who works with Exit Real Estate Partners in the western suburbs of Chicago. He represents homeowners, growing families, investors, and clients moving from smaller homes into larger properties.
Mikey has completed approximately ten flips and owns several single family rental properties. His background in construction gives him a practical understanding of renovation costs, contractor relationships, schedules, and the risks involved in improving investment properties.
Mikey entered the project expecting renovation costs of approximately $90,000. By the time the work was completed, the total had increased to roughly $137,000.
The increase did not come from one dramatic event. It developed through delays, inspections, additional construction requirements, contractor changes, and repeated expenses that accumulated throughout the project.
A chimney inspection added approximately $2,500. Radon mitigation added another $2,500. Additional heating and cooling work became necessary after walls were opened and the inspector identified uninsulated components.
Small unexpected expenses become dangerous when the original budget has no room to absorb them.
The first general contractor repeatedly failed to complete work according to the expected timeline. Mikey did not feel that the project was receiving the attention or priority it required.
One of the earliest warning signs was the permit process. The contractor took approximately one month to obtain the permit and blamed the municipality for the delay. Looking back, Mikey recognized that he should have taken control earlier instead of assuming the project would correct itself.
The delay affected more than the completion date. Every additional week created holding costs, financing pressure, and less flexibility in the renovation budget.
Mikey eventually replaced the first general contractor with someone he had used before. By that stage, the project was already delayed and needed to be completed quickly.
The replacement contractor understood that Mikey had limited options. Additional work became a change order, and the cost of finishing the project continued to increase.
Changing contractors can also create disputes about incomplete work, responsibility for defects, access to materials, unpaid subcontractors, and whether the second contractor must redo work completed by the first.
A replacement contractor is not simply continuing the old job. The transition can change the budget, schedule, responsibility, and leverage of everyone involved.
Mikey describes the construction schedule as one of the most important parts of a flip. The schedule determines when inspections occur, when crews arrive, when the property can be listed, and how long the investor must continue paying financing and holding costs.
Repeated explanations about delayed crews or work beginning the following week may appear temporary. When those delays continue, the investor loses control of the project and the projected profit begins to disappear.
Mikey explains that his other flips were normally completed and ready to list in approximately sixty days. This project required roughly four or five months, adding substantial time beyond his normal process.
Mikey believes the original budget should have included at least another $10,000 because the project required permits. That amount would have helped account for inspections, delays, newly discovered work, and requirements that became visible after construction began.
Permitted construction may reveal conditions that were previously hidden. When walls are opened, inspectors may identify electrical, plumbing, heating, ventilation, structural, or safety issues that must be corrected before the project can continue.
Mikey also concluded that he should take a more direct role in future permit applications when acting as the owner and coordinating the contractors himself.
A permit is not only an administrative fee. It can change the scope, timing, and final cost of the renovation.
Missed deadlines, unclear change orders, permit delays, unpaid subcontractors, and repeated cost increases can become legal and financial problems. EV Häs helps investors evaluate contracts, document obligations, and respond when a construction relationship begins placing the project at risk.
Mikey did not lose money on the project, but the additional expenses removed most of the expected profit. After several months of work, the result was close to breaking even.
The experience temporarily discouraged him from pursuing another flip. His response was not to leave investing permanently. It was to examine the mistakes, take greater responsibility for the schedule and permits, and become more diligent on the next project.
The broader lesson is that expertise does not prevent every failure. A successful investor must remain involved, question delays, maintain contingency funds, document contractor expectations, and act before one problem becomes a pattern.
The appropriate amount depends on the condition of the property, the scope of work, permit requirements, property age, and how much of the building will be opened during construction. Investors should expect that hidden conditions and inspection requirements may increase the original estimate.
Warning signs may include missed start dates, slow permit applications, unclear schedules, inconsistent communication, repeated explanations about unavailable crews, and requests for additional payment without clear documentation of completed work.
The replacement contractor may need to inspect, correct, or redo existing work. The change may also create new pricing, scheduling delays, material issues, subcontractor disputes, and uncertainty about responsibility for defects.
Permits can involve application fees, inspections, scheduling delays, professional plans, and additional work required by the municipality. Inspectors may also identify conditions that must be corrected before construction can continue.
The investor should review the written agreement, document missed deadlines, request an updated schedule, confirm the status of permits and subcontractors, and consult an attorney before withholding payment, terminating the contractor, or hiring a replacement.
