J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
320 Replies
J Scott
(Moderator) -
Developer from Sarasota, FL
replied about 2 years ago
Originally posted by @Rodney Sums :@J Scott
If you personally buy and hold properties, how do you research emerging markets in an effort to purchase property in the path of growth and development? I'm currently reading a book about emerging markets, you're supplemental answers would be great. Thank you for taking the time to address questions for everyone.
Hey Rodney,
When it comes to emerging buy-and-hold markets, the most important things are growth.
Specifically:
- Population Growth
- Income/Wage Growth
- Job Growth
If you have those three things, you're potentially looking at a good buy-and-hold market.
Dieggo Goncalves
New to Real Estate from Marietta, GA
replied about 2 years ago
Who needs HGTV when you have BP and Youtube!? lol
That's very interesting though, you obviously have all the knowledge and more.
Thanks for all the great content you provide us aspiring* REI!
Originally posted by @J Scott :Originally posted by @Dieggo Goncalves:
When will your Flip or Flop show come out?
Back in 2014, we spent about 6 months negotiating with HGTV on a show. But, we couldn't come to an agreement -- they wanted another typical flip show, and we wanted something different. We never came to an agreement...
Here's more information (and a sizzle reel) from that adventure:
Rodney Sums
from Laveen, AZ
replied about 2 years ago
Thank you for that answer! I was inquiring more about how you research vs. what you look. For example I've looked up items like that using the census bureau data. Where do you personally go or what do you specifically review when you're monitoring or looking for emerging markets? Thanks again.
J Scott
(Moderator) -
Developer from Sarasota, FL
replied about 2 years ago
Originally posted by @Rodney Sums :
@J Scott
Thank you for that answer! I was inquiring more about how you research vs. what you look. For example I've looked up items like that using the census bureau data. Where do you personally go or what do you specifically review when you're monitoring or looking for emerging markets? Thanks again.
Most of my information will come from talking to local investors (not just real estate), business owners and real estate professionals (agents, brokers, lenders, appraisers, etc)... I'll actually spend time in the markets that I'm consider and literally just network with other investors and seek out people who are knowledgeable about the market.
That said, some of the data sources I like when looking at rental areas:
census.gov
city-data.com
zillow.com
zilpy.com
Local chamber of commerce sites - can provide information about business/job/wage growth
Local real estate associations (members of NAR) - can provide information about local housing stats, housing supply, etc.
Natalie Schanne
Real Estate Agent from Princeton, NJ
replied about 2 years ago
@J Scott - How do you manage contractors so you get the price you need, the quality you desire and the timeline you agreed to? (Sometimes “contracts” don’t solve everything.)
How do you manage relationships to request rework (until you get quality you expect) without paying extra or buying extra materials, and having that contractor work for you again / not walk off the job?
Did you ever get your contractor license and insurance in any area to make it easier to manage the permitting process/subs (in case you had to change someone)?
The GCs who bid my job ask for like 200% of any price in your books (in NJ where the home values are 150-200) regardless of how many I contact. The craigslist guys at $100-200/day are hit or miss. My favorite workers are those with a day job doing x and do it for me for an affordable amount but usually aren’t licensed to pull permits.
I got a tile guy to sign a contract he didn’t really read stating he was paying for all materials besides tile and grout and he will get $100 less per day if not finished by yesterday (it’s 80% done and the 10 days to finish 1000sf was generous). He brought me $500 in bills for leveling spacers and thinset and redguard/crack prevention. I don’t know how to keep a relationship with him if I deduct the materials from his completion payout. (He’s very skilled but constantly broke.) I agreed to give him $3psf for 1000 sf of floor tile after having a $1600 “+ materials” competitive bid from my B quality handyman who would have used the cheap spacers and the floor may have been uneven. This tiler’s quality is very good.
Thank you!
J Scott
(Moderator) -
Developer from Sarasota, FL
replied about 2 years ago
Originally posted by @Natalie Schanne :
@J Scott - How do you manage contractors so you get the price you need, the quality you desire and the timeline you agreed to? (Sometimes “contracts” don’t solve everything.)
How do you manage relationships to request rework (until you get quality you expect) without paying extra or buying extra materials, and having that contractor work for you again / not walk off the job?
Did you ever get your contractor license and insurance in any area to make it easier to manage the permitting process/subs (in case you had to change someone)?
The GCs who bid my job ask for like 200% of any price in your books (in NJ where the home values are 150-200) regardless of how many I contact. The craigslist guys at $100-200/day are hit or miss. My favorite workers are those with a day job doing x and do it for me for an affordable amount but usually aren’t licensed to pull permits.
I got a tile guy to sign a contract he didn’t really read stating he was paying for all materials besides tile and grout and he will get $100 less per day if not finished by yesterday (it’s 80% done and the 10 days to finish 1000sf was generous). He brought me $500 in bills for leveling spacers and thinset and redguard/crack prevention. I don’t know how to keep a relationship with him if I deduct the materials from his completion payout. (He’s very skilled but constantly broke.) I agreed to give him $3psf for 1000 sf of floor tile after having a $1600 “+ materials” competitive bid from my B quality handyman who would have used the cheap spacers and the floor may have been uneven. This tiler’s quality is very good.
Thank you!
Hey Natalie,
I believe I say in the new edition of the Flipping book that, in a hot market, contractors are the most difficult part of the job. It didn't use to be that way back when there were fewer investors and contractors needed to do a consistently good job in order to find work. But, these days, contractors just need to have a pulse, and someone will be willing to pay them.
With that in mind, here are a few thoughts:
- First, many parts of NJ are going to be in that 10-20% of the nation that is more expensive than the upper limits indicated in the estimating book. There are just some markets (San Francisco, Southern California, NYC, parts of NY, Washington DC, etc) where labor and materials are much higher than most of the rest of the country, unfortunately. Luckily, home prices typically reflect this as well. If you're working in an area with extremely high labor prices, but low housing prices, you may want to revisit your farm area.
- Don't just have your contractors sign the contract, especially the handymen and small time companies. Actually go through it with them, make sure they understand what they're providing and what you're providing. That way, at the end of the job, when they try to charge you for things not in the contract, you won't have to feel bad saying no. I know one investor who will literally record his discussion with his contractors walking through the contract, so that if they ever end up in court, the contractor can't claim he didn't know what the agreement was.
- In terms of, "How do you manage contractors so you get the price you need, the quality you desire and the timeline you agreed to?" You don't. I write in the book: BETTER, FASTER, CHEAPER - PICK TWO. Typically, you only get two of those with contractors. And you need to decide which two are most important to you. For me, it used to be better and cheaper -- I was willing to compromise on speed. These days, I don't want my projects to drag on (the economy can shift any day now), so I go for better and faster -- I'm willing to pay more. Figure out which two are most important to you, and find the contractors that will satisfy those two. Oh, and some won't even give you two out of three -- try to avoid those.
- In general, when someone tells me that they get royally screwed by a contractor, it was because they didn't check references on that contractor. Most contractors that will screw you do the same thing to all their clients. You certainly aren't the first. Many investors are too lazy to do due diligence (I'm often too lazy myself and I regret it). Check reference, visit past job sites to see quality, check for lawsuits, verify their insurance and license, etc. Most bad contractors don't hid their "badness" very well.
Polar Prutaseranee
Flipper/Rehabber from Tustin, CA
replied about 2 years ago
Hi @J Scott , I just wanted to say that I think this is great. I recently listened to the podcast as well, but was familiar with your work and contribution to the site and to the flipping world in general even before that. I have no questions for you at this time but really wanted to let you know that I really do appreciate you taking the time to really allow others to learn from you. I'm sure I speak for many when I say how appreciative we are of what you've done for our community. The fact that you created this thread is awesome. That's all I got! Take care!!!
J Scott
(Moderator) -
Developer from Sarasota, FL
replied about 2 years ago
Originally posted by @Polar Prutaseranee :
Hi @J Scott, I just wanted to say that I think this is great. I recently listened to the podcast as well, but was familiar with your work and contribution to the site and to the flipping world in general even before that. I have no questions for you at this time but really wanted to let you know that I really do appreciate you taking the time to really allow others to learn from you. I'm sure I speak for many when I say how appreciative we are of what you've done for our community. The fact that you created this thread is awesome. That's all I got! Take care!!!
Thank you for the kind words, Polar!
Polar Prutaseranee
Flipper/Rehabber from Tustin, CA
replied about 2 years ago
@J Scott My pleasure
Andrew Syrios
(Moderator) -
Residential Real Estate Investor from Kansas City, MO
replied about 2 years ago
If you get scarred half to death and then get scarred half to death again, do you die?
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