Handyman specials how i got creative when money got tight

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Handyman specials how i got creative when money got tight

Steven Maduro
Decatur, GA · Member since 2012 · 198 posts · 59 votes

I had two properties that were going vacant at the same time
one was a dead beat tenant that I had to evict after she only paid two months rent.
the other was on a house that I basically just put someone in to keep a person in the house to make sure it was occupied and wouldnt be vandalized.

I have a dedicated contractor who will do good work for cheap but he was unavailable and i was cash poor.
it looked like I may have had to just let the properties sit until I could come up with more money.

then I got an idea rent the place as is
take off the money I would have paid my contractor to do some of the work and get a handyman or licensed trade skill type guy. t rent it.

I ended up getting a skilled tradesman in each house.
one guy is an actual house builder that hit bad times during the recession the other guy works with his father installing and remodeling bathrooms and kitchens.

both these guys came signed the lease
on the first tenant I allowed him to move in with security plus 200.00
the difference was the paint and drywall repair and cabinets stained and house cleaned. that I would have paid someone else to do out of pocket which I didnt have.

gettting that money allowed me to take care of a 350 plumbing problem and a furnace issue that came up

the other house
the guy moved in for security plus 300 for the first two months less than half the actual rent because he is going to do all the painting and the bathroom remodel
some drywall repair and hang ceiling fans.

he is working alongside my contractor and my contractor has now gotten a new partner and he has okayed this guy to do the work
all things worked out.

and now my two houses have some capable people in them
who wont come crying everytime there is a minor problem

I know this isnt the ideal way to do business
but I sort of started out over extended.

I wont resort to this tact all the time I just was on hard times and needed a solution

and this seems to have paid off just thought I would share.

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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y

You're lucky. Contractor/labor guy moves in and does work, he stops paying in 3 months and claims he has been working on the house, You evict, he files a workmens lien, you end up in court or figure it out. So it can backfire easily, ask me how I know.....second thought, don't ask. :)

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    13y

    You're lucky. Contractor/labor guy moves in and does work, he stops paying in 3 months and claims he has been working on the house, You evict, he files a workmens lien, you end up in court or figure it out. So it can backfire easily, ask me how I know.....second thought, don't ask. :)

    6Reply
  • Randy F.
    Contractor · Anchorage, AK · Member since 2012 · 351 posts · 196 votes
    13y

    Thats great, as long as it goes as planned. I would definitely approach this situation as if you were contracting with a contractor to perform the work. It should specify what work is to be done and by what date. An inspection should be done and contract should say that if after x date y work is not completed, full rent must be paid in full.

    A guy works construction all day and when he gets home says, "I put in a full day! The last thing I wanna do is hang cabinets or paint the livingroom. Ill do it tomorrow". The next day same thing... And the next...
    Come the weekend and he decides to reward himself for a hard week and goes fishing. Come the end of the month and all he's done is fill nail holes!

    5Reply
  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    This would never work in an area that requires a rental inspection.

    Bill Gulley, In my area a contractor needs a signed contract to file a lien and must also be licensed. Is it different in your area?

    1Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    i think the thing that went in my favor is both guys are married with children so the wife wants the place nice.

    I admit it is dicey and can back fire
    but it seems to be working really well

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    13y
    Originally posted by Rob K:
    This would never work in an area that requires a rental inspection.

    Bill Gulley, In my area a contractor needs a signed contract to file a lien and must also be licensed. Is it different in your area?

    They should here, but they can argue the point in court, so any claim can be made. You do need to know what the laws are in your state when you start dancing around with such matters. Good point!

    0Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    13y

    bill beat me to it!! lol

    you are so damn lucky. the last thing a contractor wants to do is come home to do more of the same work he just did for 10 hrs.

    also, normally a house in a bad condition attracts bad tenants. hell, i have a fantastic house right now and no applications. yet, it attracts people with a budget of $650 per month.

    when you have finished the house half ***, you attract half *** tenants. when you get those tenants, they dont care for the house thinking you did not care for it in the first place.

    i understand that you had no money, so that worked out ok for u. again... my post can be summed up in one word.... lucky.

    3Reply
  • Gary Clark
    Chicago, IL · Member since 2013 · 82 posts · 7 votes
    13y

    Creative. I'm impressed. Love it when a good plan comes together!

    0Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    Gary Clark@ gary

    thanks appreciate the kudos

    0Reply
  • Gary Clark
    Chicago, IL · Member since 2013 · 82 posts · 7 votes
    13y

    No prob. There comes a time when we all gotta think outside the box

    0Reply
  • John H.
    Massachusetts, MA · Member since 2009 · 144 posts · 31 votes
    13y

    I'm from MA, so it may be different, but I was under the impression if you did that, you needed a workmens comp policy on each person doing the work like that. I could be wrong though, I never looked into it too deep.

    0Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    I am glad I decided to just do it and not come here to ask if it was a good idea

    0Reply
  • Randy F.
    Contractor · Anchorage, AK · Member since 2012 · 351 posts · 196 votes
    13y
    Originally posted by Steven Maduro:
    I am glad I decided to just do it and not come here to ask if it was a good idea

    Steven, You made a decision that you felt was in your best interest and it worked out well for you. Thats awesome! It showed some creative thinking on your part.

    Please keep in mind that BP members giving of their opinions and advice is done with the best intentions. In this instance, it wasnt about knocking how you chose to handle your situation, rather to point out the potential downside. I've been rehabbing properties for thirty years and my own house has ALWAYS taken the back burner. Its actually an inside joke amoung tradesmen that their own work never gets done.

    There are new folks coming to BP every day looking to get started with limited resources. There are likely many who can get a mortgage and make a down payment but dont have the cash for rehab. I certainly wouldnt recommend that they go into a deal with the intent of using this strategy to get the needed repairs done. While it worked for you, i believe that the odds would not be in their favor for a positive outcome.

    0Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    understood.
    but do you understand what i am saying?

    If I had come here to ask I would have thought it was a horrible idea from the comments and I may not have tried it.

    thats all I am saying I am not judging the posters or saying they are dream killers or anything.

    I am just saying sometimes you have to go with your gut.
    it may be your time to shine
    call it rolling the dice.
    or calculated risk.
    thinking outside the box.

    nothing ventured nothing gained right?

    so I am glad I just decided to do it
    rather then ask for opinions first.

    0Reply
  • Randy F.
    Contractor · Anchorage, AK · Member since 2012 · 351 posts · 196 votes
    13y
    Originally posted by Steven Maduro:
    understood.
    but do you understand what i am saying?

    If I had come here to ask I would have thought it was a horrible idea from the comments and I may not have tried it.

    thats all I am saying I am not judging the posters or saying they are dream killers or anything.

    I am just saying sometimes you have to go with your gut.
    it may be your time to shine
    call it rolling the dice.
    or calculated risk.
    thinking outside the box.

    nothing ventured nothing gained right?

    so I am glad I just decided to do it
    rather then ask for opinions first.

    Yup... I get it. We all gotta go with our gut and do what we gotta do!

    "calculated risk" is where its at. Thats what is great about this site and everyones willingness to share their experience.

    0Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    I posted an update i forgot to put it here

    I am interested in your feedback
    all in all one house worked out well the other not so well
    but even the failure was not an epic fail I did manage to get some quality work done.

    but the tenant broke the lease and i now need to to take him to court.

    0Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    So, one of the contractors living in your property at a discount now needs to be evicted? They won't pay rent and they won't leave on their own? Maybe not an epic fail, but a fail that is costing you money and lost rent. Hopefully the completed repair work that he leaves behind adds up to way more than the lost rent and court fees.

    0Reply
  • Steven Maduro
    OP
    Decatur, GA · Member since 2012 · 198 posts · 59 votes
    13y

    lol yes i am only going to court on principle he has already left
    but since he is not making restitution for the one month rent
    and because he didnt do all the work he technically owes me for the reduced rate he was afforded.

    not an epic fail because at the time I didnt have any money to do the repairs and now what is left will cost me less than 400 dollars to fix where two months ago i was looking at about 1,200 in repairs

    0Reply
  • Ryan M.
    West, MI · Member since 2012 · 674 posts · 182 votes
    13y

    To add a example:

    I had a clown in a multi family we purchased on a short sale. The previous owner let him in there because the prop was going under anyway, with the idea he would do stuff. I began the evection process the day we closed because he was way behind anyway. When he did get out (day before a full move-out evection) he took all the stuff he improved the unit with. To add insult to injury he took all the plugs and cut the wires flush with the back of each box.

    The issue is thing will go well when its in their favor. When they are getting booted, all control is now in their court and they can, and some will, go to town on the place before there out.

    0Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y

    I have a question on this for Bill Gulley, K. Marie Poe, and Randy F. or anyone else that may have the answer.

    Does allowing a tenant to perform repairs and maintenance open the LL up to the tenant having an equitable interest in the property? I may be way off on that but I thought in one of the recent(last month or so) posts I read that was mentioned somewhere.

    0Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    The short answer is no. I think you may be referring to lease option concerns, where the tenant has an option to buy, and whether or not the option creates equitable interest.

    The biggest concern with letting a tenant do and/or supervise repairs is liability issues and possible mechanic's liens. If I let a tenant hire someone, they 're not going to be checking for licenses and/or liability insurance. That's my call, as an owner, to decide to hire someone unlicensed or uninsured. My property, my insurance policy, my risk. Tenants rarely understand why it's not ok if they hire someone to do repairs. Many tenants think they are doing you a favor by hiring someone and think the main concern is cost. They are usually unaware of liability and lien issues.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    13y
    Originally posted by Matt Devincenzo:
    I have a question on this for Bill Gulley, K. Marie Poe, and Randy F. or anyone else that may have the answer.

    Does allowing a tenant to perform repairs and maintenance open the LL up to the tenant having an equitable interest in the property? I may be way off on that but I thought in one of the recent(last month or so) posts I read that was mentioned somewhere.

    Yes, it does provide for a basis for a claim. If a judge hears the tenant made 1,000 bucks worth of improvements with your consent and you claim they have 2,000 bucks in back rents, I doubt you get 2,000 bucks, more likely 1,000 or if you had them do work in violation of law, likely nothing, might depend on what the judge had for lunch.

    Work with your consent; I never told the tenant to build a 800 sq ft deck in two levels who had a lease-option,says the owner, but the building took three months, the owner admitted driving over there and driving by several times.

    Any business law students here? Consent may be granted when there is no objection, called "implied consent", so the owner, by his knowledge of the acts of the tenant and failure to object, approved the work.

    BTW, did I really get burned on my historic episode, not really. We settled the deal, neither happy at the time, but looking back it was no big deal....it could have been.

    Funny I'm saying all this, I know a guy that I have used many times before. He will be doing some long jobs at the lake and I'm considering just letting him stay at my lake house and complete some odd jobs for me while he stays there, without rents. I pay for materials. We know each other, that makes a world of difference. :)

    0Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y

    Ok that cleared it up some I think the post I was referring to was on lease options. Thank you both for the insight into potential legal issues, always good to have some extra insight when trying to work on a deal and knowing the potential risks with each one.

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    13y

    Lease Optioning a Junker
    A Good Idea?

    On the other side, when buying on lease option, not selling, should you consider buying on a LO and doing repairs as a viable strategy?

    Consider the costs to buy w a bank, credit needs, capital needs, debt service and insurance payments with no rent income coming in....

    -Find a vacant property with repairs,
    -Get discoiunted rent on a lease from owner with option,
    -cloud the title,
    then
    -sandwich the deal to a rehabber - contractor for a JV piece of the profit
    -Rent it out for a bit more than you are paying the seller

    -Your sandwich spread should be enough for both you the REI and the rehabber to both profit.

    -The urgency - motivation of the seller, like a vacant out of town seller, is important.

    Bill Gulley, what are your thoughts?

    Best Wishes,

    Brian

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    13y

    I'd say much easier said then done, especially for a newbie, with little or no money, the rehabber should probably be family that you could kill if they messed up or walked off ( :) )

    Brian, I can do it, I'm sure you can, but that is not for the beginner or the faint of heart.

    I thought you got away from the SLO stuff. But, you may recall, there was a recent thread where the situation would have been right for the SLO that I regretfully suggested (LOL).

    I would partner with a contractor, I would not lease to them really, get in, get it done, move on with a real buyer.

    Lastly, options are not the best in most areas if it's a rehab. It takes an owner to legally contract work on a property and getting permits can also be a problem as the permits are by contract with the onwer for a contractor to pull or the owner needs to get them. If you relied on the owner and they dragged thier feet, which they can, you could have problems meeting deadlines.

    Lots of variables..... :)

    0Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y
    Originally posted by Bill Gulley:

    Yes, it does provide for a basis for a claim. If a judge hears the tenant made 1,000 bucks worth of improvements with your consent and you claim they have 2,000 bucks in back rents, I doubt you get 2,000 bucks, more likely 1,000 or if you had them do work in violation of law, likely nothing, might depend on what the judge had for lunch.

    The scenario above might provide a basis for a tenant to make a claim about what they owe or don't owe in rents, or a claim about what they should or shouldn't be reimbursed for repairs. I see no bearing or effect or how it creates equitable interest as it applies to title.

    0Reply
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