All Forum Posts by: Alex Craig

I prefer CPVC. Very cost effective and performs well in extreme weather conditions. Make sure if you are using CPVC, to use Flow Guard Gold. I have been through the Lubrizol plant which is the resin that makes Flow Guard Gold. They are very innovative and actually working on flexible CPVC similar to PEX. Make sure whoever installs your CPVC knows what they are doing. The solvent cement process is a little different then joing regular PVC in the sense that the installer does not have to use near as much pipe cement to join. Using to much cement will weaken the joint of pipe and fitting.

David--$8,000? What was the shingles made of? Is that what roofs cost in your part of the country? If so, I am in the wrong business.

About $35 a square. Roofing contractors margins are insane for a trade that requires very little training. One can be fully trainded after putting on their first 2 roofs. I don't pay much more for a tear off. Basically I figure in the cost of the dumpster and about a 1/2 day more labor. I always consider when paying a contractor had skilled the task is. The guys up on the roof are making around $12 a hour. With that in mind, paying huge charges for a Roofing Contractor doesn't make much sense. Also, consider a roof can be put on in 1 day. Is that really worth thousands?

Laurel--here is a little advice as I have recently flipped 2 properties for retail in Memphis, TN for full retail. Buyers are paying full retail IF the property looks awesome, appliances are included, the roof is on the front half of its lifespan, A/C and Furnance and Hot Water tank are fairly new. We hung Hunter fans instead of the Home Depot Hampton Bays and spent a little extra on electrical fixtures. Don't cut corners and it will sell for what you want!

Phillip--we didn't sell Tom a turnkey. He bought it "as is" for $39,000 and I think we put $7,000 into the property. We told him exactly what we were doing to it. We never advertised it was "turnkey". We then rented it for $925 a month and managed it for free for 1 year. He collected 11 months rent minus the furnance. I believe he was into this property around $46,000 or $47,000. With 11 months rent (and I am guessing $1,500 in expenses) his ROI for the 11 months it rented was 15% (these #'s are just esimtates, I have exact #'s on my Property Management software that I could pull if you like). Then I sold it for him at $55,000 on a owner financing note where I believe he got $10,000 down. So from the time he bought December 09 and sold to June 11 he collected around $10,000 in rent. I am guessing $1,500 in expenses. I am guessing $1,700 in taxes and insurance, plus a profit of around $8,000 on the sale, plus getting $10,000 down on that sale and interest rate around 8%.

Are you seriously complaining about that? You should be calling me to put you in deals where you make $8,000 profit after holding for 15 months, along with collecting a respectable 14% ROI during the time it was rented AND collecting interest on the payment.

Since Curt had his name thrown under the bus, I will come to his defense. I don't know much about their operation, but you don't sell and manage as many properties as they do without having a track record of success.

Phillip--did you get a inspection report on the property you bought in Memphis? I recommend all our buyers get one. This avoids situations like the one you found yourself. It seems you have had bad experiences buying out of town properties, however, don't you take some responsibility for that? As you know, you can't always trust what people tell you.

I once saw a investor take a picture of a Section 8 check and the caption read "Infinite ROI." Too funny and naive.

I agree with you Curt. Post the known #'s and let the investor figure in their own vacancy and maintenance. I personally do not like to budget maintenance cost based on rent amount. A furnance cost roughly $1,000 installed no matter if the rent is $900 or $595. I have figured on a 30 year mortgage, the average cost per year is $750 in maintenance. This $750 over the lifespan will cover 2 furnances, 2 A/C units, 2 hot water tanks and 1 roof. Those cost today add up to roughly $10,000 or $333 a month. The other $417 per year is routine maintenance. I have 3 properties that became vacant this year for the first time in 4 years and 3 of the 4 rented out the following month. That is a vacancy rate of just above 2%. I would hate to walk away from a deal that nets 14%, but walk away b/c I am over inflating maintenace and vacancy. The renovation is very important; a good one will reduce maintenace cost and should be considered when making a turnkey purchase.

There are BP members who would pick apart my theory, but managing over 150 properties, I see this $750 maintenace budget per year is pretty accurate (assuming the houses we put new mechanical systems in the house get at least 80% of the expected lifespan)

Curt, your response reminds me of one of the "Thank You Notes" written by Jimmy Fallon.

"Thank you, the expression "With all due respect", for reminding me that somebody is going to tell me something with absolutely zero respect"

We manage several homes that are 4 bedroom and it presents no more issues then a 2 bedroom, whether it is section 8 or not. One thing we do to "tenant proof" houses that are on a slab is to stain the concrete instead of install carpet. Also, paint the walls a darker neutral color, it will not show as much wear and tear and will be easy to touch up when the tenants move out.