All Forum Posts by: Ben Sears

How is everybody dealing with contractors who are late or absent? We have a pretty experienced team (and hold a contractor's license ourselves) and have had two contractor issues in the past two days. Yesterday, our HVAC tech showed up an hour late for our first appointment which set him back 45 minutes for our second appointment (We purposely scheduled heat pump service on two properties back to back thinking this would be quicker). Today, we got our demo crew going on a new property we just purchased only to get the run around from the dumpster company. First they had driver issues so it was going to be lunch time instead of first delivery. Then by 3:30 when it hadn't arrived, they had "mechanical issues" and the truck "broke down". We've been promised for the morning or Monday at the latest but I'm not holding my breath. I know delays are inevitable, but we hold a fairly tight schedule in order to get properties turned over. It's been a frustrating week so thanks for letting me vent BP!

@Devin Hughes I'll comment on this because I just hired a part time project manager last week. Here is the background on my project and my experience so far:

-Our current project is a 3/1 SFR in a rural area.

-My project manager is one of my best friends of 10+ years. He has minimal remodel experience but can find his way around a toolbox and is decently handy. 

-His compensation for this project is 1% of the final project cost (~$600). His duties include contacting and scheduling contractors for bids and work, ordering materials, and making phone calls. We have an agreement to revisit his compensation for each job for the foreseeable future. 

-What I wanted in my PM was someone who had great people skills, doesn't take crap from people, and is a self starter. I can teach someone construction and remodeling but I can't teach interpersonal skills. My PM is in this with me for the long haul and understands where I want my business to be in the future. 

This has been a great adventure for me because I openly admit that I'm a control freak with my projects. It has been incredibly freeing to pass on some work to someone else and see what happens. So far I have assigned him some small, non-critical tasks. He has also been on site with me taking measurements, talking to contractors, and getting a lay of the land. The plan is to give him increasing responsibility and possibly place some people under him. I see this as a really positive thing for my company and am looking forward to seeing how it grows. 

Well we made it through closing (the quickest I've ever been through in under 10 minutes!) and the house is officially ours! We immediately got our landscape contractor to work clearing this jungle of trees and vegetation. The guys did an amazing job and even cleared an old shed and hauled trash for $700.

Here's what's on tap for this week:

-Exterior door installation and secure the property

-Roof bid (complete $3k)

-Window bid (complete $2200 installed)

-Meet engineer from the power company to have service upgraded from 100A to 200A

-Power wash the exterior to prep for paint

-Partial interior demo on Friday to repair structural and water damage

I hired a good friend as a project manager. He has some limited construction experience but is a self starter and doesn't take a lot of crap from people. He's jumped on getting most of the bids and started working on a schedule. He's extremely part time so our deal is that he'll be compensated 1% of the total project when we refinance (~$600). He's in this for the long haul with me and we'll continue to adjust his compensation based on project size and performance. So far this hasn't saved me a tremendous amount of time. For anyone contemplating hiring a PM, you should bite that bullet!

I get more and more excited about this property every time I visit. We're under budget and on schedule so far and I hope it stays that way! 

Not knowing where you are located, my guess would be that there are going to be several considerations. 

- It's likely that the health department will need to approve increased square footage if you lot utilizes a septic system. You shouldn't have an issue if you are connected to public sewer.

- Check your local zoning to ensure that duplexes and manufactured homes are still compliant on the lot

- If everything checks out, make sure that the home dealer approves the site for the type and size of building that you want to place. 

I'm sure there are a few other things, but there are most of the items that don't change between jurisdictions. 

@Brad Spuhler is this only quote that you've gotten so far on the HVAC? The issue you'll likely run into is that very few of us will understand your market and might be unable to accurately estimate your job. I might suggest getting one or two more contractors to bid the job and see how they compare. If they are within a few thousand dollars, my guess would be that you're getting a pretty fair estimate. Plus, it never hurts to get quotes from several contractors on most big dollar work anyways just to double check all of your numbers. Good luck on your project. Sounds like a good one!

Edit - I will tell you that I had dual mini split installed in my basement in Southside, Virginia and it was ~4k installed if that helps at all

@Ryan Jones have you looked at using the rental calculators on BP yet? You can stick all of this information in and it will spit out a forecast for the entire 30 year mortgage. This would be the only way to ensure your math is right. With the numbers you have, it would be a pass for me. If there isn't any cash flow (or very little), then there's no point in going to all of the effort to rent it out and maintain it. With that being said, it looks like you covered all of your bases with expenses. You can run it through the calculator and then post the results directly to the forum for others to review. 

I'm not sure what area of Richmond you are looking for but we use Executives Realty in Chesterfield. They have a fairly small service area, but are fantastic on the PM side. They have in house maintenance and don't take any slack from tenants. Highly recommend. 

@Nicholas Tarver I think a good project manager would be critical at his stage. He needs someone that knows construction and can serve as a go between to find subs, schedule, check up on work, and clear jobs for payment. We're starting to grow and this was the first person that I hired. Granted, he's very part time and working alongside me for a couple of flips but this is going to save me a ton of workload. Secondly, I would think a good bookkeeper or someone authorized to cut checks after work gets cleared by the project manager. This would keep your investor from having to deal with the money side of things at least on a day to day basis. The PM can simply let the bookkeeper know that a sub is ready to be paid and the check can be cut without your investor even needing to know. 

Might be worthwhile to sit down and list out all of the duties associated with the flip and create an organizational chart. Fill it out as if the company was completely built out and then fill spots as they become necessary. I included all of my contractors, project manager, bookkeeper, attorney, CPA, etc on mine. It doubles as a quick reference list for my PM to know who to call. 

@Nicholas Tarver my apologies. I didn't quite understand the scope of what you guys were already accomplishing. What kinds of systems did you have in mind specifically? 

We had this discussion on systems in another thread. I'm at the point in my business where we are beginning to develop systems for managing our rentals and flips. What I can tell you is that it's incredibly hard to put systems in place if you don't have several investments under your belt. You really do need the experience of working through a few flips to know what systems are required. For us, we quickly realized that we didn't want to chase tenants for rent every month or drive to the bank with checks so we signed up for a third party collection company. We did this after driving to the bank for a year with paper checks and understanding what a waste of time it was. 

I use the above example to demonstrate a task that we found redundant and wasteful. If I was in your shoes, I would ask your friend to make a list of all of the tasks that he completes during a regular flip. Sticky notes on a wall are a great way to do this. After he's done, take all of the sticky notes and separate them into "do yourself" and "develop a system/sub-contract". This will give you a place to start instead of blindly attempting to develop systems that you may not even need.