All Forum Posts by: Bruce Woodruff

Yes there are bad contractors out there. I say that as a long time contractor. 

But there are also plenty of bad customers out there, and they contribute to the mess. Changing the details of the project, not paying promptly when invoiced, micromanaging, etc....

Good customers / good people attract good Contractors....

All numbers look good until the SHTF. Make sure that 1) your rehab costs are realistic, and 2) your expected sales price (minus all related expenses) is also doable. Keep running your numbers, and use a more gloomy and tight set of numbers. What if it runs longer and costs more? What if the economy tanks a couple months after you start the remodel? What if it takes you longer to get that sales price? 

Run these ^^ numbers and see if you still think it's a good deal. Or....how much risk can you stomach?

@Matthew Paul is spot-on! Get your trusted Contr to give you a price to complete your project, making sure that you have a very detailed SOW and there will be no changes or misunderstandings down the road.

I suggest paying as you go, for instance, when demo is done, pay him just for that, same with framing/electrical/plumbing/etc.... If he has a legitimate request for some extra upfront money (to purchase cabinets or tile) give him that amount, although any established GC should have enough in his bank to buy these materials.

You definitely do not want him as an employee, as Matt says, now you are in a different arena and a very risky one for you....

I have been all of the above - Flipper, STR Host, LTR landlord, and of course, Contractor...

There are a lot of LLs here but I would guess more like 60%....

You are only listing 3 expense items. What are your full projected expenses? Include a CapEx entry and your taxes (of all types). And always assume less income.....that way you can be surprised if/when it comes in higher.

I don't know the area, but check your competition on VRBO or elsewhere and see what they get, and what amenities they offer.

 Ah, well if that's the case, take the money and run! Are you going to 1031?

Mine was the realization (over time) that in order to milk the ultimate profit from my STRs, I needed to not only self-manage, but also be the cleaner and the handyman, etc.....

Now I'm sure there are some properties that have such a huge profit that one could use a PM and hitre cleaners....but I'd bet that most STRs that rent for $150 - $500 a night need to be run completely by the owners in order to maximize the profit......and in some cases, this will determine if it is even worth doing at all....

Just my $.02..

Also, don't forget appreciation! If these properties will appreciate 20% over the next 5 years, that is built in profit as well.

Your property tax increase should be minimal. And I would add a full bath, even if you have to go with a 30" corner shower. Then you only need a 5'x5' space.

We've probably all been there/done that! Good for you for posting, maybe other new investors will take notice. Some properties like yours just need an attitude adjustment and a little tweaking, others need a solid analysis to see if the numbers will ever work, and maybe they need to be sold and move on....