All Forum Posts by: Chris K.

@Dylan Thomas

Single member or multi-member? For single-member, you should be able to get everything done around $500 to $1,000 including filing fees. Multi-members LLCs are very hard to estimate unless you know exactly what you want in terms of structure. 

Shoot me a PM if you want some recommendations. I believe we are technically still not supposed to recommend someone directly on the forum. Maybe the rules changed. ¯\_(ツ)_/¯

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Bryan Gambina

Some thoughts: 

• How many bids did you receive per scope? Let's say you asked five contractors and got five bids in the same ballpark. If that is the case, there's probably some kind of factor that's increasing the bids. What that can be, I have no idea.

• In terms of how contractors determine price, it somewhat depends on how sophisticated the contractor is. Some folks just work off a rule of thumb or "gut feeling." More sophisticated contractors use various bidding software to get the most accurate quote as possible. But as a general rule, contractors price their bids by setting a target margin. For example, let's say that you are a contractor and you have a potential job that will cost you $100k. If you are aiming for a gross margin of around 40%, you need to bid around $166,666.67 to get there. On top of that number, you can start adding PITA fees and other x-factor fees. 

• In terms of contractors charging more for labor depending on the area, it's whatever the market dictates. As a general rule, the higher the pricing, the more scrutiny you will face from the owners. So contractors that can charge more are probably "better" than contractors that can't. And by "better," I don't necessarily just mean their skills as a contractor. Maybe they are better at marketing, customer service, sales, etc. 

• Also note that, as a general rule, contractors aim for higher margins for residential jobs than commercial jobs. Why that's the case is complicated but it mostly has to do with the fact that: (1) residential customers can be very demanding with little knowledge; and (2) commercial/industrial jobs have lower margins but much larger contracts.

• Along those lines, the high-end residential market is a tricky market. Some people can deal with it; others can't. But the level of demand/finishing for a high-end job can truly get out of hand depending on the whims of the owner. So it's not unusual for contractors to add significant "fluff" to your bids to deal with these changes. 

If it makes you feel any better, a contractor that aims for around 30% to 40% gross margin will end up around EBITDA around the low teens if they do everything correctly. An owner of a small contracting business may make six figures after salary and distributions (especially if the owner actually does the work). But the construction world isn't an industry with crazy margins. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Bret Davis

The real answer is that it depends on what your lease says. But if they ultimately cannot leave, you will have to start the eviction process. 

I do have to note that you went through an eviction claim three times already. So you are probably dealing with "seasoned" tenants. If you are not familiar with how evictions work, you may just want to work with a lawyer who can help you through the process. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Rao Mu

You need a copy of the lease to review. It's not uncommon for a tenant to renegotiate the lease with the new owner as part of the purchase. If possible, it gives both sides a peace of mind that either party will not disturb the status quo for a few years. But as @Joel Owens said, it could be a blessing in disguise if the rental rate is far below what the market demands. 

You would want to do significant research about the chain and also the franchisee. You will also want to have some contingency plans lined up if you and the franchisee cannot see eye to eye. 

You would want to get your professional teams involved in this sooner than later since this is your first commercial investment. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Gregory Shriver

There is the Standard PAR Forms although they are not ideal to use if there are no realtors involved. While there are other forms floating around, you will want to make sure the agreement you use has all the contingencies and terms that you need for a particular deal. You may want to give the forum more details to see what you might be dealing with. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Rigo V.

Are you self managing this project or are you going to use a GC? How big is this rehab project? Once you get to a certain size, most construction projects work under the AIA framework even if they don't use the standard AIA contracts. Assuming you are going to act as the GC and you need to follow the AIA framework, here are some items to keep in mind: 

• You will want all your subs to follow the same contract so you can keep the billing cycle consistent. This get's harder when you deal with smaller subcontractors since they could've spent their entire life without having worked on a single project under the AIA System. But that can't pose a risk when working with a HML that expects you to follow the AIA system.

• You will want to set a retention amount. That is typically 10% of the price. 

• Every sub needs to submit their requisition paperwork by the middle of the month. They will need to bill you projecting out to the end of the month. You will need to take that, review all the numbers, and prepare your own paperwork to submit to the lender. This is critical as it keeps the project flowing. Missing a deadline could lead to very grumpy subs and possible work stoppage. You need to make sure you and the HML are on the same page when it comes to the draw schedule.

• Before you ask the lender to release the money to you to pay the subs, you will need to check their work to see if they billed an appropriate amount. Because the AIA system forces a sub to project out to the end of the month, most subcontractors familiar with the system will understand that they may need to adjust the requisition paperwork at the end of the month. But you --- as the GC --- needs to be on top of what they actually did and purchased. 

• You'll ideally want all your subs to submit their invoices using AIA Forms G702 and G703. But depending on the size, they may not know how to. So that can get tricky.

• As others have mentioned, you want a lien waiver for each draw. 

If you haven't done this kind of project before, I would suggest working with a reputable GC on this. Unfortunately, you might not be able to afford one depending on the project size. Just make sure you are going into this well-prepared. The construction world can get brutal --- even for experienced folks.  

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Christian D.

Shoot me a PM if you want some referrals. I assume you are actually looking for a broker instead of a company. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Tyler Harrel

Why don't you just hire a commercial broker to list your property? Not sure if you live in Fort Lauderdale, but you should have no shortage of brokers there.  

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Bryan Gambina

Most contractors do not like doing proper breakdowns because it takes a lot of time to do it. If they haven't worked with you before, most contractors won't spend their time doing a breakdown for you. That's especially true since a lot of "residential" customers tend to use the breakdown as a way to get better pricing from other customers. Until you give these contractors some assurance that you won't waste their time, they will probably not spend too much time writing you a detailed breakdown. 

That's especially true if they are in-demand contractors. For example, my construction company passes on about 90% of bid requests that we receive. Granted, most of what we do are commercial/industrial work. But even for residential contractors, they have bread-and-butter clients. If you do not fit that mold, it's hard for them to give your work any serious priority/attention. 

How many bids have you received so far? If you tried a bunch of different contractors of different sizes and they are all over your budget, it's possible that your budget is unrealistic. But I have no idea whether that is the case since: (1) I'm not sure what exactly each bid includes in terms of scope of work; and (2) I don't know what contractors typically charge for material and labor in your area. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Ariana Pope

You can do title searches on your own but ultimately the buyer will want title insurance. Most title companies won't rely on the search you do. It might be a good skill to learn to weed certain properties out. But ultimately, the title search that matters is the search done by the agent that needs to issue the title policy. 

Do you have a buyer lined up? Some buyers may want to use their own title company as well. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.