All Forum Posts by: Craig Drummond

@Joseph Konney - thanks!  Great question.  The finding a good & reliable contractor seems like a tough nut to crack.  At least for me right now.  In my area the contractors were all very busy and booked up 3-6 months in advance.  That was the response from the handful of ~8 contractors (of the 35+ that I called) whom actually returned my call.  

I just finished a book called "Long-Distance Real Estate Investing" by David Green and he provided a good recommendation of including both positive and negative reinforcements into the ICA (independent contractor agreement).  Specifically, once a timeline is set he recommended adding a week and then asking the contractor, "is there any reason that you cannot realistically complete the project in this timeline?"  Since you added a week the answer is usually "no".  Then he recommends adding a 5% bonus if they complete the project before the end date (positive reinforcement) and a 5% penalty for each week beyond the end date (negative reinforcement).  I'm not sure how this will play in the real world but it's something I'll consider next time.

Also, I had a few learnings along the way that I implemented which helped.  I provided a VERY detailed SOW but my contractor would never look at it and as a result he was having to redo work.  I started having 2 regular meetings over the phone with him each week on Monday & Friday.  These were short 15min meetings that helped a lot to review the work to be done (Monday) and what was completed (Friday) and answer any questions about the SOW.  I wanted to avoid micromanaging and approached it more from an improving communication standpoint so that we can both move faster.

Do you have any suggestions when it comes to finding, managing, & motivating a quality GC?

@Bob Marr

Thanks for all of the compliments & support!   While BP is a FANTASTIC resource I have found that folks rarely post all of the details regarding their rehabs.  As a result I spent countless hours trying to piece it all together.  For this reason I'll continue to share all of my info & learnings about this project in the hopes of giving back & helping others, as well as soliciting advice for what I could have done better. :)

@Bob Marr - I had the cabinets refinished.  They were decent solid wood cabinets and just needed some refreshing.

@Jill DeWit - Wow!  You are a WEALTH of information!  Thank you!  I did actually consider wholesaling the property but since I knew I had a decent margin I felt it would be a good first time flip which would allow me a lot of room for error should something go sideways on me.  I am VERY interested in learning more about the various methods for finding off market deals.  I love doing research and bargain hunting and can see myself very much enjoying the process.  I'll reach out to connect.  

@Genta Horton - other than MLS which goes to Zillow, Trulia, Realtor, Redfin, etc. I have several craigslist ads posted in the surrounding areas. Is there something else that you would recommend for promoting the home?

@Andrey Rudenko - I have itemized my costs by room where possible but the data is incomplete.  This is due to my contractor's bid not being as itemized as I would have liked.  That is on my list to do better next time.  Also, I placed a HUGE material purchase from home depot and many following home depot odds & ends purchases which made it difficult to assign to each room.  Below are my approximate material costs per room.  Labor was included in the overall bid of the contractor.

@Sergey Tkachev - Hi there! I believe we met at the BP meetup last Fall. I based my ARV on comps in the immediate area at the time. Being my first go at this I was intentionally very conservative. I figured that if the #s worked with my conservative estimates then I would have a high likelihood of success. That said here is my estimate vs. actual. As you can see I was fairly conservative in my initial ARV and the continued & unforecasted appreciation definitely helped offset my cost overruns.

@Kalyanii K. - Thank you!  I put together an investor packet and started asking around family, friends, coworkers to see if anyone was sitting on a pile of cash & was interested in investing in real estate.  I did several presentations and finally found a private lender willing to take the plunge.  I found it pretty amazing how many people have a lot of cash just sitting in a low/no interest savings account!

@Mark Walker -  Thanks!  Exactly!  I saw this as an opportunity to help solve someone's problem!  The previous owner owned the home outright and I told him that he will lose all of his equity if it goes to auction and that I will do everything in my power to prevent that from happening and to make the process as easy as possible.

@Scott W. - You're exactly right!  It's too early to celebrate as the deal is not done until it closes.  The location is a bit tough on this one and will require the right buyer so I imagine there may have to be some concessions made to get it sold.  TBD.

@Jacent Pillow - Agree, the location is the biggest challenge I face on this one.  It's a fantastic community but the drive is not for everyone.  The new bridge will definitely help but that's still ~5 years out.

@Kelly Delfino  -  The location is 2801 Darr Ct, Placerville, CA 95667 - $395k

@Mike McDevitt - I had it on Zillow for 2 weeks before it listed and got about a call a day. But the location is tough so I decided I needed MLS to increase visibility. The $70k is after commision but I will have to pay uncle Sam his share of that.

@Jay Truong - Thanks!  See the image for my paint scheme.  All Sherwin William colors.

@Matthew Kimball Thanks Matthew!  I would say that one of the most challenging parts of taking action was that none of the books I read with their "rules of thumb" or estimating costs seemed to apply to California where housing prices are quite high and contractors are also very expensive.  I imagine that WA may be similar.

@Cameron K.   Thanks!  I did use a GC for ~90% of the flip and did a lot of the smaller stuff myself.  Although I know I would enjoy being more hands on my W2 job doesn't afford me much time to do so.

@Jacent Pillow   Thanks Jacent!  Nice to see a local here.  The home is a bit far out there in Swansboro so I've budgeted a longer listing period.  Homes seem to be moving out there, just a bit slower than the other side of the canyon closer to Placerville.  Do you invest in the area?

@Robert Richardson Thanks! I did a lot of homework leading up to this by reading various REI & flipping forums on BP as well as reading no fewer than 10 REI books, a couple of them twice. Eventually it became time to put it into practice! :)

Thanks! I live in El Dorado County and love the area so I would like to pursue additional flips here. I've been reading up on out of state REI and am becoming more enamoured with the idea and at some point in the not too distant future I'd like to try an out of state project. Most likely a BRRRR.

As requested, here are the #s as it stands today.  I'm sure the profit will be something less than this once I close.  I have a very long holding period on this project since it was incredibly difficult to find an available contractor.  It took me 5 weeks of contacting 35+ contractors to find one and work didn't begin until ~8 weeks after close.  The contractor also went over his projected timeline by 5 weeks.  Partly due to weather and partly due to his double booking his time.  Definitely a learning experience!

Purchase / Sale

   Purchase Price (Act)  $180,500

   Sale Price (Est)  $395,000

Fixed Costs

   Buying Costs (Act)  $14,267

   Holding Costs (Est - this incl loan i pmt)  $25,223

   Selling Costs (Est)  $23,550

Total Fixed Costs  $63,040

Repair Costs

   Finish Materials  $22,924

   Labor / Equip / Build Materials  $58,158

Total Repair Costs  $81,082

Total Project Cost (Less selling costs & ipmt)  $282,203

Total Investment  $324,622

Profit  $70,378

Also, here is some more info on how I found the deal. I found it via a Zillow alert that I have set up for my area. The previous owner's daughter listed it FSBO on Zillow 10 days before it was due to go to county auction for a tax lien. I was one of 5 offers within 3 days and they told me that they selected my offer over other higher cash offers because mine was the most creative & did the most to help them out in a difficult situation. I offered his full asking price but in addition to my "cash offer" I also offered to pain the lien, to hire movers for him, provide moving supplies, provide a 10x20 storage paid for 3 months. Aside from the lien, it was only ~$2k for everything stated. Since we closed in 7 days and he had so many "treasures" I gave him and additional 12 days to clear whatever he wanted from the inside of the home and an additional 30 days to clear the outside. Anything he didn't want I would take care of disposing myself. This was a bit of a pain for me since there were several vehicles left on the property that did not have paperwork. Anyway, the idea behind understanding the seller's motivations and concerns and then putting together a creative offer to address them is something I learned from the @Brandon Turner book "The Book on Rental Property Investing".

Hello investing friends! My very first "flip" went live on MLS today. What a great learning experience and it was definitely very different than what I've seen on HGTV. :) Nonetheless I LOVED the process.

Before/after pics attached. It was A LOT of work but the home cleaned up real nice.  Now I'm hopeful for a quick sale!

https://www.redfin.com/…/P…/2801-Darr-Ct-95667/home/22299722

A shout out to Brandon Turner for his book on REI that inspired me to understand the seller's motivations and concerns and then put together a creative offer to address them. That piece of advice helped me to land this deal despite several higher cash offers that were submitted.

Here are some pics along w/my before & after collage.  

Count me in!  Looking forward to it.