All Forum Posts by: Juan Cristales

 First deal is definitely the toughest! It does get easier. The problem I had at the beginning was inconsistency. Stay the course for a year and you'll beat out the majority of people getting started. 

This corner duplex is little tricky. 

On the road frontage side, you lose 25 feet as this is the building set back. On the right side, you lose 5 feet. On the back, you lose 10 feet and on the left side (the side-street side), instead of 5 feet, you lose 15 feet! 

Anywho, we got this to fit EXACTLY by having the survey company to come out and MARK the EXACT corners for us. I didn't want to leave it up to the foundation guys. Paid an extra $150 for BIG peace of mind.

Lesson: When you have a TIGHT lot like this, leave it to the pro's to ensure you're not accidentally into the easements. Had a foundation guy and a city inspector teach me this! Did you know?

Let's go!

Juan-

Wow man! That is a tough deal to analyze when you don't have a lot of experience. I'm in the Texas market and also don't know anything about that market. Here's a couple of points I would bring up.

1. In a scenario where value is a bit unsubstantiated like this, I will pay an appraiser to give me a genuine valuation of what the product would sell for at market. They would need to know what the end product is going to look like to give it a solid number. That's the base-line.

2. Once plans have been stamped by the city, I do my best to not alter them as it costs time and money. The good thing is that you haven't actually started construction. Create the plan and stick to it, is my suggestion once you're committed. Also, once you start, you have to find a way to finish this project. You stand to lose less (if it ends up not being profitable) by finishing it THAN BY trying to sell a half-built product (where you are most likely going to lose more).

3. There are builders who do a "Cost Plus 15%" in most areas. My challenge with those guys is that interests are sometimes NOT aligned. This means that a GC is going to pass the cost on to you plus his fee without regard to seeing if he can source labor/material at a better price. He has limited incentive for that. 

4. Build to Rent I think is great but just as @Stuart Udis mentioned, you would likely need more doors to make that profitable. In Texas, the model working well for smaller investors are duplexes. Two doors. One structure. I've personally built SFR rentals and the DSCR loan made it a "not so great scenario" for me. Even with the built in equity, the rent rate was insufficient to cover all or a majority of my construction costs and now I have a ton of cash tied up in those deals and the cashflow doesn't justify it. Lesson learned but I couldn't take the Loss.

Let me know what you decide. 

Building new is something I wish I had started sooner. I prefer it more than flipping houses. House flipping just comes with so many "variables" that even the most experienced flipper can sometimes not anticipate. You have to buy SO Deep that the offers sometimes become insulting to sellers and it can be a very frustrating endeavor. 

Best of luck!

Juan-

 If you already own something inside an opportunity zone, what needs to be done to qualify? 

Man!!!! We finally got the meters installed and the rain has stopped so that the machinery doesn't just SINK in the MUD! 

This small item of getting the meters installed has meant SIGNIFICANT progress since now we can have clean water. Post inspection, we will be able to do the driveway forms and get that inspected. Then we'll pour the concrete for the driveway and finish the sod. Once that's complete, we'll paint and get all the minor items finished so we can get the Certificate of Occupancy (COO) from the city.

Sat progress is good progress!

Juan-

 Yeah man.. it's tough at the beginning to learn how to assess rehabs without having some level of experience in either doing it yourself or hiring people out. 

Juan-

 Too true.. once you go through the process, you get an appreciation for the work and you quickly realize that our time is better spent elsewhere. Appreciate you being transparent about it!

Juan-

 You're right about the inspectors being generous, especially if you're upfront that you're a newbie and could use some guidance. They WANT investors like us to learn how to do it right. 

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Juan-

Not to be cliche about it but you do have to start with the "end in mind." I commend you on planning it out first. Too many just dive right in without counting the cost, heck I've done that. 

Always start with the systems first: For the soffit, you may or may not impact the roofing system as this may require fascia to be replaced. If so, then the drip-edge on the roof will not survive the replacement (at least, this has been my experience). 

For the bathrooms, you'll need to figure out if you're keeping the original layout and will be changing out valves or if you're planning on changing out the water lines. If you go with Matte Black finishes, the plumber will need to know that upfront vs Brushed Nickel stuff.

Lastly, if you haven't done a bunch of remodeling I would ask my local group of investors for recommendations for contractors and ask them why. 

When I first started I got quotes for foundation repairs that ran the gauntlet of pricing. $4,500. $9K and $18K. I was SO confused and didn't know what to do. So I asked a friend who had done a ton more rehabs than me and he laughed at me. I didn't see what was funny. 

He told me that both the $9k and $18k guy were going to hire the $4,500 guy to do the work. So, frustrated I said... so just use the $4,500 guy?! 

He said, "NO!" 

Get a structural engineer to draw the house and show you where you need piers. He costs $450 and isn't trying to sell you foundation services. Take that report to a foundation company and ask them to bid you on the number of piers shown on the report by the structural engineer! I had no idea. 

Moral of the story... make friends with local investors in your area who have more deals under their belt than you. Some are jerks. Some are not. 

We started a WhatsApp group of local investors (just 9 of us) and we share EVERYTHING. Good contractors. Bad contractors. Best practices. We all do something a little differently.. and sometimes you just need to vent. It's a free group by the way.

Best of luck!

 This is awesome! 

For sure... Good on you as the home owner for your compassion but allowing this to continue indefinitely is doing everyone a bit of a disservice. You, for obvious reasons. The tenant is unfortunately living outside of reality and may not know or understand it. This is tough. Would like to hear how it pans out for you. I think you can definitely find a middle ground.