All Forum Posts by: Dan Maciejewski

The answers above have it.  When you are booked, there is still a price you will add work for -- it's just a lot higher than when you have no business.  

Usually, the guy with the low-low quote has a reason they are not in demand, whether bad work, inability to schedule, lazy, crappy assistants, no advertising, no word-of-mouth network, etc. . . .

Usually the guy with the high-high quote isn't that much better, they just have a huge advertising budget.

Also, keep in mind that materials have been getting more and more expensive so the guys with steady work are hedging against running short and having to buy at retail, the low quote may not realize and will come back 2-3 times for more money and end up being the same price as the median prices.

You don't need anything fancy.  You can make your own spreadsheet, use one of BPs, or find one online.  Here is a link to one -- scroll to the bottom of the page and use either the 30 (year) or 15 (year) excel workbooks.  Check for errors -- they're not all that fancy!

4% is accurate for me right now, but I still use a month for calculations.  That's 8.33% or round up to 9%.  And I spread that out over the year. That's gross rents - 9%. I do not try to add up all the expenses.  Utilities should be effectively zero during a vacancy, lawn care doesn't change, insurance doesn't change, debt service doesn't change, etc. . . I already have an advertising budget (also effectively zero in this market).

Remember, your budget is your plan and your P&L is your reality.  Update your budget monthly, quarterly (or at least yearly) off of your actuals on your P&L.

If you're selling in a few months, you're not going to notice a positive ROI on a 5,000 door upgrade! Most Realtors would tell you to fix what needs to be fixed and put in a good replacement door.

That being said, if the cost to repair is enough that the 800 dollar difference in doors is the only real difference (i.e: labor is still going to run 3-4,000), then I would go ahead and put in what you have in mind.  Assuming this is a 350-400k+ property, the buyers will notice and it will put you above the competition.

I don't see where you are, so I can't link one for you, but the best way to not get sued, or win if you do get sued, is to follow the law(s).

Your state's landlord -tenant act will have everything you need to know, phrases you need to use, timeframes you need to follow, ways to communicate, etc.  Here is Florida's.  Know all of yours -- I give it to my tenants at lease signing.

The you find your County, then City (if needed) landlord codes to see where you need to file, more detailed procedures, etc.  Sometimes they can be more strict than the state, and evictions are at a more local level than state level.  Here is Pinellas County's website.  Here is Pinellas County's tenant rights package.

@Tracy Cummins Ah. From my experience, a conventional appraiser never gives judgements about the FHA "safe, secure, and sound," and just gives value judgements. Besides the kitchen and bath being in and working, I think you should be good!

Hope some lenders chime in and help!  I see this one is in your regional forum -- maybe post your reply in the other post and some lenders can give some thoughts!  I'm going to follow that post, too!

"Should I go for a cheaper house and do a live in flip? Or buy something already upgraded and save the hassle?"

Unless you are planning a rehab that will add enough value to make a decent profit, you may not want to buy at all.  Usually the recommendation is to just rent if you know you're moving in 2 years.  And if you're in there for under 2 years, you'll have to pay capital gains taxes, too.  

I know in my market, you should be able to buy a turnkey house now and walk away with enough appreciation in 2 years that you should be able to get a check, maybe even a big one.  Will that cover the debt service that you will have paid?  Maybe, depending on the house.   If not, then your debt service will be close to market rent.  Again, it will depend on the property, and market rents.

"When looking at a live in flip- go for neighborhood? Or cheapest property? Or just stay the hell away and get something already upgraded?"

When looking for a flip or rehab, the question is how much value can be added.  

A better neighborhood always means more demand which translates to lower holding costs when put up for sale, and can mean a better price.

A cheap property doesn't really mean anything. Is it cheap because it's a mess? Because the owner doesn't know its worth? Because the neighbors are nightmare? Or is it cheap to you because you see how much value you can add to get a great ARV? The last is what you're looking for.

For your last question, a live-in rehab is not for the faint-hearted!  @Mindy Jensen has done a few if I remember correctly from the podcasts and she probably has plenty of posts about washing dishes in the tub and sharing a bathroom with no door!

You should only really do it if you love it, or are willing to put up with a lot of discomfort for a good profit!

If you were my client (assuming I know a lot more), my advice would probably be to rent for the 2 years, or strategically buy a turnkey house that you are 99% sure is going to appreciate well if you are determined to buy.

What part of the purchase do you need help with?  

Have they agreed to sell?  Hoarders can be difficult to move -- they tend to have personality traits that prevent them from committing to change.  

Whether off-market or not, the process should be the same as a traditional sale.  Contract-to-close is the same.  Maybe if your broker doesn't allow personal purchases for free, you'll act as a non-licensed buyer (not put it through your brokerage) but you'll still disclose that you're a licensee.  Ask your broker -- most allow you to purchase without charging you -- especially if there's no commission.  

For a conventional loan it just has to either appraise or you have to have the cash to cover the LTV. It needs a working kitchen and bathroom, too. Check with a lender. For a cash purchase, you can buy whatever you want -- make sure to get title insurance!

Yes. Vacancy is a cost, just like CapEx, R/M, debt service, property taxes, insurance, utilities, management, marketing, etc. . . You need to factor all of those in in your initial estimate to see if the property makes sense as an investment. Then budget for them after purchase!

Otherwise you will have a bad time if there's an expense that you didn't budget for!  Whether it's vacancy, or a broken dishwasher, it should be in the budget, then tracked in the P&L for next year's budget!

The only way to really know is to compare the homes in your area.  You can check the rent rates and days on market of both homes with and without garages.  Make sure to do it at the price point you are planning to be at.  

My guess is that it won't make much difference in either vacancy rates or rent rates for all but high-end homes.  And all high end homes will have a garage so it's moot.  

Where you will probably see a difference is in purchase price.  In my area. a garage can add up to $20,000 in value if it's a large attached garage.  And even in low end homes, a single car garage should add about $5,000.

So, it is most likely that you would want to purchase homes without garages, and then rent them at about the same rents as homes with garages.  But, all markets vary, so check for yourself -- your property manager has access to the stats for the homes he manages, so he's probably correct!

It's part of the inspections -- they don't have a choice unless they want to cancel the contract.  Unless you have a weird inspection contingency. . . 

Just find another plumber that can do the scope.  The fact that you have a contract with an inspection contingency literally means you have the owner's authorization.

If the property was built in the 70's or prior, it's definitely worth it to get the scope.  Most pipes do not have an issue but if you do, the $500 to prevent thousands lost in damages