All Forum Posts by: Davon Lowery

@Johnny Khoury  There are a lot of poor people here and while on the surface it seems logical. More poor people, need more lower rent homes.  However with that comes the same logic.  Memphis has a lot of crime, crime usually happens in poor neighborhoods, thus the majority of the crime are in lower rent homes. Both statements I made are 100% accurate.  Then to take it a step further, most poor people rent, people who are not poor do not buy and live in homes in poor areas, thus homes in lower rent areas are not owned by home owners, which is obvious when you drive up and down these streets.  With no ownership in these areas, there is no pride in the area, thus poor people tend to be more transient. If a few bad neighbors move in the area, then they will simply move to another neighborhood.  When tenants move because of this, then poor people tend to vandalize the vacant home.  All that being said, having a Property Manager that is willing to go to battle is very important as poor people tend not to be as educated, thus trying to reason why a poor tenant should have to pay for the carport post they ran into is difficult, plus they lie non-stop.  That is why our management portfolio of 400 homes avg rent is around $900.  We currently have 2 evictions out of 400 on our board, those rents are $650 and $750.

The past 2 years, the avg rent of properties we sold was $1,060 and $995. Filling those is not a problem at all.

On the rehab from out of state. I advise if you go down this route to interview 3 long distance, then pick 1 and fly in and stay there for the first week, then fly in for the final inspection.  Also, don't ever let the contractor get ahead of you.  If he needs some large draw up front,  I would buy the materials from Home Depot and work with the contractor to have it delivered to the house.  If it is a good contractor, then he will understand that you could be a repeat customer and it is natural for you to be guarded doing this out of state.  Whatever you do, you have to come to town and supervise.  To much money can be lost not doing so.  I live in Memphis and the hardest part of the first 2 years in business in 2007 was getting the homes rehabbed correctly, at a reasonable price and done in a reasonable amount of time.  For a normal rehab, 21 days or less is normal.

 Well you aren't going to see a 40% difference if you're still on that kick. You're way over-pricing the benefits of what you believe you are offering. Let's say for instance just for grins that 40% is all profit, he isn't going to give up 100% or 50% or probably 40% of it just because you have some steady work. Your steady work is probably worth 5-10% off at the most, 10% is likely a stretch. Keep in mind likely anyone you're considering for doing this isn't sitting around in their underwear every day watching Oprah, they are already working, your work is just another job, if it's not your project it will be someone else's. You need to begin formulating what really is the advantage of an amount of work, because just the work won't be enough, there has to be a savings to the contractor such as less time spent wasted chasing bids he won't get, things like that, you need to actually save this contractor real money to see a discount, volume is really not going to do it, and I can't stress enough promises of volume are worth even less.

Then there is the issue of timing, you're an investor so you're going to be always pressing for right now, any contractor worth a damn is always busy but I'm guessing you're probably going to figure that your 'volume' is going to also mean the contractor should respect your authoratay and be ready to jump when you have the next one. I think that alone is going to be yet another shocker for you when you find out your volume doesn't move you up in the schedule. As long as your 'volume' doesn't mean he's 100% busy with your projects only, you're always going to be just another client in the schedule. 

You really should be getting the idea that nobody is going to give you a discount on work based on your promises, you find anybody gullible enough to take you up on your promises and you're probably going to be the one who doesn't want that guy back after you get into your first flip with them. Guys with the horsepower to actually perform have seen guys like you and heard guys like you for years and years and 99.9% of them are all talk. 

If you end up actually being the real deal as much as you might not like it, you should get into the mindset of what you're being told over and over again here is going to be true, and that you will actually need to prove yourself before you see any contractors willing to give you a break. As strange as it might seem to you, you are going to need to prove yourself to them, not the other way around.

My advice would be to forget all about any discounts on volume until you actually have a track record of volume with the same people, then that's something to come back around to and start looking at. Right now I think your real problem is you're just not talking to enough tradesman yet to really get a good idea of where your savings are on your project you're considering. Just in this thread you've gotten more ideas that you have from the actual people you are looking at hiring, that's backwards yet again.

@Sean Ridlon  if Milwaukee is like Chicago and it sounds like it is Pex is not allowed.  plumbers union running rough shod on the industry.

@Davon Lowery  if you live in CA and are trying to do remote rehab yourself.. this is highly risky venture ... especially if your also doing it for investors who are relying on you to execute. 

I know many folks these days are thinking just like rentals they are priced out of their own market but go to another market and flip.. well sounds good but pretty tough .

One must have a leader in the mix here.. that will be at the job and has  a vested interest.. if not chances of running rehab from you office in Ca as stated pretty tough.

Kenneth Cowan beware that when you use a 203k loan that repairs that are being funded by the loan need to be repaired within 6 months after you close the loan. Also, you will need to have a license contractor be approved by the lender to complete the repairs in order for the lender to approve the loan. That being said, you may have to tweak your plan a bit, because you won't have the luxury of taking 2-3 years to fix up the place.

My question would be .. How did one come up with a $6000 budget for plumbing ?  Did you have bids or opinions before hand ?  I too am a contractor.  When I hear the word " budget" I cringe . Most customers dont have a clue what things cost . Sure they price materials . Labor is the largest expense .  But they dont realize contractors are businesses .  The difference between materials and the bid is not all profit .  A $ 10k plumbing job is about $ 3500 in materials ( approx) and 2 men 3 days work . its a small job . Asking for 40% discount is basically asking them to work for free . 

Contractors do what they do because it is very profitable . A decent contractor can make $100k a year (net) . A good contractor can easily make double that .