All Forum Posts by: Dennis Vo

@Laura,  My partner just paid $3.57/sf for school fee for the two new homes we are going to start tomorrow... and the owners already cry about the school fee.  They should talk to you to get some comfort  :)

@Jonny, Ryan is correct.  Review your contract and scope of work with your subs.

Without seeing your contract, I wouldn't know your agreement; but normally, it's always the plumber job to connect water and sewer within your property.

The one thing I don't understand is how can the plumber pass inspection, without the inspector look at the connection between the new sewer lateral to the existing line?  Because:  1.  the new sewer line has to have a 1/4" slope when laying the ground, and 2.  you have to install a clean-out at that new and existing connection.

Someone really drops the ball

@Harish, $250 to $350/sf for ADU seems high. Did you get multiple bids? We just finished two ADUs in Anaheim and Fountain Valley respectively @ 720sf/each for $180K/unit. Both ADUs have everything a regular SFR has.

@Laura, $26/sf for school fee?  Wow, that is EXTREMELY high.  We already complaint at $5/sf in OC.

@Peter is right, the housing market is extremely crazy, so it's hard to find good subs and contractors to work on rehab... and everything else.  We pay our subs well, and still have a difficult time getting them commit to our new-ground-up projects.   At this market, it may be hard for you to make a profit if you have to hire a professional contractor to complete your work (and not doing the work yourself).

At the moment, I can only make a profit when I use my in-house crews to do the work for my personal investments.

Hope that help.

@Graham, I see lots of new REIs want to make profit from OOS deals without having a good team on the ground = DISASTER (you should read Morris Invest Case Study 2 & 3).

I agreed with @Jay and @James about putting a “good team” together is hard, and investors need to spend money and time at the beginning to nurture that team. I listen to BP podcast regularly, and learn a whole bunch from them; but those successful investors have done the first few investments in their own backyard before venture out to other arenas.

Regarding to contractor: as a seasonal contractor for over 20+ years, I still get screwed over by some of my new subs. The housing market in CA (maybe elsewhere as well) is extremely crazy, which causes me to hire additional subs to help my company finish some of my projects. And guess what? I have more headache chasing after them, then my regular subs… and I am here on the ground working with them daily. So why OOS investors think that these subs will put them on their first priority list?

The good contractors and subs that I work with NEVER wanted to work on homes of class B-, C, and D. These dwellings are nightmare, because they are old and require lots of work; in addition, the profit is not there. I feel sorry for new investors/homeowners when they found out how much money they have to put out.

@Clayton is right about bulk purchasing. This is the only way you can make investing work in any market.

@Eric, I don't see any newly remodeled SFR in Fullerton for less than 550K

@Peter, the ROI is too low for all the cash you put in. In addition, if the tenants moved out, you will have to put up a hefty amount to cover your expenses while re-rent it.

@Jennifer Matsumoto, the general cost is +/- $120/sf for the ADU structure in OC. I heard of Pre Fab ADU that costs less than that, but the resell value is lower than a standard type of construction. Most buyers consider these homes as "mobil" homes.

Congratulations !!!

@Allison Keib, be "cautious" of new construction (ground up) for new homes or modulars for new investors.

Ask your realtor if she had ever built ground up modular homes from beginning to the end before (entitlement, underground utilities, crane in units, rough hook up, final touch up, etc.)?  If she did, then check her record before jump in with both feet.  If she hasn't, then stay away, because the later problems will be yours... not hers.

New construction requires lots of know hows from paperwork to coordination with your "teams" to make a profit.  If you never built before, then understand all the process of how much it takes to build a new home/modules before strap down all your cash in one place.

If the number doesn't work for your current search, then keep on looking... instead of getting stuck on a bad deal that mitigate you from invest on potential good deals.

Good luck

@John Cicilioni, sorry to hear your situation, and it should be a lesson for all of us... especially for new investors.

I don't know the contractor license board requirements in PA, but in CA, contractors are only allowed to acquire 10% of the total sum of the project... or $1k max as retainer fee.  After the first withdraw for the retainer fee, the drawn schedule should be between the contractor and owner.

However, the process of any type of construction always follow a sequence.  That's why, the payment schedule should reflect to the works which the contractor had completed.   

For a roof renovation of $12,800, for example, I will request $1K for retainer fee, and 20% after removal of old roof, 30% more once the roofing materials stack on your roof, 20% more once we placed down the underlayment and half of the roof, and final payment at completion of the project.  The reason why most contractors that I know of break down payments like this so we have cashflow to keep the project going, but at the same time, the owners only pay for whatever they see have been done at their home.  

This is an example of a roof renovation, but this "break down" payment should apply to any kind of construction projects.  If a contractor/sub requests for a large sum of money up front... then it should be a big old "RED" flag.

You can thread "un-legitimated" contractors with legal threads, but (based from my experience) it's an uphill battle for the owners.

If the contractor is bonded, you can file with his bonding company, and hope to re-coup your money back.

Good luck