All Forum Posts by: Hattie Dizmond

Hey Cash!  Welcome to BP.  Let me know if there's anything I can do for you.

if the HUD listing says "Exclusive" in listing type, it is owner occupant only. If it says "Extended", it is open to investors.

also...you're in NY. Doesn't everyone have to belong to a union, if they are legit? Contact the appropriate union and see if they have a grievance process. 

 We didn't exactly filter by price point.  Since the tax value is way off market, it wouldn't really help us. What we have done is carefully define a sub-market where almost all flips/rehabs/scrapes are at about $750k and up. In Dallas that's a pretty big number, whereas it probably wouldn't be in CA and other pricy markets.  There's still a ton of competition, but a lot if it is builders looking for scrapes. There are a lot of properties with rehabable houses they can't get cheap enough to make a scrape viable. Yay us!!

We actually took the reverse approach here in Dallas just to cut down on the investor competition.  It seems to have already paid off. We just began targeting a specific are a couple of weeks ago and should have a signed contract back tomorrow for our first deal in that sub-market.  Of course, we are now having to rethink our funding, but that's a great problem to have!!

Welcome. I just moved from Richardson to N Dallas. My business partner still lives in Richardson, and it's one of our primary areas for REI.

You've definitely found the right place. Start listening to the podcasts and read the Ultimate Beginner's Guide. 

it won't help you with this situation, but it may prevent future pain...

SOW (Scope of Work) itemizing precisely what work is to be done, the finishes and/or exact material to be used, who has authority to decide on any undeclared materials or finishes (you or contractor). Both you and the contractor provide written approval of the SOW. 

Any change or addition to the SOW IS handled via a formal, written change control, which is acknowledged in writing along with associated costs. 

The SOW should be followed by a formal written quote from the contractor, either T&M (which should then be detailed out at the same level as the SOW) or a fixed price bid. The contract should clearly state the time line for completing the work. 

A contract should include the bid price, a copy of the approved SOW, a copy of the accepted bid, how materials will be purchased and your payment terms. 

Never pay a contractor more than 40% upfront, and that's only of they are directly responsible for purchasing the materials. If you're paying directly for the materials, I wouldn't do more than 20% max up front. Everything else should be done on milestone payments, with a large enough completion payment attached to a final walk through to incent them to finish. I would also include penalties for not finishing on time. (You have to allow for change controls and/or things out of the contractors control, such as the exact tile you just had to have being on backorder.)

If you do those things, you should have a good relationship with your contractor. It should also weed out the frauds. 

Completely agree with @Ryan Dossey We meet with everyone who we qualify as being in position to sell to us, regardless of the asking price. In fact, the very first deal we met with a seller on - ever - was a FSBO. They were asking about 25% over what we could pay. I spent time both building a relationship with them and educating them on what would be needed to bring their house up to the standards of what today's buyers are looking for, what it would cost to do it, and what our business model is - so they would understand there was a max price we could pay. They were building a custom, smaller house and facing some health issues. They didn't want to do the rehab and needed to move quickly. After all the discussions and explaining, they agreed with our price. Done.

Actually, you should be able to assign the contract to the end buyer just like you would an investor who is using conventional financing.  However, it would require the buyer to come to the table with the difference between the amount to the seller and the purchase price including the wholesale fee, unless their is enough difference between the appraised value and the all in cost.  (In some cases the buyer may also have been approved to exceed appraised value by a fixed %.)

I'm not an agent. However, I believe one of my true competitive advantages as an investor is my detailed knowledge of the sub-markets we focus on and my knowledge of the DFW market in general. Notice I didn't say I have detailed knowledge of the entire DFW area or our entire MLS area, which is 12,000+ sq miles. It's impossible. I know enough to know which areas across the urban & suburban sub-markets of our MLS represent median house price & income, which areas are experiencing growth and/or renewal, and what the general grade of the area is, etc. However, I only consider myself an expert in the sub-markets we actively work.

So, my first piece of advice is to become an expert on a specific area; pick a zip code or school district...something that provides a defined segmentation.  Then learn what makes that area unique or desirable.  What types of people live there and want to live there and why.  What amenities does the area offer.  (For instance, one of our primary farm areas is the Richardson ISD.  Why?  It's mostly suburban, family neighborhoods with a school district that is one of the top 25 in the entire nation, which means people want to live there and exiting a deal is pretty easy.  But, even within that highly desirable ISD, there are 3 elementary schools, 2 junior highs and 1 high school that are head and shoulders above the rest.  My business partner lives in Richardson.  1/2 block down the street from her the exact same house will sell for $50k less than hers, because it feeds to a different elementary, even though the elementary that's assigned to that house is rated a 9 on GreatSchools.org.  And, it's still in the same subdivision, neighborhood, etc.  You have to know the area to really get it.  Our other area is school agnostic, because 90% of the people with school aged kids send their children to private school, which is why they live in the area.  Most of the top private schools in Dallas area within a 5 mile radius.  Why is that important?  Money.  People have money and are willing to spend it.  And, sales don't necessarily pick up or drop off based on the time of year.  If people have their kids in private school, moving during the school year means nothing, because there is no transfer necessary.  Again...you have to understand the area and the people who live there and want to live there.)

Basically, don't try to boil the ocean.  Pick a manageable area.  We like to think in terms of sub-markets and micro-markets.  (i.e. Richardson ISD is a sub-market.  Individual elementary school feeder zones represent micro-markets for us.)  And, visit every single open house you can within the area you choose.  Hope that helps some.