All Forum Posts by: Mike Wadsley

@Ryan Reddy

I look for other rehabbers to provide references for GCs. I've had good luck looking at the provider directories for my local realtor association and investor groups. 

1. How often do you need to be paid? 1/2 up front - 1/2 at completion or weekly or ...

2. Are you willing to sign a lien waiver each time you are paid?

3. How do you document the scope of work?

4. How do you handle change requests?

5. How many projects do you run at one time? How big is your team?

6. How do you plan to keep me up to date on progress? Do you need me to be on site?

Those are my big questions. Most of all, pick someone that you like.

https://smdra.com/find-a-busin...

Hey @Ryan Reddy

I much prefer to use a GC. A good GC will know what contractors in your area are worth hiring. They will also coordinate timelines to get the right subs in at the right time so they don't step on top of one another and they perform their work in a logical order.

If you act as your own GC, you may save money in what you pay your subs, but could pay for it in the end with increased holding times / costs and rework done by the subs. I tried to figure out what I saved vs. what I would pay myself for the additional time that it requires to play project manager. It was less than minimum wage. I like to focus on those activities that make money, namely finding new projects. If you find a good GC and keep them busy, they will generally give you a break on some of their fees because of the volume.

My $0.02

"A federal lawsuit filed this week by housing groups on Long Island, in New York City and across the nation alleges real estate brokerage Redfin engages in racial discrimination, saying it systematically shortchanges minority communities by offering lower levels of service than it does in white areas.

A two-year investigation by the 10 groups, including Bohemia-based Long Island Housing Services, the Fair Housing Justice Center in Queens and the National Fair Housing Alliance, a Washington, D.C.-based nonprofit group, showed that Redfin disproportionately offers its highest level of service – including discounted commissions – in predominantly white areas across the country, the groups said in their lawsuit against the Seattle-based brokerage, filed Wednesday in federal court in Washington state."

-Taken from https://www.newsday.com/busine...

We should always be fair in our real estate deals. I'm curious if you all think this will affect how we, as investors, operate.

#1 is a clean break and allows you to figure out what investment makes the most sense for you. $50k would be a good down for a new primary residence. It would get you into something respectable if your talking about a lower down payment. That amount would get you 20% down on a nice condo / townhome as a primary residence. 

You could still go after option #1 and house hack / BRRRR using that money and be able to get into a townhome or condo that you could work through. You are in a unique position where you're not necessarily tied to staying in a particular property for any extended period of time. You'll just need to make sure you keep your tax implications in mind.

If your intent on #2 is to have an investment property, the challenge might be getting enough out of the equity to buy her out and finance it. A traditional lender will want more money down on an investment property

Hey @Nathan H. - Check your purchase contract and your termination. The standard contracts provide guidance and remedies for EMD disputes through arbitration. If your agent is independent broker, they should know how to engage legal proceedings. Check out your purchase contract and it will tell you what those remedies are. 4.3.2 sets the stage and section 24 of the purchase contract will give you more details. Most brokerages will have legal counsel on retainer for assisting in these matters.

I'll echo the sentiments on Grace. I, too, invest out of state in rental properties and could give you some great pointers.

While the election isn’t over for the candidacies, there are a handful of measures that will affect us as real estate investors.

Ballot measure 2B asked voters to approve a 0.25% sales-and-use tax increase (which amounts to 2.5 cents per $10 purchase) for services for the city’s homeless population. While it might be only .25%, it might be worth a look in evaluating any vendor agreements that you have to determine if your expenses could change. (Denver Only)

The biggest one that could impact our bottom line state-wide is Amendment B.

Colorado voters have passed Amendment B, which asked to repeal the Gallagher Amendment. This portion of Colorado law impacts the residential assessment rate for which property taxes are calculated.

The Gallagher Amendment was passed in 1982 to limit then-skyrocketing residential property taxes. It says only 45% of the states property tax revenue can come from residential properties, while the other 55% comes from commercial ones. This has caused decreases in the residential assessment rate despite double-digit increases in home values. If residential property taxes decrease, local governments, police, fire, schools, libraries and anything else that your property taxes pay to fund will likely receive fewer dollars. On the other hand, you'll pay less in property taxes.

What are your thoughts on these and any other NON CANDIDATE results do you think will affect your real estate business?

(This is not a thread for discussing the candidates and their positions and prognosticating on what could become as a result.)

Hey @Kevin Vo - Welcome to the BP forums! It's a great place to get a lot of information from like minded people. You've started with some great books. Thinking like an E is a great mind shift to get you out of the J.O.B. rat race.

As you start to read up on the BP stuff, let's connect and see where I can help you out.

For my winter projects, I add 10% to my timeline to external work and schedule in throughout the entire project instead of sequencing it toward one end. The good contractors know how to work around the winter weather and will bust their butts to get things done on time. It all boils down to how you put your project plan together. Have you plan ready for best case / worst case / most likely in your hip pocket when you schedule your contractors.

Sometimes, I will build in language to my contracts for a penalty for late delivery as well as a premium for early delivery. When I set my budget, I always add my contingency, which could be used for the early project delivery payment. The trick here is managing scope changes. If anything changes, it will require you revisit the timelines and any associated early / late payments. Do it in writing.

Structure your payments to reward completed work. I won't work with contractors that want to be paid on a regular time interval. Document completed work with descriptions and pictures. Also consider having a lien waiver for each payment so that you can consider that piece of work "done". I have one contractor that I won't pay anything until he shows up and finishes at least one day of work. He's great when he's there, but not great about showing up if I don't see work complete before the first check hits his pocket.

I like working with a GC, because they have the existing relationship with the subs and know who they can trust to finish on time. Yes, you'll pay a little more than working with the subs directly, but the GC will take care of the contingency in the budget & timeline.

Overall, the best tool is constant communication with your contractors. Everything is in writing with clear expectations for who's doing the work, with what materials, on what timeline and any permits that need to be obtained. The worst words you can hear are "I thought you meant..." Make time to be on site, without being in the way, and check in at expected times. Setting a repeatable cadence with your contractors will give you both a better understanding of how to work well together.

$15k isn't a whole lot to get you started in the metropolitan markets of Colorado. Inexpensive condos & townhomes in the Denver suburbs are going to start north of $125k and will needs some capital outlay to get it to rent ready status. The opposite side of that coin, however is that Colorado is a strong market for appreciation. Even through the big crash of '08, we still held on to a lot of value and recovered quickly. Cap rates in Colorado aren't great, but if you're in it for the long haul, it's a great place to invest for future equity. 

With $15k I'd be looking to find a partner or private lender that would be the money and you do the work. That much would show a potential partner that you have some skin in the game.

You can find some more price friendly areas outside of the metro area, but then you're also looking at lower rent rates and lower demand.