All Forum Posts by: Hugh Ayles

We did all the work on our last flip except for the plumbing, HVAC, and most of the electric.

It was a cash issue for us.

On this bext one we will be subbing out the windows and cabinets.  We need to get out of this one in 6 weeks so time has become more important than cash.

How much should I budget for a rehab?

It's a business.  You need to keep cash set aside for your business.  You will be able to sleep better if you are capitalized.

What if you misjudge your spending habits and a big expense comes up?  If you need to pocket the money rather than set it aside for future expenses, you are undercapitalized and should not have rental property until you can set aside cash.

Good businesses do not run by depleting the cash.

 I would think you would list each partner and next to them list the distribution amount.

In the world of contracting, you would have a joint venture agreement. The JV agreement outlines the percentage stake of each partner. That percentage reflects your profit portion.

As with any accounting advice, confirm this with your CPA.

No, a receipt cannot suffice as a lien waiver.  A receipt does not acknowledge all bills are paid.  A lien waiver is dotting I's and crossing T's. It forces ackowledgement that no other money is owed for the work performed.

I always have subcontracts signed.  I have what I call a master subcontract agreement.  It has the boilerplate info that is important to me.  I only have a contractor sign that once.  I also have them provide a W9 and an insurance certificate.

Then I have a project agreement per project.  It is usually one page and references the master subk agreement, the project name and address, the scope of work for the project, and the contract amount.

The one time you take a shortcut is the one time you get burned.

@Nick Brubaker

Each state may have very specific lien waiver language.  I know Texas does and my waiver came directly from a state site.  There is an important phrase to learn: "legally enforceable".  You may think you have entered into a contract or have a sufficient waiver but it may have language that is not enforceable.

In TX it was vogue to have lien waiver langauge that stated you acknowledge you have received payment and give up your lien rights.  It was required by some to have submitted this as a condition of receiving a check.  in other words, you were being forced to give up lien rights before getting paid.

Now the waiver language states you give up your lien rights after the check is deposited.

W9 are for both individuals and businesses so yes, get a W9 from your contractors.  It is standard practice to provide these.  If they are hesitant to provide this info, find another contractor.

Are you saying you are using a contractor and they are using subcontractors?  If so, you only need to get a W9 from the contractor you are contracted with.  Think of it this way, you need to document where your money is going.  Get a W9 from the company whose name is on the check you are writing.

I have had good experiences and bad experiences with wholesalers.  YOU have to know the numbers yourself.  I am naturally a skeptic anyway so we always check numbers and look at the property.

We have used private lenders as well as HML on wholesale properties.

If the numbers work, financing is not an issue. But never force the numbers. You will lose money that way. I am seeing some houses in our market sit a long time because they are forcing numbers such as an ARV that is not supported by comps. With the influx of newer investors, we are also seeing some houses sell for an amount that does not make sense.

Bottom line is know your numbers and figure out how much risk you are willing to take.

Austin has been building infrastructure for decades.

There are more major highway projects not slated to start for 3 more years.