All Forum Posts by: Jim Kalish

Quote from @Bruce Woodruff:

Quote from @Jim Kalish:

Someone mentioned you should empty the place yourself.  Good suggestion.  And doing some or all of the demo yourself is a great idea. 

No it's not, a 'good' GC will never let a customer do any work. Too much liability and room for errors. Say they cut a truss while removing something in the attic? Or cut through a header? Or drill through the center of a beam? Or pull the wrong wires out of the panel? Or cut the wrong pipe?

Every mistake will cost the GC money and time (more money) and  then the customer will blame the GC anyway for delays and going over budget.....

 That's quite a leap from emptying the mess the hoarder left behind and pulling out cabinets and carpet to cutting a truss.  A GC works for the client.  If the scope of work is clear it includes both what the GC is doing and what the client is self performing.  If the GC sees that the client is performing work they shouldn't, point it out.  If the client insists, don't sign the contract.  But there is nothing wrong with segmenting the work.  Would you expect the GC to oversee simple landscaping?  What if the client loves to paint?  As long as its all captured in he scope and the schedule.  I agree that letting a client doing anyhting structural or complicated under the GCs permit is a mistake.  But a team approach is always good for the investor.

Congratulations on closing on a deal!

First I want preface this by saying in addition to being an investor 'm also a General Contractor.  So naturally I'm biased.  But like most people have said the right GC is definitely worth it.  So what is the right GC?  Since I started many years ago not only managing my own rehabs but doing a lot of the work myself I know not all GCs are right for rehabs.  The GC has to have the right mindset.  He or she can't cut corners but must understand you are rehabbing to sell to someone else, not live in it.  And they have to understand the goal is for you to make a profit.  SO you want a GC who does rehabs, a lot of them.  If they normally do a home owners kitchen remodel and decided to try out doing an investors rehab, you don't want them.  And a top notch GC will work with you, letting you do me of the work yourself.  Someone mentioned you should empty the place yourself.  Good suggestion.  And doing some or all of the demo yourself is a great idea.  But then turning it over to the GC is the way to go.  Not sure if anyone mentioned this yet but you still need to be engaged.  A detailed scope of work is a must.  And you have to make sure its being followed.

As for your second question, as others have said, that's something you should have already laid out.  After closing is not the time to decide what walls to move.  don't feel bad.  Common newbie mistake.  But if you haven't then an experienced GC can be a big help.  He can tell you what is doable, what it will cost, and if he knows his stuff, what makes sense.

One other point.  Not sure what the requirements are where you are but most in-depth rehabs need to be permitted.  The few extra dollars are worth it.  A good realtor will check to see if you pulled any.  If not, at the very least he will tell his client to run for the hills.  At worst he could make  call and let the local permitting authorities know.  And that could cost you tens of thousands of dollars.

Best of luck!

Hi BP community. My son and I have been investing in North Carolina for several years. We are now growing our portfolio. Also, my son has other partners out of NYC who are also looking for more properties in North Carolina. We are located in Charlotte and are looking for properties within a couple of hours form here. So if you are a wholesaler in this market I would like to get on your cash buyers list.  Our email address is [email protected].

Search Criteria

Within 2 hours of Mecklenburg counties.

Single families to rehab and flip and 2-4 families to rehab and rent.

On the singles family would like to be all in at around 70% of ARV but I realize those are getting tough to find. We are flexible. If the numbers work to buy and hold we will do that as well.

On the multifamily I'd like to see at least 300 per door true monthly cash flow after all the repairs are done and have refinanced

And my son's NYC partners also invest in larger multi-family units and commercial buildings.

Thanks,

Jim

@Desirae Price Welcome to the crazy and fn world of investing.  First to answer your question, as the saying goes it all depends.  Flipping is a very hands on business.  And being an architect is a very demanding and time consuming job.  I know that because y daughter is one.   But being an architect also gives you  leg up since you understand construction, building codes and project management.  So once you have some flips under your belt you will succeed.  But of course the question is how do you get a few under your belt.  Like @Michael Dumler said, partner up. There are several Real Estate Investor Associations (REIA) in your area. REIAHouston https://reiahouston.com/ sounds like one that you may want to check out.  I think they let you attend 1 monthly event for free before you have to join.  There is an event coming up on March 15.  This is a great place to meet other investors and start looking for a few to talk to about a partnership.  Do a few flips with them so you aren't burned out and you will find out of you wnat to go on your own ar just continue the partnership.

Good luck!

Maybe its semantics. But a Home Equity Line of Credit (HELOC) is something that is given on a home to an individual. Over the last year I've called 97 lenders and if they give HELOCs on rental properties, which most don't, it has to be in a personal name. I've found 2 that will give a HELOC on investment property held in an individual name; TD Bank and PenFed. I had did have offers for a business line of credit using an investment property as collateral. But unlike a HELOC, which is based on credit score and property value, business lines of credit are based on debt service coverage ratio (DSCR). Basically the lender will evaluate what your debt is, and they really load it up, and what income the property will generate. Then its just a simple ratio. Most lenders want to see income 1.25x the debt. These types of loans are more expensive than HELOCs and are normally re-evaluated every year or 2. Now if you want to go the business line route you can try US Bank, but I'm not a fan. I spent 3 months negotiating with them and what the loan officer told me was way less than what the underwriter offered. Basically she lied to me over and over again.

Best of luck.

@Jordan Hovan Welcome to the business!  It can be very lucrative and fun.  But without a really good plan it can be a good way to say bye bye to a loot of money very quickly. @Andy Sabisch gave you some good advice above. But let's dive in. There is a lot of work to do before your first flip. IMO the hardest part is finding a good deal that you are comfortable with. The old chestnut you make your money when you buy is absolutely true. So you need to decide how you are going to find a property. There are all sorts of software out there to help you search. Google them and then research them to see if they will work for you. But you will have to make an investment in time and money. Or you could go the Driving for Dollars route. DFD is a lot more time consuming but a lot cheaper. You could use a realtor but I've found in this market if its listed and is a good deal it goes almost immediately to the realtors best clients. And it goes for cash. If its still on the market for several days there is usually a good reason. And there are a lot of other methods. You don't need to pick just one but you do need to fully understand each one you will be using. So now that you have decided how to look for a property you need to decide what you are looking for. Single family, 2-4 units, commercial. If you just look for "something" it's going to be tough to narrow it down. Are you going to rehab or wholesale? If you are going to rehab, how? Are you going to do the work yourself or are you going to hire a GC or something in between? If you are going to hire a GC or a couple of subs start looking well before you find a property. They can be a big help when you are trying to figure out if its a good deal. And as Andy said, find your financing now. In this competitive market someone who can close quickly, say 10 days, has a real advantage. If you find a property and your offer says bank financing and 45 days to close you may not even get a counter offer. If someone is going to sell you there property at 60% of ARV they want out now.

BPs has all sorts of tools and resources.  Use them.  You will be way ahead.  Best of luck and let us know when you hit that homerun.

You are going into this with the right mindset.  You are destined to succeed.  Best of luck

PenFed and TD Bank will do HELOCs on investment properties if they are held in your name, not an LLC. Both have some restrictions.
PenFed will only give it to people who have 3 or less properties in their name regardless if they are paid off or not. They are 80% LTV and 50% DTI. 
TD restricts you to 3 mortgages in your name. You can own more, but they have to be free and clear. 75% LTV and 43% DTI PenFed

Amanda Sanford 726-333-8154

TD Bank

Matt Paterno 856-380-4276

Matt talks real fast.  So don't hesitate to tell him to slow down  

Good luck

Not sure if you still need any thoughts on this but here is my 2 cents. First I'm not in TX. But I did a little research and I came up with the same conclusion as you did, no lines of credit. So if you were looking for funds that you didn't have to pay on unless you were using them you may be out of luck. But if you want to use the equity to invest in another property a cash out refi is the way to go. I just did 2, one on my primary and one on an investment property. The rates are so good right now and the property values are so high I was able to pull a lot of money out and it barely changed my payments. As for cash out vs home equity loans, as pointed out by someone else the cash out had a lot of advantages. It will cost you more to get and take longer but in the long run its a much better way to go. Beat of luck. 

Congrats on your first deal. You didn't mention if flipping is going to be your full time gig or a side hustle. If it's not full time doing a lot of the work yourself or using a handyman can be a pretty tough way to start. It's very time consuming, not just the doing the labor but overseeing a handyman   The fact that you are struggling with the SOW means you could end up with the handyman, who you will pay by the hour, doing things you didn't want done or taking way too long to do the work if you aren't checking on him on a regular basis. I'm not saying handymen aren't a great asset for us but they do need on site direction. And having them do things that need to be permitted, like a bathroom or electrical, could bite you in the end. A good realtor for the buyer will check to see if you pulled a permit on the rehab. So finding a GC who works with guys like us is the safe bet.  And a solid SOW is critical. There are tons of articles on the subject. Just Google how to write a scope of work for a house flip. And if you do want to do some of the work yourself like the demo, which is a good idea, then just put that on the SOW. Bathroom to be demoed by others. And be specific about what that means. If in your head that means take out the vanity and toilet but the contractor things it means remove the tub, tile, and flooring as well then you will be getting a change order. Scopes need to be very specific so I'm not surprised the GC wanted to charge you. Normally a GC will give you a budget figure for free. But then charge for the detailed scope. And a line by line scope for a newbie is not a bad idea. You probably will need to use a bigger, and therefore more expensive GC but on the first couple it might be worth it. And getting the budget estimate is a good way to pick the GC. Im assuming you already did your own estimate before buying the property so you can compare that to the GC. As for material, without a good scope it's tough to figure out what you need. But buying early is a good idea. Lead time on windows and cabinets is outrageous right now. And if you are buying the property with borrowed money that means more carrying costs.
Now once you get a couple flips under your belt going the handyman route can work. But just remember permitting and the possible consequences of not getting one. 
Lastly, there are a lot of good books to use as a reference. Turner wrote a couple on flipping that you might want to read. BP has them on the book store. The book on estimating rehab costs and the book on flipping houses. 
Good luck