All Forum Posts by: John Blackman

Architects are in a unique position to save some costs if they are in the development game. We hire architects for all of our projects. Construction can be a bit daunting to get into for the first time because there is so much to know and so many ways to make a mistake. Knowing the process with your local government in regards to permits is also key.

I'd start by networking in the local builder/developer community and hook up with a builder. Builders and architects don't always get along, but you're going to need each other. For your first one, let someone else build it and track what happens. Track all of the expenses and in what order they are done. Get copies of everything and you will be able to piece together the puzzle of new construction in your area.

The key things to watch out for are the following:

1) Insurance and liability
Make sure you get a good builder's risk policy. Know your liability for workers on the site. Talk to a professional about your obligations in your state. When you sell the house, someone has to be listed as the builder. That person has the lions share of the liability or at least should.

2) Surveys - make sure you can fit what you want. Lot slopes and trees can mess up your day as well as soil quality and proximity to waterways.

3) Permits and what order those permits are required

4) Budgets - the more accurate you can be before you spend, the less hair you will pull out.

5) Financing schedule - getting the money isn't so hard as spending it properly. You can starve your pipeline if you spend wrong. Make a schedule otherwise you will end up bringing more cash to the table to keep things moving.

6) Process - making sure you schedule contractors at the right time so they are efficient will save time and money. A good builder can help you here.

This is a very abbreviated list, but if you hit the above hard it should start uncovering the nuances required to do a full build project.

Get a good local mentor and work with an experienced builder on your first few. I have a feeling that as an architect you may want to build stuff that you like. Keep the market in mind. If I built what my architects wanted to build, I would break even because they all want to build palaces in markets that won't support what they are designing. So design for the market or you may find yourself with the most expensive house in the neighborhood which is just harder to sell.

Thanks for all of your recommendations everyone. I think we'll end up using a hybrid of providers. I'm convinced now that what I need for our bookkeeping is not anything that complicated. We still have our CPAs to do the heavy lifting, but right now we just need someone to scan receipts and make QB entries with the right price codes.

General soliciting for investment money can get you into big trouble if you don't do it correctly. Even when you do it right, you're not placing general ads, at least not under the current regulations.

I would start by developing relationships with friends and family who trust your experience. Write them a private unsecured note with an interest rate and terms. Pay them a monthly fee for borrowing the money and pay them back when you sell the house. It's easy, and close friends and family are not likely to sue you especially if you are performing on your note. To formally accept investment money from someone else you should use a private placement and file with the SEC.

You can also formalize money with a JV or LLC if you want to take on an investment partner. That is it's own topic that is far to large to address in one post, so I'll recommend you read some of the excellent content on the site for that.

We're all here to learn. I welcome mistakes I can make here or in discussions with fellow investors as they usually save me some money and pain down the road.

William Bannister that is my plan. I don't need a full time bookkeeper and need an intermediary solution that doesn't cost $100/hour. Your experience will certainly give me some context so I don't pay too much. Thanks.

Thanks everyone for the quick responses.

Will Barnard, how many transactions do you have in your books after a month? This seems like the perfect metric to use to determine the value of your bookkeeper. Our projects are usually 16-20 weeks in duration and have on average of 200 to 300 transactions for the whole project that need to be categorized.

According to the BLS, it's $16.36/hr on average. http://www.bls.gov/ooh/office-and-administrative-support/bookkeeping-accounting-and-auditing-clerks.htm

I don't like rules of thumb because the details have a way of popping your bubble. I use a spreadsheet to determine my go or no-go on a deal. This one qualifies as a buy for me. Everyone's criteria and risk tolerance are different of course.

$18,000 equity (20% of $80,000 + $2,000 in closing costs)

Annual Income = $11,880 (includes 10% vacancy)

Annual expenses ~$8,450 from above. (Includes PI, tax, insurance, Schedule Es, management, and vacancy)

Annual Income: $3,429

That is an ROI of 19.1% not including depreciation, equity growth via your note, or appreciation assuming your market is rising.

This also assumes only $720 a year in upkeep which might be low. That is the only turd in the punchbowl I would look out for.

Eviscerations and feedback welcome.

So I've got a problem and thought the great minds on this site could help me out with my bookkeeping issue.

Our business is starting to grow to the point that keeping the books is taking more time than I want to spend on it. This year we'll be doing more than double the number of projects we did last year which is going to break me with the bookkeeping. So I went out and started looking into hiring one.

My accountant and other builders in the area all had recommendations for bookkeepers, but they all charge $100/ hour. I even found one that charges only $60/ hour. I don't like to think of myself as excessively cheap. I am willing to pay people what their skills are worth. The level of bookkeeping I'm looking for includes making an accurate QuickBooks entry and scanning a receipt to put in a dropbox folder. I'm not looking for a CPA who is going to structure my entities and give me tax advice.

What is a reasonable amount to pay a good bookkeeper? $100/hour is $200,000 a year, more than most executive incomes. I find that rather disturbing as it doesn't strike me as a skill that requires specialized education like a CPA, Lawyer, or engineer. Is bookkeeping so traumatic that no one will do it and you just have to pay that much?

Does anyone have a bookkeeper that charges by the transaction instead of the hour?

There's nothing wrong with paying for a mentor if they are good and will help you in your real estate career. Bryan Hancock was my mentor and I paid him for it. It was money well spent and now pales in comparison to the money we make on our deals.

That being said, there are plenty of fly by night folks out there and the out of state thing does make it more difficult but not impossible. Make sure they have a good track record and you have the capability to follow through on their advice. If you can put at least a year long plan in place that should be enough time to get you to the point where you are ready to fly on your own.

Personally I spent about $30,000 on Real Estate education from a variety of sources. That was a hard bullet to swallow and it took me a couple of years and some thin deals to pay it off. In the end, it was well worth it.

Be prepared to for some rough nights where you question why you got into Real Estate, why you 'wasted' your money. It can be a hard few years when you get started before you learn enough to consistently make money on your deals.

Then again, it might be very easy for you and you'll knock it out of the park on your first few deals. I plan for the worst and once I can accept that, then I move forward.

Above all, make a plan, set goals, do check points every week on your progress. Make to do lists every week during those check points. Get the work done. If you track it, it will improve.

Congrats on your first flip! I remember mine and it went far worse than yours. I kept the seller in the deal to do some of the work and that is the first and last time I will ever do that again.

Only over budget by $1500 is terrific and you got a nice fence out of it. So really you just increased in your own budget instead of having to pay more than you thought for the repairs you planned.

Doing that deal will earn you so much more in the process of learning than the actual money. Although that closing check is certainly going to be nice and what we're in it for right? You will get more comfortable with each deal.

Good luck in your next one and congratulations again.

This probably won't be the last time it happens to you. Honestly be glad they left and didn't leave any damage. Market the property and get it leased up again. Pursuing them legally is going to cost far more than you will get out of it. It's much easier just to re-lease the place.

To prevent this, I would spend more time screening your tenants. BiggerPockets just released an e-book on Amazon.com for 0.99 that is a great synopsis of what you need to do to screen a tenant.

http://www.amazon.com/BiggerPockets-Guide-Rent-House-ebook/dp/B00AXNQC8S/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1359863792&sr=1-1&keywords=biggerpockets

Your property is a substantial capital investment. Treat it as such. Don't let anyone into your place because they say they can pay the rent. Getting anxious to get a tenant is an easy trap to fall into.

Make sure your tenants have good income. Get proof. Make sure they have been employed a long time by the same employer. Make sure they are making 3x the rent.

Get the deposit up front before you let them move in. No deposit, no keys. Can't pay the deposit and first months rent without a blink, move on. I could go on, but really just buy the book linked above.

We all want to be nice and give people a break. I've done the same and lost my tenant early because I didn't wait for a more qualified renter. My personal suggestion would be to count yourself lucky and move on.