All Forum Posts by: John Clark

This is good to know and something I'll bring to the attention of my realtor who represented me

I didn't get a T12 until much later. Way after I had already paid the earnest deposit. When I did, I noticed a fluctuation in the rent roll, but I never got an answer as to why. Later I found it it's because the tenants pay what they want, when they want and I can't run a business like that. At what point does one make a decision to blow his earnest money away? What if you don't find any red flags until after? How is one to know how much money one can lose if you dive right in? I'm a newbie. My first investment. I'm not yet at the stage where I can do this blindfolded but I am one to take chances, except this time it didn't pan out. The PPP doesn't scale down for the first 5 years. It stays at 5% for every year.

The issue I see with all of the comments on this thread is a clear lack of perspective. Contractors aren’t willing to understand the Investors side, Investors are willing to understand the Contractors side. If everyone would zoom out and really try to gain perspective of the other side it would help clear up so many issues.

Contractors,

You need to understand why the Investors are asking for bids without materials. It’s because they have been burned in the past by paying a contractor for materials up front who walks with their money and doesn’t do any work, or contractors trying to overcharge. Why they are looking for the best deal. It’s because they are looking to maximize their investment. Why they are choosing the contractors they do. They don’t need someone who isn’t accountable and will want to charge insanely high prices. Once you begin to understand what they are after you can help provide a service to them that will benefit all parties.

If you as the contractor are always on the defense and pushing back to potential clients needs with a “my way or the highway” attitude it’s not going to solve anything. It also doesn’t help when you say you’ll charge 2-3x what the going rates are either if they don't bend to your will. Would you want to work with anyone that has that attitude? What if you went to a nice steak house and requested your meal prepared a certain way. In return the staff was rude and said that you’ll get what you are served and if you don’t like it, you can leave or we’ll just charge you double! That’s not the greatest business model.

Trust me, I understand the difficulties of the construction industry. It’s not for the weak! It’s incredibly easy to get jaded over all of the crap that happens in our industry such as clients who don’t pay, labor shortages, supply chain issues, tight schedules, incompetent inspectors, terrible drawings, weather, safety, etc. If handling that is too much go do something else because it’s not going away!

Investors, homeowners, business owners, etc. need our expertise. As contractors we need to be great communicators and keep the client’s interest in mind at all times. Contractors need to be clear on the expectations the owner should have on their work and what’s in their bid. Unmet expectations lead to frustration, so make the expectations crystal clear! Take accountability for everything and do what you say you’re going to do, period!

Investors,

You need to understand that without contractors, your dream of financial independence doesn’t happen. Acting like you are some high and mighty investor that deserves to have contractor bow to your every demand is a load of crap. It’s amazing how many times I’ve heard “If you give me a good deal on this job, I will have future work” or “I don’t want to spend much on this project, it needs to be cheap” or “can you do it cheaper”. Newsflash, contractors don’t want to hear this at all.

Advice – don’t ever say the word “cheap” to a contractor. There isn’t a quality contractor that wants to do “cheap” work. Instead, you should ask for value, or ways the contractor can meet your expectations for the project for maximum return on investment. If you are open about the goals of your project, they will be able to help you reach your goals with their expertise. If they can’t do that, they aren’t a good contractor or you have unreal expectations.

It is your responsibility to be a good client to your contractors. Their jobs are far from easy and it’s only worse when you have unreasonable expectations and treat them poorly.

Let’s use the steak house example again. If you are provided with great service and a great meal but only make your servers/cooks job harder by being ridiculously nitpicky, rude, and never showing gratitude no one is going to want to serve you. You may get by for a short while but eventually they are going to find a way to keep you away. In the contractor world, word gets out quick (at least in my area) about bad clients so it’s best you don’t get a reputation you don’t want.

Pay your contractors timely, understand sometimes schedules and budgets aren’t met, things can and will go wrong. It’s not always your contractor’s fault and you need to understand this concept.

To sum this all up, I used to be a bitter contractor that always cussed working with clients, Architects, Engineers, GC’s, etc. Then I became an investor who needed different contractors to help me scale my business and I realized what the client goes through. There are some BAD contractors out there, I mean awful. It really opened my eyes to what they have to go through and why they request the things the do. Now I have a better understanding of both sides and it’s helped me provide a better service to my clients as a contractor.

Grow your perspective and it will change so much. Be good to people because you may not understand their perspective.

Also, what about the retiree that books an ADU or casita out to make some extra coin, then loses property tax benefits afforded to seniors?

Maybe, and I don’t have a lot of experience with property taxes on commercial but the basis is different. Homeowners are taxed based on market value and recent sales. Commercial same?

I’m new to house hacking a duplex and this is the second time someone asks me for a late move in. If I allow someone to move in later in the month (target month is nov) Should I still mandate full deposit and first months rent before before the first of the month?

I’m new to house hacking a duplex and this is the second time someone asks me for a late move in. If I allow someone to move in later in the month (target month is nov) Should I still mandate full deposit and first months rent before before the first of the month?

With an 8% mortgage rate, there is no way to have positive / break even cash flow buying a market price property on MLS today.

I picked a house in the MLS today.

$460k asking price (non-expensive market price) on a SFR.

Say we got it for $450k after negotiation.

$2000 monthly rent,

with 25 % down, 8% rate, mortgage include property tax, HOA, insurance is $2900 monthly before I even count the vacancy, repairs, management fees etc.

This is a -$900 monthly negative cash flow.

Unless paying cash, after all the cash investor dried up, using 25% down payment, how do a typical mom and pop landlord buy a new property?

What strategy can we use to survive in this new market?

How do landlords stay profitable or break even cash flow in this high rate market?

Thanks!