All Forum Posts by: Jon Martin

Yes agreed, and that makes perfect sense. Where it's tough for me is I have lots of cross-pollinating projects that span different rooms. Several rooms will need drywall, paint, trim, doors, and some electrical (can lights, fireplace inserts, appliances). So with a fixed price I'm worried that I may be overcharged in some areas and not get discounted when I downgrade items (such as cabinets), or it was calculated into the fixed total and turned out to not be required. 

Not sure what if you still recommend a fixed price contract in that situation? I would totally be fine with fixed price if all the work were isolated to a single discreet project. Or if the price comes in lower than the itemized cost plus quotes and fully encompasses the scope of work, then that's any easy yes as well. Thanks again for your input!

i finally need 2 hands to count the number of detached SFH homes under $1M in my desired market (San Luis Obispo CA) close to where I currently live , or 1 hand if you exclude 1 that is townhome-ish but technically detached. For most of the last 12 months there were 0-2 at any given time that fit this description.

Homes are still going quick where I made my first investment (Greenville SC), so I'm guessing that they are going for over asking.

A market I have my eye on for my next STR investment seems to have more options now, and some that were listed before the recent rate hikes are still lingering. Hoping for more blood to spill when I'm ready to pounce in the fall.

Good to know, thank you @Bruce Woodruff and @William Sing! Wanted to be sure I wasn't being taken for a ride, makes me feel better about potentially moving forward with him. 

HI Everyone, 

Been trying to nail down some quotes for a rehab on a 2/1 SFH. Had 2 contractors who committed to starting the job flake (good riddance, better now than later), so at the time of writing I only have 1 contractor willing to start with a quote in hand. Supposed to get 2 more in the next few days. Scope of work includes drywall and interior paint on ~900 SF, 5 doors, baseboards, knocking down a kitchen wall, kitchen rehab (counter, cabinet, backsplash), and a handful of small misc stuff.

Problem I'm having is the 1 quote in hand from the first 3 is asking for a cost plus of 30% on his subs along with an extra $5K fee for "overhead" (office, truck, gas, etc). Is this normal? The cost plus % already seems high on its own . . . .  but either way shouldn't the contractor's actual overhead cost be wrapped into the cost plus markup fee? 

Thank you all in advance! 

 Agreed! The detailed touches and individualized service that a good host can provide, especially when catered to a specific market and customer demographic, is simply not scalable at the corporate level. Much more complicated than hiring a bull dog to collect rent. 

 No- the cash out is not repaying the original loan. Your new refinanced mortgage paid off the loan and gave you cash back, so now you have a higher payment (old loan principal + cash out). 

Yes- you have the right idea with 1 and 2. You will have a new loan that hopefully your tenants pay enough to cover. You will then use the cash out from the refi to roll into your next down payment which will require an additional loan. 

When you refinance, brrrr or not, yes the original loan is paid off, however you do start a new loan. Those who don’t take cash out usually do this to lower their monthly payment because rates have gone down, but you can forget about that option for the foreseeable future. 

No, it's technically not free money when you pull out cash because you will need to pay whatever cash back that you take out. However it can feel like cheating in a sense because you are borrowing that cash based on the new increased ARV (hopefully).

So, now your loan payment from that first property is probably higher (because you asked for cash), but you got some of the cash back out that you used to to start that first deal. Now, the “repeat” is you use that cash to role into the next deal. That way you scale faster, because for most it takes a while to save that kind of capital. 

Hope that makes sense . . . It took me a little while to wrap my mind around it too ;)

Keep in mind that the liability knife cuts both ways. If someone slips and falls on your/"their"(lol) parking lot, they may just decide to come after you. Which is why there is no shame in taking it over and monetizing it accordingly. 

Or like already mentioned, try to get a lot line adjustment and sell it the HOA.

 Big thanks Jason! Will be sure to reach out to you when the time comes. 

 Zip code is 93442, north end. 

Yeah, it’s hideous, but at the end of day I still thoroughly enjoy drinking a beer (and morning coffee) while enjoying this view! 

Can’t think of other zip codes off the top of my head but this is not unusual. This is one of the less expensive beach destinations in the southern half of California and STRs in this neighborhood still average $60-80K+/year.