All Forum Posts by: Jeffrey Stasz

Great Question Amir. 

Uphill and Downhill are NOT the same. Uphill is significantly more costly because the productivity factors of the excavating machinery is an order of magnitude different. 

If you are going downhill and do not need to haul any of the material it will be much cheaper and faster to do this sort of site work. A small to mid-size dozer can "slot" doze down hill. You will get a productivity bonus because gravity is helping the machine and the dozing technique will allow you to move more material per set. So machinery will be on site for less time and use less fuel. That equals savings to you. 

Now on the uphill: you are using an excavator and dumping into hauler or moving it elsewhere on the site. In this instance you either have A: two machines, two operators, and twice the fuel consumption. Or B you have multiple movements per set. That is going to slow you down and cost a lot more. 

Finally, if you're excavating below 5 ft you're going to require special shoring and form work. This is added cost as well. 

If you'd like to read more about this topic check out this book: 

https://www.amazon.com/Pipe-Excavation-Contracting-Revised-Roberts/dp/1572182660

If the trailer is not square you have a couple of options: 

1. Use the 3,4,5 rule to create a square and run you flooring to that. You can then piece in sections around the edges, or, you can rip your final flooring at the outer edge of the square to fit flush to the wall. This will give you a great looking layout and cover any irregularities with the baseboard trim. 

2. Start from the middle of the room and go out. This does a similar thing as the method above but will likely not look as slick and you will have a bit more work to do at the edges. The advantage, if the house is way out of square this method will do a better job of covering up irregularities. 

Tip: If you're not using T&G flooring I recommend grabbing some long pipe clamps. They will help you pull the seams tight and bend boards to minor changes in the floor layout. 

Pro Tip: if you don't have one, get a sliding miter saw that can also bevel. You can pick up a 7.5" craftsman for under 200 beans. If you want to really spend some money I recommend the 12" Bosch Axial Glide. But that set up costs about 1k. FYI

All good points above. 

Let me add a POV as a contractor (granted I am not for hire, I just run point on my developments). It's important to note that an investor's detailed SOW and a contractors detailed SOW are radically different things. To a contractor your SOW is like the Table of Contents for a book, while their bid is the contents of a book. Both are called SOW's but they are not the same thing in practice.  Even JScott's excellent SOW examples from his book are not enough for a contractor to accurately cost out a moderately complex job. 

Doing estimates the way you're asking is very very time consuming. It makes sense to do it on a job that is going to run north of 80-100K but it is a time suck if you're looking to spend 5-10K. And to be honest it takes almost the same amount of time to do an estimate for a small job as it does for a big job. 

So. Here are a couple of solutions that can get you closer to what you want done: 

Drawings: Use an app like MagicPlan or RoomScan to get a PDF floor plan of your place. The measurements won't be 100% but that's okay. The contractors that can bust out a detailed estimate fast are almost always using some software that depends on a floor plan in PDF. On Screen Take Off and PlanSwift are two popular programs among residential contractors/light commercial contractors. Craftsman Book also has a program but it's clunky. Revit is the go to among the big boys but likely too expensive and complex for your needs. 

Make the floor plan before you meet with the contractor and send it to them prior to the meeting. Bring paper copies to your meeting so you can mark it up together. 

If you want to take this to the next level you can do the floor plan and takeoff yourself. Then hand the contractor the SOW, The Materials Schedule and just have them price the install. The advantage of doing it this way is you're going to learn A LOT about construction. The downsides are it takes time to learn that much about construction, the take-off programs are kinda pricy (a few grand a year) and there is a learning curve to these products. 

But, if you're serious about the business and improving multifamily product to get stronger cash flow this is probably the right path just not an easy one. 

One final note: I agree working directly with subs is often cheaper. However, you should check with your local laws. Some states require a GC on jobs over a certain value. Even if you're the owner and even if the sub is licensed and insured you could potentially be legally required to have a GC. Also, don't underestimate the value of GC's. Yeah they are going to ping you 25% in overhead. But the good ones will be done 30% faster with a lot less headache. And if you're lucky you might find a mentor that can teach you a lot about dealing with subs, what to look for in a build, where to find good deals on materials etc. And, if you're really lucky you might find a GC that is also an investor, expanding your network and providing a good person to bounce ideas off of. 

Hope this helps and feel free to PM me if you have any questions. 

Hey all. 

I am new to Charleston and wondering where I should set up my banking relationships. I am developer and GC and would like someone that does lend on spec building. 

Thanks 

JS 

Have to second the replacement advice. Especially if you're going back on the market. And if you are going back on the market, consider a metal roof. They go on fast and usually create more value then they cost to install. 

Looking forward to seeing everyone 

It will make certain materials dramatically more expensive. During the surge, for example, the price of plywood went up dramatically. 

This is something I find kind of interesting and thought I'd throw it out for discussion. 

We get a lot of discussion on BP around the relative value of getting an agents license but almost no discussion about the value of a technical license such as a GC, LEED AP etc etc. 

I find this kind of strange as the technical license is, in my view, far more valuable than a sales persons license. For example: A licensed GC knows what they are looking at and have the skills and expertise to properly scope a job before it starts. A licensed GC can acquire a bond for commercial building and apply individually for building permits, to name just a couple of advantages. 

As a flipper/builder/developer this gives me way more flexibility in how I run my jobs as well as additional legal and financial protections if things go wrong. Additionally, I am able to provide consulting and other fee for service products to other investors, agents and homeowners. 

I think this makes me a much stronger candidate as a partner and a much stronger candidate for commercial lending. Just think about your own deals and partnerships and ask yourself what is more valuable: a person that has a good idea of the market, can see a lot of properties and is legally able to sell the property (sales person)? or a person that has a good sense of the market, is able to see a lot of properties, has the skills and abilities to scope, bid and execute a project, is legally allowed to contract with subcontractors directly, is legally able to negotiate municipal permitting rules and is legally able to carry the GL insurance to cover against injury and loss at a level unavailable to unlicensed folks? And as an added bonus are able to take a 30-40% discount on building materials available to commercial contractors.  

Clearly, this is not helpful for the buy and hold folks, or the folks out buying up turnkey rentals so yes, the relative value of the license is dependent on one's chosen strategy. Still..for all the talk about getting a sales license, I am consistently surprised at how few discussions there are about the merit of getting a license where most of the value add is captured. 

@Matthew Rollo a margin account is a loan based on the value of your stock portfolio. They typically have a very low interest rates. 

A little more about my first deal: I was in marketing and was considering going back to school to get a MSRE. After talking with several people and doing some more research on founders of major development firms, I concluded it was not worth the time and monetary investment. So, rather than go to school I bought a house, quit my job, and signed for classes at the school of hard knocks. 

Because I was doing this to learn as much as I was doing this to make money I took a different approach. 

First: I acted as my own GC. I managed my subs, worked with engineers, found good suppliers etc. Yes, I ate a ton of **** by doing it this way. And yes, it cost me more time and more money to do it this way. But I now know 10x more about residential construction then most flippers at my deal level. It also means I am capable of taking on bigger projects, with longer time frames but much higher returns. So, it was an investment in the future of my business. 

Second: I focused on building a portfolio of stunning work, not maximizing the ROI of each project. My goal is to move into new construction and larger developments. In working with investors thus far the quality of your portfolio matters as much as the returns. Investors want to see quality work that can withstand pricing pressures in a down market. Also, if you really want to grow a RE Development business, you need to demonstrate excellence in housing before moving into more complex commercial projects. Finally, I think quality and higher margins are a safer business model then volume and low cost.

I thought I would spend about 80k on the rehab. By the time I was done I had spent 160k total (again including all commissions, permits, professional fees etc). Now because I am conservative I still made a solid profit and was able to pay myself 65K and return 10% to the capital that made the deal possible. So, in paying myself and returning to my capital base I made a touch under 100K in 18 months. Not great, not terrible. 

I am sure there will be folks on the board that will take serious issue with my approach. And I pretty much read @jscott's and did the opposite. I think his advice was sound, but I was not in a market that supported making 10k on a flip. So I needed to aim for gross margins closer to 200K and net margins of around 100K.

Hope that helps. 

JS  

I used cash on hand and a margin account to fund my first flip. Pretty much made every mistake possible and the total flip took 18 months from purchase to sale. 

That said I did a total renovation of a historic home. My final net profit (after fees, taxes etc) was 65k and a little north of 18% un-levered return on the money. 

Planning to continue going at this full time and will likely move my business soon. Future deals will be financed with Hard Money