All Forum Posts by: Justin Sullivan

@Mary M.

Do you know what an escrow account is Mary? There is nothing wrong with continuing the collect the fee and holding it in a separate account while the tenants decides what they want to do. If they reach out snd say they aren’t getting another pet then they get reimbursed. If they get another pet then he has his money. By removing the fee it’ll make it that much harder to put it back on and the smartest thing to do is have an escrow account so money is there dor either party that needs it. They might be devestated from the loss of their pet snd not sure if they want a new pet or not. I did not look up the laws nor am I an attorney. If he wanted legal advice he should have called an attorney. But he didn’t he went to BiggerPockets forum to have a conversation about it.

There are so many do's and don't's to flipping and it isn't so simple as just a brief explanation as a response to a forum post. If you are dead set with tackling this project solo then I suggest you factor in a decent amount of contingency cost and extra time for the project to run over. Not saying that you can't get it done quickly and with minimal headaches but if you expect them and they don't happen then its a win win.

Another option is to partner with an experienced flipper and split the proceeds with them. This way you can learn while you go. I have someone who has put up the down payment for my flip just to be able to shadow me and learn the process while also receiving a return on their initial investment.

You could always wholesale it to someone else. If you really want to BRRR then stick to BRRR and let someone else who knows what they are doing flip. One thing that drives me crazy is someone who buys a deals and messes it up demoing things that don't need to be demoed or doing shotty work then re listing it back on the market and trying to make a profit off of it. If you commit then commit and get it done no matter what.

Regardless whether you BRR or flip your going to need good contractors so that is a start. Make sure you find good quality contractors to fix the place up. Remember cheaper doesn't mean better. You may save money but the headaches will not be worth it. Make sure you vet all you bids by asking for references and walk jobs that they just finished and are currently working on. IF they don't have any or can't walk you then run away. They should have projects to be able to show you if they are good. One tip for finding contractors is the look at recent deals that were just flipped and go to the twp and figure out the contractor who pulled the permits. 

All in all there is several ways to tackle this but whichever way you decide just pick it and commit. Don't back out halfway through or change your mind. Follow through with whatever option above because all of them will work and make you money it just depends on how much involvement you want in this deal!!

Good luck

Stay motivated and make sure you do something to move yourself forward every single day. Remember your still young so enjoy yourself and life. Partner with some people who have experience and agree to do there grunt work and the stuff they don't want to do to be there shadow. That will teach you so much you'll get years ahead of anything you could do on your own. Surround yourself with people doing bigger and better things and try to reach there level. Once you do move yourself up to the next level and repeat the process!!

Coming from a Licensed and Insured GC this is a red flag. In NJ if you are performing any renovation tasks over $500 you need to be licensed and insured. My license number is on all my documents and on my trucks and I send my insurance proof with client as additional insured when asked. If the client doesn't ask me then I update that info once I get signed agreement. This guy also did everything via text?? No contract?? That is an issue as well. You need a good quality contract with scope off work and protection in case of problems. They may not happen often but you will kick yourself in the *** the first time someone runs off with your money and you can't get anything back because you don't have legal contract. Or you're going back and forth over who is in charge of removing the brick at the end of the job and you have to pay $1,000 in dumpster fees. Always protect yourself and do things the right way! Go on rocketlaywer.com for something generic and fill it out for all contractors if they don't supply them themselves since most don't!!

I wouldn't just end the pet fee right away. I would continuing accepting the $50/month and put it in an escrow account and hold it until there lease is up. If they decide to get a new pet then no harm no issues. If not then they have a credit towards there next year renew or an extra payment upon receiving their security deposit. 

@Stefan D.

Dude there is so many things wrong with what you did I don’t even know where to begin. But in the plus side you learned in one deal what some investors don’t learn after years. I own a GC company and I invest. I am now investing in two markets 2,000 miles from each other. I’m going to list all the things you could have done to prevent this deal going the way it did and I’m sure you already know most of them but anyone reading can learn prior to making these mistakes…

-Hope for the Best Buy prepare for the worst!! No bank is ever going to turn on utilities for you. Banks want to take the liability off of themselves. So if they try to turn on utilities and somethings broken now it’s disclosed and they had to either fix it or let the next buyer know that is broken. So lesson learned always have an experienced contractor or home inspector walk the properties and inspect the utilities for what’s visible. Huge red flag to me was the fact that the property was vacant for a couple years mandatory you’re going to need gas company to come out to pressure test your pipe along wirh Pittsburg winters I could have told you there was going to be issues.

-since I live far away I will always have a home inspector whom I trust and have a relationship with wall all my deals. This will give me a report hwing what is wrong with the property which I can hand to my contractors snd have them

Fix it. I also get architect drAwings so that way plans are on site so everyone knows what’s going on. These little things really help out especially with long distance Investing.

I hope that upu learned from this experience and are happy that you didn’t lose your ***. I’ve lost money on several renovation projects for other people which taught me the best way to move forward. Although I didn’t like it I think it was needed for me to get where I am. Now I can scale much quicker knowing exactly what is needed.

The page froze snd wouldn’t let me scroll to the bottom so this is suppose to be higher up. I hope you keep investing man cuz that deal, although money was left in it; actually isn’t bad. I’d you need money know just sell it take the loss. If not then just ride out the cash flow snd move on to another deal. Thanks for sharing your negative experience I love hearing this stuff because this is where I learned from my

Mistakes!!!

-Always get multiple contractor bids especially for long distance. You not only need multiple bids but you also need someone to check on them regularly. ThT one contractor does $35k obviously wasn’t equipped for the job. And as for speaking with contractors, it may benefit you to hire someone who is more expensive but well qualified because it’s less headache in the long run. Trust me I spent a long time using the cheapest guys to “save money” and just clean up there mess behind them but it’s not worth it. It’s much better to pay well and have the relief that’s it’s done correc

@JD Martin

My wife is an agent and she is killing it. She has 5 closing scheduled for July and has really turned up on her volume. The work if there for agents who work hard and understand the new pivot. You won’t make any money if you let your clients offer list price with contingencies. The agents making money in this market are the ones who let their clients know that they must come in with there best off the rip and little to no contingencies to get a deal done. If the client doesn’t listen then move on the someone else who will. My wife is doing so well that once we get settled in AZ I’m going to get licensed with her snd we will work together on the agent side. Construction is also booming(I am a GC). I have plenty of projects lined up and should hit my gross sales of last year by august and l’ve actually scaled that business back because I’m phasing out of it and moving into being and agent/investor instead of a contractor/investor. So basically it’s the 80/20 rules on steroids and now it’s 95/5. Basically with the way this economy is right now if you want it you can make as much money as you want or need. There is zero excuses or hold backs. This is showing who really wants it.

I just purchased a 4 unit property which clearly had massive foundation damage which cost an extra $40,000 to fix. We are literally rebuilding half of the foundation. We had a seller disclosure which clearly stated no known issues of structural repair need everything is great blah blah blah. On every seller disclosure I have ever read I have not once seen a seller disclose a negative issue. I wouldn't worry about the fact that they aren't giving one. If anything I would be happy because that means they don't want to lie on the paper. Just do proper due diligence like you should for any purchase and have a good GC walk the property with you to tell you any red flags that pop up. Yeah some inspectors are good but they don't tell you cost needed or how to repair issues. Pay a good GC to walk the property and tell you a firm repair budget.

Mine isn't a specific deal but actually a way of operating to complete the deal. Let me start off by saying that I've been researching real estate investing since I was a teenager and pursued construction to learn how to renovate the houses myself. Due to my experience I felt it be necessary that I do the work myself to keep down on construction cost. So our(My wife and I) project we successfully finished a beautiful flip but it took us 6 months longer than we expected. So I decided then on the next deal I would outsource everything and do zero physical work on my own so I could scale quicker and do more projects. I will jump out of the plane and install my parachute on the way down while my wife will watch hours of you tube on how to install her parachute before she even considers jumping. So at the time I started running a renovation company and started doing projects for other investors as well. Things were going pretty well. Tons of work doing a personal flip plus 4 other projects who could complain. Well next thing you know the pandemic hits and I run into a few issues is manpower and now instead of spending the time to find different crews I get this wonderful idea to just do it myself because I can! So I decided to work 7 days a week to play catch up to finish my  flip and complete out all my client projects. During this time I was not focused on finding new subs, or more deals, or more money, or more strategic partners. All I was doing was damage control. I was in the day to day of my business and wasn't focused at all on growth and development. I fell down the rabbit hole and couldn't pull myself out. Now that I finally pulled myself out deals are harder to come by due to the market and now I have to focus on re-building what I was already halfway there a year ago. Not that big of a deal since in the grand scheme of things I am net positive but I definitely lost money on some client projects. Lesson learned here, Stick to the goal. Don't do things just because you can. I did this and it caused me to regress and go backwards instead of continuing to build and move forward. I am in a much better place now but I did lose a great deal of time personally renovating other clients investments instead of focusing on my own and progressing forward in my goals.

Make a plan and stick to the plan. Don't be lured into a quick $10,000. Its just a bathroom. Nothing is quick and nothing is "just a..." in this industry.

@Ryan DiCanio

I’ve read several responses and yes all of them are right but correct me if I’m wrong I think you’re speaking more about that gut feeling that you’re missing some thing and the fear of moving forward. I know that my wife and I analyze hundreds upon hundreds of deals for a year while we renovated our personal home I’ll live in flip, and before we purchased our next investment property. I don’t really understand the analysis paralysis because I’ve never gone through it but I can’t say that I have felt fear and thought that something looked too good to be true. Honestly maybe you just got to it first or maybe no one in your area will invest in the property you have it could be a number of different reasons why it seems too good to be true but most of the time if you’ve analyzed plenty of deals and you were accounted for all maintenance cat bags Property Managment realtor fees closing fees etc. then I say move forward. I had that feeling mildly on my first couple properties wondering why no one else purchased it is it gonna sell etc. etc. but I trusted my process and I moved forward and push through the fear and ended up coming out on the positive side. I now can run a deal in under five minutes. I say if it looks too good to be true then chances are there’s plenty of room left in that deal that even if you make mistakes you’re still going to come out on top so just move forward and jump into it you’re gonna make mistakes you might lose money you might not but the only way you learn is through experience. Jump in and start investing man that way you can build her confidence in yourself and start changing your life for the better!