All Forum Posts by: Liam Goble

I'm a builder. Based on your numbers, you're going to blow through the $500kcap, unless you use the cheapest materials. If the $500k cap is firm, and you want to build the 3ksf house, then his allowances are probably ball park where you need to be. If you want a high end custom house, you have to pay for it.

A few points of reference:

1) Affordable housing as built by Habitat for Humanity, with donated labor and many donated materials generally costs about $75/sf to build (excluding land).

2) Our medium range non-custom houses cost between $125-$150/sf to build. That is off-the-shelf materials from your big box stores using the contractor discount. That's not Viking ranges, no induction cook tops, no custom cabinetry, certainly no sound system.

3) Our high end custom houses that DO install the high end equipment, including sound systems, Hardi board, custom cabinetry generally cost $200+/sf.

If you force your GC to meet the $500k price and build a 3ksf house, he'll find ways to cut costs. And you don't want him to do that because you'll end up paying for it later.

I do plumbing work and agree with @Rolanda Eldridge . Even the big guys in my market are now switching to PEX (but still charging copper prices!). I had a pipe burst at one of my units and the fees to fix were certainly in line with copper, not PEX pricing.

Get a few estimates. I'm sure this varies, but I've found that smaller outfits will give you better prices, though service is sometimes slower (which may not benefit your situation).

I think the process is state specific, because in my state (PA), I believe that we have to close by COB the same day we purchase the property.

I would think it may vary by county. Here in PA for instance, the county I live in has great records, but you have to pay to search them. The records are as up to date as the available information. The count immediately adjacent does not have electronic records, so you have to visit the recorder of deeds. The county in which my parents live (and I'm considering investing), has free online records with TONS of good information.

Probably with any county, the information available either through public records (county) or private (3rd parties) is only as good as the available information (eg. if the owner does not inform of a change of address, neither the county or 3rd party will be accurate).

Jacob, I'll keep you updated on the project. Yes, I advise always having a signed agreement with a very clear set of "This is what you'll do and this is what I'll pay". The irony of the whole situation is that I'm a contractor and always insist on having contracts in place with my clients, because I want protection for myself. Figured it would work out with the original contractor.

@Edwin E. I had walked through the project with the contractor before we started work. I outlined exactly what was to happen including using painters tape to denote what was to be gutted. To help the whole project along, I figured it would be best to leave each room's scope of work taped to the walls for the contractor to execute on. I did not have a signed agreement w/ the contractor (lesson learned), however the lack of contract cut both ways, see below.

The bathroom's SOW was to only remove the lower 4' of drywall because of damage to the drywall. The first infraction from the contractor was that he removed all 8' of drywall. I informed the contractor that he did too much and needed to follow my direction, rather than direct the project himself. He gave a bunch of excuses, but relented and said he would follow directions.

After I posted this issue is when J. Scott advised I fire the guy.

I gave the contractor the next milestones to accomplish (gutting the basement), this was a Sunday night directive for execution on Monday. Monday, received a phone call from the contractor asking about removing the bathroom's plumbing. I said no, focus on the basement.

Phone call on Tuesday morning from the contractor. Question about demolition in the basement (which should have happened on Monday). Contractor mentioned that the bathroom is now a blank slate. I said "You're kidding". Reply: "No, I figured it'd be easier for you later. I pulled all the plumbing."

I informed the contractor I wanted all of his time/bills and to not return to the site until I had a new plan forward. I made my decision to fire the guy on Wed/Thurs and received the invoices on Friday. The guy included mileage to and from his house even though he never worked more than 7hrs/day (I could maybe see discussing mileage if he was working 4x10s). He had the audacity to include time for the 'full demolition of the bathroom' and to bill me for materials to make the repairs for what he demolished.

I said the contract cut both ways. I didn't pay his mileage (if he didn't drive, he didn't have a job), I didn't pay for his time to demolish the bathroom, didn't pay for the repair materials and didn't pay his estimated costs to bring the space back to 'pre demolition' state. I explained that those costs were his to bear because he decided, against my direct instructions, to conduct this work.

I'm glad I was quick to heed J. Scott's advice the 2nd time although I've lost one week's time, money for new drywall, studs, waste plumbing and a subfloor.

After I fired him, I learned that the basement, which had three rooms when he started, and was to have three rooms when he finished, finished up with only two rooms as he thought it would be better to only have two rooms. Hind sight is 20/20, I shouldn't have paid him until a full review of the site (I was so shocked at the bathroom, I stopped there). I should have also gotten a quote from another contractor and deducted that amount from the final invoice because that is what I will have to pay.

Overall, my new contractor is going to execute more work than the first contractor at a price approximately 20% less than the first contractor. (It's written in a signed contract)

@Edwin E. @Jacob Coates Heeding advice is or can be very difficult...I had an experience with a contractor on a house flip. My contractor did a little more demolition than I had asked. J. Scott (here on BP), who is an experienced flipper, recommended I fire the contractor immediately because the contractor may have simply been making more work for himself. Fast forward one week, and the contractor had entirely removed the bathroom in the house (as in: all walls gone, all plumbing gone, everything gone).

Needless to say, if I had heeded the advice, I wouldn't have to completely install a new bathroom.

Thanks to both of you and good luck with your REI.

Jacob, If it helps any, my wife and I planned to do the same w/ casinos when we were first married at 22. We abandoned the idea and focused on REI, with much, much better success.

Good luck with your REI. I've talked with a few active duty and veterans here on BP.

I have all of my properties under an LLC, though I am considering some future purchases under my personal name for the financing. Anytime you purchase through an LLC, you will be subject to commercial lending, not standard 30-year notes.

It's good and bad. When these units are paid off, my cash flow will nearly double, the bad side is that they are all financed under 5/5/5 arms, meaning that in 5 years, I'm not sure what my rate will be, but I'm pretty sure it will be higher than it is today.

Lastly, commercial lending is more expensive than personal lending.

I use appliances as a negotiating chip w/ the tenants. Depending on my market (I currently operate in two local markets, both very different markets) and in one market, I try to get top dollar for my rentals (avg. market rent: ~$650 for a SFH, mine rents for $725; I do this because at that rate, I get a very specific clientele). If requested, I will include 'extra' appliances (W/D, DW) to my residents.

My other market, where I shoot for avg. market rent +5%, I generally include all appliances anyway.