All Forum Posts by: Mark Parzych

I don't think a 1031 would be feasible given the circumstances unless I rented it out for a year then sold it. 

I didnt have any discussions with my CPA regarding this house. The only evidence of intent is having a for rent sign in the front and my statements on here. Even if it is feasible, timing doesn't work well because I'll be gone all of January for a business trip.

I want cash now to invest or to rent it out as a long term rental. Putting it on a wrap would not put much if any extra money in my pocket. I would probably get about the same cash flow as well verses renting so there's really no point. Lease options are a little tricky in Texas and not something I want to go through with. I think any type of owner financing or lease option is the worst path for my short term and long term goals so it's either sell to increase my capital to buy more rentals or keep as a rental but limit my ability to purchase more rentals slightly.

I'm now going to try to get labor only bids. I met another contractor who did 20% premium on materials, subcontractor work (electric/plumbing/etc) and that 20% was his profit. I don't like that method since he has no incentive to cut costs.

Labor only only works if the scope is very well defined because every little deviation might be extra. 

My contractor so far has been very good. There's been many corrections made from the previous work and he has very good communication. He has a very competent lead worker in his crew who knows what he's doing and keeps everyone on track. 

I think everything might still be wrapped up before Jan 1st. We are installing cabinets tomorrow, granite day after, and flooring right after that. My main concern has to do with my plumber showing up to finish his work. The electrician is on schedule to finish the wiring and fixture installation tomorrow. 

I met a couple on Sunday who walked by asking if I was looking to sell. I said I'm planning to rent it but they got a price from me I'd be okay selling it for. They came again Monday to check on the progress and asked my contractor a bunch of questions. It seems like they are becoming invested in the house. If I can get that price without a realtor then I may sell. I'm probably overdoing the quality as a rental. I'd like to renovate multiple properties at once and could utilize this capital to expand my business. In addition interests rates have risen substantially and it may be worth selling before it decreases property values. Thoughts? Rent out or Sell?

@Andy Krzanowsky

If you have a bunch of equity why don't you just refinance to pull money out and keep it... if the numbers make sense that is. Interest rates have gone up but there's nothing we can do about that.

Just think of it as your first BRRRR

So a lot has happened, yet nothing has happened since my last update.

On Saturday I stopped by the house and I saw they were painting the walls with the wrong color. On Friday my contractor asked what color I wanted, I told him, yet he used paint he already had (by the October Purchase Date) to save money. I told the painters to stop, actually went and bought paint myself, and came back for them to continue. I sent some texts expressing my frustration to the GC  since he wasn't answering his phone.

On Sunday I saw the house was emptied with all materials. On Monday my GC confirmed my expectation which was that he was walking from the job. I was being too much of a micromanager according to him; yet he had not followed his own commitments according to details in the contract. If he asks what paint I want after discussing it with him, that's what I expect. 

I paid him a draw two days before this happened so I'm out a chunk of money.

Anyway I've spend the past couple days trying to find another contractor to finish up the work. I've written out a detailed scope and am asking for a labor only bid. I signed another contract tonight. They say they should be done in 10 days.

It's Wednesday today. 

I decided to use the cabinet source I talked about earlier and they will delivery on Sunday.

I got the granite guy's contact info and he'll continue the job and install on Wednesday next week.

I talked with the same plumber and he'll continue the job outside and we came to an agreement for the rest of the inside plumbing. 

I talked with the same electrician and he'll finish up his portion.

I got the AC guys info and will talk to them soon about finishing their portion. 

So everything is going to come back together soon. I'll be out some money but I'm not beating up myself over it. Who knows it may work out best anyway. The contractor I met today seems to work with a lot of investors and apparently has a really good realtor contact. I'll explore that and see what comes of it. 

I'm attaching my scope list for those interested. We made a couple changes when talking with the contractor as you can see. 

@Kevan Shelton

Thanks my concern with that is ceilings are low it'll highlight how low the beam is.

I'll just let the room play out and change it later if it looks odd.

Thanks @Armando Cruz, @Holly Scott, and @Gordon S. for the support.

Today my contractor went to that store and ended up purchasing cabinets. They are RTA so he'll have to assemble them. Said he got them cheaper and based from the picture they appear to work well enough. 

Today I went to Floor and Decor to pick flooring and tile. I've come up with the design scheme and my paint color. It should come out nice... I hope. The laminate floors are $1.50 per sq/ft, kitchen/bath floor tile at $1.60 per sq/ft, and backsplash $8.00 per sq/ft.  So not builders grade cheap but not super expensive either. 

Here are pictures at the end of week 7.

Couple things to point out. The bathroom has that shelf in the bathroom due to the wall size being 6ft instead of a standard 5ft. It doesn't give enough space to make a wall with a gap for shelving behind the tub but turning it into only a wall would be odd also. To get bathtubs 6ft long it would cost way too much. Utility is important so I figured this should work well in the end. 

The plumber started digging to install the new gas line but hasn't installed any pipe yet.  Just wanted to send out a picture for those who don't know what to expect. Grass that was dug up is being saved so hopefully it can grow right back once complete. I just hope he does it before the uprooted grass dies completely.

That low beam in the living room is something I'm thinking about. It's drywalled and textured to be painted over the normal wall paint color but I'm wondering if something else should be done with it? Paint it the trim color? the ceiling color? Skim coat a smooth texture and paint it trim color maybe? Not sure if it should be highlighted or blended in due to it being so low. Any advice?

They should start painting tomorrow and be done by Tuesday. I'm hoping that everything will start coming together fast but not very optimistic. At least I see some type of progress everyday; albeit slow.

It's been two weeks since my last update. What was suppose to last 5 days ended up lasting 14 days. The tape, float, and texture has taken almost two weeks and delayed our timeline significantly. They didn't even texture orange peel as described in the contract. Instead it's the cheaper looking knockdown and crows feet on walls. I'm very irritated that it came out that way but by the time I saw it almost the whole house was done. It's not worth redoing everything again. Here's a picture before texture. I'll take another round tomorrow that I'll post.

Another point of contention have been the kitchen cabinets. I asked two weeks ago to get started on that and he had been putting it off. This past weekend I finally asked what his budget was for cabinets so I can go to the stores myself to look. For a 10x15ft kitchen he said $1200. That's not possible no matter how cheap it's made. I was seeing them on the cheaper side at $4,000 and up. RTA's can be had for $3500 but then install cost increases. Yesterday and today he went to a couple stores and saw prices for himself. We agreed to mid-tier cabinets when signing the contract yet even the cheapest runs Home Depot crap runs $2500. Realistically it should be around $5000 for a kitchen that size but I found a craigslist ad that has good quality for $3000. My contractor is going to go to one final store tomorrow recommended by the granite guy, but I'm expecting prices to be at least in the $4000 range. I'm banking on my contact but he's not been the most responsive so I'm a little worried. 

So at this point we need cabinets selected. Once cabinets are selected I'll pick out backsplash, kitchen flooring, and bath flooring. I looked at paint colors today and we'll get started on that next. Once painted it's ready for cabinets/granite, prehung doors, and trim work. 

The goal is everything painted and ready for cabinets installation to start next Wednesday. Again we'll see how that goes. I'm now telling prospects who call my for rent sign a later move in date. I know that it'll be harder to get things moving quickly due to the holidays. 

If anyone in Houston knows where to find cheap yet good quality cabinets please let me know!!!

Any loans that meet Fannie/Freddie guidelines have a chance to be sold in which case you don't have a choice who your bank ends up being. For conventional type loans in your personal name just go with the cheapest rates and best customer service.

Go talk to some mortgage brokers. They may be slightly higher interest rate but should be able to find the right bank/loan for you.

I agree with others saying to increase the price so the buyer covers the realtor's commission. I've wholesaled to a buyer who wanted to use an agent. We simply added the agents commission paid for by the buyer on top of our agreed upon sales price.