All Forum Posts by: Matt Groth

What materials? The 2000 sq ft duplex I am building right now, has aluminum soffit and fascia, and lp smartside. Materials alone are close to 12k.

Square foot prices are impossible to give you. Is your flooring $1 per square foot, or 8? What you pick as finishes have a huge impact. Looks interesting, though. Quite a bit is done. What I have seen in my area is partially finished places are tough sells. Usually, the seller gives a 20k discount, if there is 20k in work left. That isn't a discount. Your best bet is to walk it with a contractor, pay him for his time, and get a bid. Add 20 percent overage, subtract that from the arv, then subtract another 10 or 20 percent for your headache. I would also check out everything with the city. It seems odd to stop a project that is that far along. It does happen, but it wouldn't hurt to ask some questions. Good luck!

One more thing, if you are "reaching out for weeks", you have already lost more potential rent than this guy is charging. Then a guy calls back, takes the time to walk around the neighborhood, throw him a small job, and test him out. It sounds as though you have never even been to the house, so you really need someone you can trust there. 

Think about it from his side. I don't want to work half days. Say I start at your house at 7 am. I carry in the tools I need, remove the old stuff , fix the problems, install the new, dispose of the trash, clean up, create an invoice, etc. After that, I hope to fit in another half day project, to make the day worth while. For a busy gc, small projects aren't worth doing, unless you charge a premium.  I personally think it is fair, maybe even a deal. Yes, I can install a vanity in less than 4 hours, it just isn't worth my time to bill you for less. 

We did this, and it turned out very well, but it was unique circumstances. I wouldn't do it for just any buy and hold. The numbers need to be outstanding, not just good. Since you plan on paying it back, the better option would be to take on a partner. If you think you can pay it back in 2 years, offer that to a fellow investor. Buy it as a partnership, and you can buy them out over time. If you factor in the tax hit on the 401k , you can offer someone really great returns. It didn't cost you any more, it made a another investor very happy, and you still have your 401k intact.

 Doing similar work here, building a duplex right now to hold.No margin on c neighborhoods, and unless your market is very different, 100 per foot is a dream.  If you sell at 125, but the market dips 5 percent, or construction is plus 5 percent, it is a loser.  I would so build and rent, or do a or b neighborhoods. Cheap lots are cheap for a reason.

You could do better on rate, but if it was fha, did you only put 3.5 percent down? Any other bank would require 20 percent down. Unless the house appreciated a lot, or you got an amazing deal, you would need to add cash to make it happen. This is the problem I see with fha.  It is fine, in the right situation, but your rate isn't that good, you are probably paying pmi,  and if you have to sell, or want to refinance, you will need to add cash. 

In MN, the talk is to rezone properties from residential to commercial, which will triple the property tax, in our case, a 8000 per year swing.  It just showed up on our local paper a couple of weeks ago. I haven't heard much else about it, other than that 1 article. It will be a game changer if it happens. Would be the 2021 tax year. That doesn't count the state license,  or the sales tax, or the lodging tax. 

 I'm not saying don't do it, just be aware of the risks associated. My wife and I have almost always gone all in. We have high risk tolerance,  and work ethic to dig out of whatever if it doesnt go perfectly. The thing with a primary is you can always let the ravages of time beat the loan into submission, and dig out of a lot of errors,  but that isn't really investing! I also think you will learn more jumping in. You may not be as hard core on the decisions, if you already have a back up plan. Never a bad deal, be patient. This isn't 2010 anymore! Our specialty has been creative deal making, and every one has been unique.