All Forum Posts by: Michael Hayworth

You don't need a degree.

You do need good, broad knowledge of the trades. 

If you're in a state that licenses GCs, you also need good study skills and test-taking ability. (Although I have no idea what y'all test 'em on up there. I get licensed GCs coming down from NY & NJ looking for work who show me a license and tell me how hard it is to get, but some of them couldn't find their *** with both hands.)

You need the ability to estimate and price a job accurately.

You need the ability to hire good employees, find good subcontractors and maintain those relationships.

You need the ability to negotiate pricing and terms with suppliers effectively - makes a big different with thin margins.

You need the ability to work with clients and create win-win scenarios. 

You need the ability to keep your head and find good solutions when everything goes to ****, because that's going to happen eventually. (If it happens daily, though, the problem is you.)

And very importantly, you need to know how to run a business - a real business - profitably or you're basically taking on a ton of extra responsibility and still really just working for wages.

Other than that, it's a piece of cake.

Do you have a decent investor community where you are? Is there a group you can get involved with?

This business is hard, and it's getting harder to find good investments. There are lots of signs of a coming correction (BiggerPockets having 4 bazillion members being one of them). 

My oldest son is 22. He makes more like $45K/year, so he has more free cash than you do, but not that far off. He saved $10K over a couple of years, and we've partnered on our first deal. He's investing and learning, and I'm doing most of the work.

If there's an experienced investor that you can learn from, and trust, maybe look for a situation where you do legwork and can invest in a portion of one of his deals?

Steve's analogy is excellent. And Dave Ramsey is excellent for people who can't really manage money. It's kinda like me & dieting - I can't eat donuts in moderation. So I should follow the 100% no-donut plan. But that doesn't mean everyone has to do that.

So for those of us who CAN manage our money...

Let's say I have $100K to invest.

1) I buy a $100,000 property. Rent it for $1400/mo. Pay taxes, insurance, mgmt fee, repair reserve of around $600/mo. I clear $800/mo. Five years later, I've cleared $800/mo x 12 months x 5 years = $48,000 in cash flow. The market has also appreciated 20%, so the house is now worth $120K. My total return on my $100K is $68K over 5 years, or about 13% per year. Beats the hell out of a savings account. Beats the stock market most of the time, too.

OR

2) I buy 5 $100,000 properties, each with 20% down. I use a portfolio lender that'll only do 15-year notes, so my payment on each house would be about $640/mo each. The taxes, insurance, repair reserve etc. remain the same at $600/mo, so I'm really only clearing $160/mo on each property. 

But $160 x 5 properties x 12 months x 5 years still = $48,000 in cash flow. Cool.

But also during that time, I've received that 20% appreciation x 5 properties. So $100K in equity from appreciation. Even cooler.

AND, during that time, the rent has been paying my mortage. The balance on each house is now $60,318, so another $19,682 in equity x 5 properties = $98,410.

In this case, my total return on my $100K is $246,410 over five years, and that really kicks ***.

Obviously, these are pro forma numbers and real world may vary. But I'd much rather have leverage working for me than against me.

I'm a GC, not a structural engineer, but I can't think of any application in which a 30' span would be covered by a tiny 4x6 wood beam with no middle supports. The implication of that is, if there are middle supports, you can typically use shorter beams - instead of one 30', for example, use 3 10', or 4 7.5'. (Even 10' is a fairly big span for a 4x6 glulam or LVL if it's bearing significant load.)

It may be that the company doing the replacement is quoting steel, or that there are factors I'm not seeing here. (The print on your photo is hard to read even when I blow it up.) Obviously, getting more quotes is the way to go. 

To build supports, cut out the beam, and replace a beam like that if I can use shorter spans, rather than one 30' long one, I'd be under $5K in most cases. But I'm in Texas and you're in the land of big government and corrupt unions, so I have no idea what prices will be like in your area.

I'm buying a house in Huntsville for my daughter to live in while in college. House needs foundation repair. Seller has a quote that is much higher than what I'd pay here in Fort Worth. They're paying $360/pier for drilled piers, whereas I pay about $220 up here.

I'll send my own crews down for all the other work the house needs, but I can't get my foundation repair sub to travel. Can anyone point me to an investor-friendly foundation repair company down there that does a good job at somewhere in the price neighborhood I'm used to?

Just for your background understanding....In a multiple offer situation, I will almost always decline FHA and VA offers. FHA buyers tend to have little cash, and a far higher likelihood of the deal falling through, which means I'm stuck putting the house back on the market and accumulating more carrying costs. VA loans....well, I love veterans, hire 'em whenever I can, and my son is in the Army. It's a crying shame that the VA is so frickin' inept. But I've never had one close without delays.

But you're saying you're not in a multi-offer, and that the seller is actually dropping the price. Typically, that's only because of condition. Cash buyers, or buyers with investor financing can buy houses in need of serious rehab. FHA, VA and most conventional loans require the home to be in sound condition - can need cosmetic updates, but typically can't have foundation problems, rotted siding, things like that. Sounds like that must be the case with your seller.

Or, he's just quirky. Sometimes that happens, too.

@Christine Swaidan....I actually see now that I misunderstood your original post. When you spoke of decks, you were talking about actual decks. "Roof decking" is the plywood underneath your shingles, which is often replaced with a roof. As I read your post, probably late at night, I thought you were wanting a breakdown between the shingles and the decking. I've been asked for similar things by clients who want to do exactly what @Matthew Olszak mentions above in trying to piecemeal the bid.

But, yes, if you have a roof project, two house deck projects, and some drywall work, I would expect a quote would break down those major sections, and separate the two house deck projects in case you wanted to do one and hold off on the other. My apologies for reading too fast and misunderstanding your post.

Why do you care? You have a scope of work, and a price. What value are you going to get out of knowing how much is decking and how much is roofing? Do you ask the car dealer how much is for the engine, how much are the seats, and so on?

I'm a very successful contractor with exceptional client satisfaction ratings. I break my quotes down into major sections, but I don't itemize them line by line. If you're looking to ask me, for example, how much it would save you if you did demo and disposal yourself, I'm happy to calculate that. But good contractor's quotes usually don't look like an insurance settlement with 21 linear ft of baseboard at $x/lf, and painting that baseboard at $y/lf, and a quote ends up with 87 lines of itemized crap, but you're still not really sure whether all those pieces add up to the whole project that you're looking for.

If you get a quote like that, it's almost always a GC who subs out every single thing he quotes, rather than having any of his own employees and sourcing materials himself. They're just taking their sub's line items, adding their percentage, and giving you a list. Those guys can be OK, but they have less quality control than someone who has his own crews. 

Try not to overthink it. Find a contractor you can work well with, who has good reviews, and who can explain exactly what he's going to do for you. Make sure all the bids include the same thing and you're comparing apples to apples, but don't get too bent out of shape if one contractor has a quote that looks like an insurance settlement and another gives you a quote that looks more like mine.

Also, most contractors don't charge for quotes. That may be a sign that he feels like you're going to be a timewaster. It doesn't sound like that's your intent, but all we contractors have to sell is our time & skill, so we're cautious about spending too much time on someone who doesn't seem to be a likely client.

(None of this is to say there aren't contractors out there who are incompetent, or just mediocre, or outright cheats. Unfortunately, we get asked to fix their work on a regular basis. That's why you check references and ask to see current jobs if at all possible.)

Good luck on all this.

I am somewhat hopeful that Trump will achieve his goals of lessening regulations. That will make life easier on small businesses like mine.

But I learned long ago that politicians will always disappoint you. There's no point putting too much hope in them, or in worrying too much about them, either. (Hell, we survived Obama!)

Whatever he does, whatever the conditions, whatever set of regulations I'm working under, I'll keep looking for ways to be as successful as possible.

I do, in certain circumstances.

I buy a lot of older homes in areas starting to gentrify. I know I'm going to sell them in 3-10 years. Most of them have hardwood floors from the 20s or so that are in disrepair. I don't want to refinish those and then have a tenant tear it up. I can get low-end carpet installed for $1/sf, so it's a fairly cheap, temporary floor covering.

I wouldn't use it in a long-term buy & hold rental, or in a house that didn't have original hardwoods - for those, I'd use vinyl plank or even wood-look sheet vinyl (there's one I've installed that people always think is actual wood till they look very closely. But for the application I use carpet for, it works.