All Forum Posts by: Michael Hayworth

First, if you're not a WSJ subscriber, you can google some words in the intro,  such as

"When Luke Dalien and his family needed to quickly sell their Phoenix-area house, they didn’t turn to a real-estate broker."

When you click on an article in a Google search, you'll get the whole thing.

As to OpenDoor itself....it's an obvious next step. The way of the world is consolidation and globalization. But I'm not too concerned yet, because they have a lot of challenges to overcome:

1. Competition. There is significant competition for houses in good markets. So most people will end up getting bids from more than one "We Buy Houses" company. Either they end up overpaying, or they get to buy a limited selection. It's convenient to be able to get a bid for your car at CarMax, but most people  use that as a floor to negotiate with others.

2. Construction crews and quality control. We have a tremendous shortage of skilled construction workers in the U.S. Largely, that's because we tell anyone with a brain they need to go to college - even if they end up $100K in debt for a liberal arts degree (philosophy/polisci for me....employers were beating down my door, man!) and working at Starbucks. The building trades gets the American kids who were considered too dumb to go to college, or Mexicans - and Trump wants to deport most of them. There just aren't enough good people to go around. And all the good renovation crews have plenty of work. So OpenDoor will eventually struggle to hire. Either they pay more than they'd like to get a good GC like my company, or they take whoever will work for the rates they pay, like Five Brothers did in the PPC field. If they pay more, margins suffer. If they hire cheap crews, quality suffers and OpenDoor houses get a bad reputation.

3. Permits. Let's be honest...in most of the country, investors don't pull permits for most of the work they do. But cities want their revenue. I had an inspector pull up on a jobsite last week and require me to pull a permit for replacing one sheet of drywall. Gotta pay the man. But that adds costs and extends timelines. it means every time you raise one of those 5'5" high showerheads or move an electrical outlet, you gotta use a licensed trade instead of having a capable handyman do it. THAT really increases costs. OpenDoor is gonna be a big, juicy target. They'll have to pull permits on everything in most jurisdictions. There again, more costs.

Overall, I think they can succeed, but it's not nearly as much of a slam dunk as they probably told the VCs.

For what purpose? Do you have a project ready to go?

My company only works in Fort Worth, so I'm not your guy, but some general input:

Any good GC, particularly in DFW, has a backlog of work. Time is at a premium. And retail clients (homeowners) are typically more profitable than investors. However, good investors generate repeat business. If you want good results from GCs:

• Come to them with a project under contract (not one you're "thinking about putting an offer on").
• The above means you have to have a general idea how to assess renovation costs yourself. There are good resources on this site for that, and mentors are very helpful.
• Have a clear idea of your budget.
• Be willing to listen to ideas and take advice, particularly if the GC is also an investor with experience doing his own properties.

In general, we're not concerned with "being a part of your team." That sounds like rah-rah seminar-speak. If you have real projects, we do good work for you, and we find that we work well together, we'll become a team.

 But that's the thing....it doesn't. :)

I'll email you a screen shot since your .sig line provides an email and since you're with BP.

@Chris Soignier, I DID upgrade to Pro. I think that's when it disappeared.

@Michael S., I should have mentioned that I played around with everything under Profile trying to see where that was set. When I go to that link, I do not see an Occupation field. I do see a Licenses field which has a Contractor license option, but there's no licensing for GCs in my state.

My profile used to appear as

Michael Hayworth, Contractor from Fort Worth

After I answered some questions on my profile, it changed and just says Michael Hayworth, from Fort Worth, TX

How do I get it back the other way? Particularly when answering questions about how to work with contractors, it seemed useful to have the Contractor label by my name.

 Chance, yeah, when it rains, it pours.When everything runs too smoothly for too long....start to get nervous! :)

 I don't do lease options.

 Apparently, this is a traditional Mexican celebration of the New Year or some such. Probably were multiple people firing guns into the air. I'm pretty sure if I called the Muncie, IN, police from Fort Worth, TX, it wouldn't be at the top of their priority list. And if they went out, it would be a whole lot of "No habla" and "didn't see nuttin'".

Nobody was hurt except the house. I'll have my local handyman take care of it. Not even filing it on my insurance.

Just in the last month, I've had:

• A slab leak at one property.
• A rat chew through a PEX line at another property, flooding the house.
• A crumbled pipe shutting down drainage at another property, requiring a partial repipe.
• A bad foundation shift at another property that's going to require shoring up.
• And finally, my tenant at my only out of town rental called to let me know her neighbors were shooting off guns for New Year's, and she has bullet holes in her wall and roof. (And this is in a decent neighborhood!)

The month from hell, right? Well, sorta. I am kinda twitching a little bit whenever the phone rings, wondering what's next. ;) But I think about how much worse this would be if I wasn't setting aside a reasonably repair reserve every month.

I generally keep about 15 rentals. I buy them in bad shape and renovate them to pretty good standards, but a lot of them are older, and we know that problems will eventually show up with infrastructure. It's crazy to have five houses calling with problems all in the month, but that's kinda the way life works, isn't it? Things run along smoothly for awhile, then suddenly, everything can go to s***.

We put aside 6% of rent every month, religiously, into a repair reserve account. So when all this stuff hit all at once, and it's going to be somewhere in the $18K neighborhood, we had almost enough in there to cover all of it. Very little out of pocket money to spend. (Now we just hope we get time to rebuild those funds before the next thing crashes!)

If you're a newer investor, please don't neglect your repair reserve and your property tax reserve. Make sure that money is being set aside for when you need it. Because you're going to someday.

David, I do 3 year ARM 15 year note. I start at 5%. Last one that adjusted ended up at 6.25.

I didn't start out calling the lender asking for refi's. I started with 7% arm on regular investment property purchases, did several purchases with them and built a relationship, then slowly expanded my line of credit and reduced my rate. I've been at this 5 years now, with maybe 30 properties with my primary lender, and a handful with my secondary one. I try to keep 12-15 properties in my portfolio at any given time, sell another 10-12 a year.