All Forum Posts by: Michael Woodward

@Dennis Suratna , Please understand that I don't mean any disrespect by saying this but I would recommend that you resist the urge to do anything that "makes sense" as a new investor. The first thing you need is education. After that, things that make sense will look very different than they did when you first started out....and you'll be able to back it up with experience.

If I were you, I would start by going to the "Resources" area here in BP and read everything you can find that's relevant to what you're doing. I always recommend the book "The Millionaire Real Estate Investor", by Gary Keller to anyone that's new to investing. You might have trouble understanding some of the terminology but you can search BP for virtually any subject related to investing. I always Google any word I haven't heard before. A lot of the time that brings me back to BP.

You will have a much better chance of success if you take the time to get your education first. I've heard it called "sharpening your ax".

@John Homich , Let me say first that I think "buying" with cash is always the best way to get the best deal on a property and it's also a very strong position during the bidding phase. It will give you an advantage over your competition if there are multiple offers (sellers love cash deals). The question of how much cash to keep in the property is a little harder to answer.

I've read the book "The Millionaire Real Estate Investor", by Gary Keller three times now. Your question reminded me of a segment in the book where Gary said that most top investors will limit their cash/equity in their properties. I think it ranged from a minimum of 30% equity and a maximum of 70% but I don't remember for sure. I could be way off those numbers so you'll need to verify that. Regardless, the premise is that you reach a point of diminishing returns from the standpoint of leverage. In other words, if you keep too much cash in your investment, you're losing some of the leveraging power.....your money could do more if you pull some equity out and buy more leveraged properties.

I'm not an expert in this area but I thought you might get some value from the perspective of the book. Good luck!

@David Krulac , Thanks for your insight. It's clear to me now (after reading all the replies) that success or failure during that period hinged on the robustness of the fundamental numbers. I don't think I'll ever use a rental strategy other than long-term hold. That seems to be the only way to hedge against a major market downturn. As long as a property stays rented and the mortgage is fixed (no ARM's), it's very predictable. Good luck!

@Jacob A. , My experience has been that a bad neighbor can make a house almost unsellable (or at least severely reduce your chance to make money on it). Unless the rest of the neighbors have ugly sheds and appliances in their yards.....AND you've already priced your property to match them, you will probably be better off spending the extra money to hide the problem. You will likely have to drop the price of your house by at least the price of the fence to get it sold anyway. It might sell just fine without the fence but my philosophy is "better safe than sorry".

The lesson I've learned from houses like that is that it's best to avoid them.

I'll second the advice from Will and J. The permitting office usually takes these things very seriously and will be the ones to exert pressure on the builder the quickest. They probably won't approve the builder's Certificate of Occupancy if they agree that he's at fault.

Otherwise, the next step is per Will's advice. You'll need legal counsel. Hopefully it won't come to that. Good luck!

@Pedro Plencher , Hands down...the very best real estate book to me is "The Millionaire Real Estate Investor", by Gary Keller. It's a complete road map with regard to real estate investing....top to bottom. I was already in the process of implementing every step he talks about in this book but it's given me a precise path to follow. The content in Biggerpockets confirms every part of this book. Also, there's tons of supporting worksheets that come with it.

Highly recommended! Good luck.

@Cooper B. , I had a difficult time finding an insurance company that would even consider covering my flip houses because they're vacant. I finally found a company that would do it so I've used them on all my houses. I'm paying about $600 for a six month policy (50% earned) from Tapco. That's the only option I've found. It's a fact of doing business for me so I just put it in the budget.

By the way, my policies with Tapco don't have a vacancy limit. It sounds like you might have been quoted some kind of short term remodeling policy.

@Ryan Riedy , I've been using an excel spreadsheet for a while to track my projects but kept running into problems with it's lack of scheduling/tracking capabilities. I'm in the early stages now of switching to MS Project. So far I'm pretty happy with it. My excel spreadsheet had a lot of hyperlinks to other Microsoft files (including email) so I wanted something that could handle that. I've come to realize that Project is built on a similar framework as excel so things transfer back and forth very easily. This is particularly helpful for me because my most used file (project evaluator) is also an excel spreadsheet. Most of my computer work is done with Microsoft products so this was a natural choice for me. I've been researching this for a while and so far haven't found anything that works better (for me). Good luck!

@Matt Liu , I would guess that part (or maybe all) of the reason your PM doesn't want you to hire your own help is because that can introduce all kinds of problems for them (if they're going to have to manage them). There are some good handymen out there (I have one) but there are a LOT of bad ones! If your PM is going to have to manage your handyman, he's going to want to know that they aren't going to cause problems. It's probably a lot simpler for him to stick with his regulars. All that aside, if their price is too high, you might have to get a new PM. Just a thought.....

As far as the insurance goes...... I had a really interesting conversation with an insurance provider a few years ago (when I was a licensed contractor) that told me that I was actually at a HIGHER risk than the uninsured guys because lawyers follow the money. I still opted to carry the insurance but I was shocked to hear that. Now that I'm not an active contractor (I hire it out now), I carry a personal umbrella policy of $1M that only costs about $30 per month to cover anything unforeseen. I'm not sure that helps but I thought I'd throw it in.

Good luck!

@Shawn Legree , I don't have that data for your area but you could call Lowe's or Home Depot for an estimate. If you know the dimensions of the house and the roof pitch, they might even give you a rough quote over the phone.