All Forum Posts by: Michael Woodward

@Kari R. , My quick response is...... don't do it. There are so many things to learn to be successful at this business that I think it's a bad idea to start with a major project. There are always hidden surprises that even the most experience investors miss (a lot). You could be setting yourself up for disaster that will take years to recover from.

On the other hand, your success is completely up to you. If you do everything right (due diligence, project analysis, execution, etc) you'll succeed. If you don't, you won't. It's a big risk. I would recommend that you find something that doesn't need so much work for your first project. They are VERY hard to find right now in most places.

The house you're looking at might look like a super deal because it's so cheap....but it might be so cheap because the experienced people know to stay away.

Good luck!

@Account Closed , I get my cabinets from a local cabinet dealer called Premier Kitchens. It's a small mom & pop kind of place so I'm sure they don't any other locations. You could Google your area for cabinets or look in the yellow pages. The key is to shop all the local shops. It's always best to get referrals from someone that's used them before. My contractor referred this guy to me two years ago and I've used him ever since.

Also, some areas have places that specialize in just counter tops. This is the very best place to get cabinet referrals because they work right behind the cabinet installers. They might not know who has the best price though so don't forget to shop around.

@Bryan L. , To answer your earlier question.....absolutely. I've gotten preferential treatment from listing agents on several occasions because they were going to get both sides of the commission. You can hear the tone of their voice change when I tell them that I don't have an agent and don't wish to be represented. It's usually something like....."Ooooh, I see. You DON'T have an agent. Let's see what we can do." I've never had an explicit/overt promise to give me special treatment but it was easy to see what was happening. I've even been told exactly how much more to offer to secure the deal.

On the other side of the coin, I've had agents try to convince me to list my property low or accept a low offer so they can secure the contract....a bird in the hand is better than two in the bush....so the saying goes.

In my opinion, the bottom line is that almost everyone is first and foremost representing themselves. There's lots of gray areas to play with.... and most do.

Amy,

Bryan makes a good point about going to Lowes. I did the same thing when I first started out because, although I could see how much things like shingles cost, I had no idea what it cost to have them installed. Fortunately, Lowes posts their installation prices on many of the items they sell so all you have to do is add it to your calculations. In my experience, Lowes labor prices are usually a little higher than what I would pay an independent contractor so if you use the Lowes prices to calculate your costs, you should be fairly safe in your estimates.

Unfortunately, there's no substitute for experience so you won't know exactly what things are going to cost until you do a few projects. But, like Bryan said, don't sweat it if you leave some money on the table. Do a few projects and keep up with all your expenses and future projects will be easy to calculate.

Good luck!

Manuel, You can probably tell by now that you've brought up a hot topic. I agree completely that loyalty is very important to your relationship with your agent but my experience has shown that I always get preferencial treatment from listing agents when I deal directly with them. I value my realtor very much so when I was confronted with this dilemma, I just asked him if he would mind if I placed my offer with the listing agent. He immediately said "sure, no problem". He knows that if I get the house, he's going to be able to list it for me. If I don't get the house, he won't. He's very aware of this "preference factor" so he's ok with letting me do it. It's better for him in the long run.

My two cents......

@Account Closed , I used to think that specialty shops had higher prices than Lowes or Home Depot until I started shopping around. What I found (to my pleasant surprise) was that I could get higher quality major items (carpet, cabinets, appliances, shingles, lumber, doors, windows, etc) for either the same price or less from the specialty shops rather than the big box stores. I found a cabinet shop that provides gorgeous cabinets. The cabinets and complete installation costs slightly more than the off the shelf "stock" cabinets from the other guys (with no installation) and look three times better.

I don't know if this is true for all areas of the country but in my area of TN, the specialty shops can only compete with Lowes and Home Depot by having better prices and service. If you plan to do projects in your area for any length of time I think it would be worth your while to shop around. I get great service and great prices because I put in the effort to shop.

Good luck!

@Rick Baggenstoss , I think you summed it up really well. That combination seems to be a fairly bullet-proof plan. Anyone that thrived during that time was doing several things right.

That's an interesting question about hedging your real estate. Off hand, I can't think of a way to hedge directly (like puts) although I suppose a good diversification plan should sort of do that. To figure it out how to structure it, I would think you would start with a list of every service or product involved with real estate and then separate them into two columns....one for products/services that do well in an inclining market and one for a declining market. Then you could create your business plan to include products/services from both columns. I'll put some more thought into that. Good question!

Thanks for your reply!

Thanks again for sharing your experience @Bryan L. !! Hopefully future deals will go well for you!

@Karen Rittenhouse , Thanks for your feedback! I really appreciate it! You have an impressive system in place and you've confirmed that following the standard "best-practices" in real estate will (should) result in a very stable and predictable business (almost) regardless of the market. This thread has given me the needed confidence to start adding rentals to my flip portfolio.

Thanks again!

@Kevin Dickson , Thanks for your transparency. I didn't realize how vulnerable my business was pre-2007 (when real estate investing was easy) but I found out in a hurry. I think everybody took a step back (some of us right off the cliff) to look for the weak spots in our business models when the market tanked. I'm sure we're better for it. Now it's time to rebuild......smarter....better...faster....

To your success!