All Forum Posts by: Sam B.

Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Rented at $1700/mo. 

Property #4 Rented at $2300/mo.  Refi cleared in early April.

Property #5 It's rented back to the sellers until the end of this month when I can get in and perform a cosmetic rehab. No change.

Property #6 Punchlist activities dragged out, now complete and on the market at $1500/mo.  Final photos are below.

Property #7 Rented at $1600/mo.

Property #6 Final Photos Below

@Jeff F.  Good job on getting it this far, seems like you can see the light at the end of the tunnel.

Really hope you can work out the financing/valuation part asap.

Sorry to hear @Cody DeLong  goodluck in locking this one down.

@Alexi Schreier  Anytime, it's been fun.  Always feel free to post up here or shoot me a PM.

And thanks, I hope they stay put for awhile.

@Alexi Schreier  You're understanding correctly.  Please note that usually, the GC will roll his mark-up into the rehab cost - so if he tells you it's going to cost $50k all-in, you can work his numbers backwards and usually find he'll have a mark-up of 15-20% (sometimes more).

And yes, because he's taking full control and usually full risk - if he missed a piece of scope and it costs more, usually that's on him.  Again, if he nailed his scope and put a little fudge into his numbers, he can make a little more money.

Your understanding of a project coordinator is also correct - essentially just my boots on the ground, advising me of what's going on and helping me ensure contractors are doing what they say they are, assisting with material deliveries, payments, etc.

@John Hunt I think it's great that you're enlightened about the path to FI via REI but it's disappointing that you've already determined you won't be happy in a career you've not yet started although that very career has incredible opportunity to not only provide a level happiness but most importantly expedite and elevate the level of your ultimate financial independence.

With that said!  I peaked at your LinkedIn and what I would recommend:

• Take your engineering background and go to the field.  Go be a construction field engineer, work on exciting and challenging projects, learn construction (applicable to real estate investing), work 60+ hrs/week, get paid per diem, earn $100-150k+/annual.
• Invest these funds in RE.
• Leverage your high income to secure long term, low interest debt on cash-flowing assets.
• After you get some experience in the field, you can pick and choose your W2 assignments.  Go overseas, make $200k+, travel the world, do fun ****.

There's so much opportunity out there for someone in your position, more than you can imagine.  

A lot of people talk about FI and how great it is.  But let me tell you...working a fun W2 gig while FI is even better.

I'm happy to answer any questions/provide more direction via PM.  Good luck.

@Alexi Schreier  Thanks for the feedback, I'm glad you enjoyed the thread.  

Re: fee for the project coordinator, I estimated the amount of hours I thought he would be working on the project and then assigned an hourly rate and came up with the fee.  At 40hrs spent on a project *$45/hr = $1800/flat rate.  

If he can get it done in less than 40hrs spent, good for him, his hourly rate goes up.  If he spends more, well, that's on him.

Your second question is where I would go from implementing a project coordinator level person to a straight up general contractor that brings in his own trades and is 100% responsible for the project.  In my market, for rehabs in the $20-50k range, I'd expect the GC fee to be 15-20%.  The fee will reduce as the project grows/becomes more complex.

In addition, I would break out a $50k rehab into 20-25% milestones (with payments) and probably also establish a small cash bonus tied to completion dates.  This can be overkill on small rehabs or an excellent tool to keep larger projects on schedule.

And everything is negotiable :)

Like others said, time/opportunity cost - I should have been doing this 10-12 years ago instead of just the last 6.  

Followed closely by rehabs, taxes, etc.

Thanks @Chinda David I'm glad you got something out of it.

Thanks @Andrew Baker it's good to hear this thread inspired you.  It's been a lot of fun and keeping this thread helps keep me accountable. 

J Scott's book on estimating rehab costs was a starting point for me back in the day.  But really, just going out and doing it will teach you so much.  I know that's difficult to hang onto, especially as the first deal can be tough...but go do it and you'll be set.  I saw on your BP profile you're willing to work for free on Saturdays - that's another approach and one I can't recommend enough.  If you're at your local BP meetup, offer that up and try to walk through as many rehabs as you can.

Before you know it, you'll be able to look at a property in a few minutes and get a rough order of magnitude - you know floors cost $2.5/sq ft to install, you know a 1600 sq ft house costs $3k to paint, you know a kitchen w/granite is about $6k, HVAC is another $6k and then you add in a healthy 20% for cost overruns and unseen items that always pop up.  And when in doubt, bounce your estimates off of your local BP network.  If your feedback is +/- 15%, you're in the ballpark.  It's now time to execute.

Thanks for the feedback @Derwin Villanueva

Please don't just blueprint this thread...revise it and make it better - I made a ton of mistakes that you can learn from (at my expense, ha!).

Which reminds me, I'll need to assemble a list of key lessons learned and post up here.  

Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Rented at $1700/mo.

Property #4 This had been on the rental market for $2200/mo for a couple of weeks with only one bite.  Dropped the rental price to $1950/mo on Thursday last week and the response was strong.  Then we got a (good) call from an insurance company on Friday.

A family had lost their home to a fire last week.  They had quality insurance coverage and my property was about the only one on the rental market that would keep the kids in the great local school and had the 4 bedrooms they needed.  The insurance company offered $2300/mo for a six month lease, month to month afterwards at the $2300/mo rate.

Done.  We're scrambling now to wrap up a few make ready items.  The family came in with a deposit on Friday afternoon, moving in on Tuesday.  My hope is to negotiate a lease extension after the six months but we'll see what happens.

Deposit and rents are paid for by the insurance company, direct deposit every month.  Love it.

Still waiting for the $189k refi to hit my account.

Property #5 It's rented back to the sellers until May when I can get in and perform a cosmetic rehab. No change.

Property #6  Property has been turned over to property management.  We have a solid make ready punchlist but overall the property looks great.  No updated photos but I'll have the final pro pictures ready in a couple of weeks.

Thinking this will rent for $1500/mo.  Will be on the rental market in another week.

Property #7 Rented at $1600/mo.