All Forum Posts by: Shane H.

Welcome @Whys C.

Hi there - not sure if this is quite the right forum or not for this question but thought it fit if you're in this space.

I'm more of an idea guy who has participated in a lot of the trades (plumbing, electrical, decks, concrete etc) simply by doing work on my properties -- I'm not the guy you want out there doing the work on a daily basis (I can build and plan out a helluva privacy fence though) so anyways I get how stuff goes together and am pretty good at the planning/sourcing and handling money aspects.  

I've worked with a contractor who is a damn fine finish carpenter - So far we've worked on 2 larger projects together the most recent being the gut remodel of the kitchen and most of my first floor at my personal residence -- we simply did what we had done on another project where I came up with the main plan, sourced all the material and then him/his small crew went to work and only charged me labor.  

He's really good at his job which I think is evidenced that he stays very busy with builders who do custom mid to high end homes -- for instance one project I took a look at he did some unGodly amount of stair rail in a $$million or so territory custom home that personally took him a full week to do.  (A $million or so custom house around here is a fricking mansion).... He's good and as I've watched him work through the kinks of things that would take me forever to figure out since I have not encountered them I managed to learn a lot.

I dont know all aspects about him but think he'd be a great person to partner up with and as he's seen a couple of the projects I've done and we've talked about rentals/rehabs it's something that interests him as well.  I learned recently that before the housing crash he had 20 + employees and it got to a point he had to lay everyone off and he had to scratch by doing odd jobs to make it through...I think the downturn was pretty hard on him as the market he was in came to a screeching halt -- now I think it's 3-4 people that work with him.  He did say over and over how much he enjoyed working on my personal residence as he mainly does new construction and very rarely will do a remodel.  He was really liking the transformation that took place.

If all goes to plan I should  have more deal flow and capital to work with going into next year and I'd like to make him a part of the business in some way simply because of his work product and his knowledge.

I was thinking maybe at first if I get projects he could bill me the labor as he does then give a cut of the profit or some sort of bonus at the end if the property is flipped or refinanced and turned into a rental?  I'm just looking to give an incentive to want to work with me and place me higher on the list than some of the builders he works for.  I think it wouldnt take much to move up higher than a couple of the builders he works for as they do not treat him very well.

I like real estate investing and to me it's not about how much money I can make, it's about freedom and hopefully helping someone else out with success too if they work hard and are a reason I'm able to be successful.  Hope that makes sense -- watching the local community we have too many ME first business people - they'll be successful for a while but I just dont see how they can get any sort of fulfillment out of life with their low quality product and mentality of only seemingly wanting to enrich themselves to live a ridiculous lifestyle.

But back to my point - do any of you have any creative ideas on how to properly reward good people or make them a part of your business if they would be key to it's success?  

Hi there - have to give credit to the podcasts for taking some of the steps I've taken the past 6 mos or so.  I feel even though I've owned a couple investment properties since 2006 I've just been piddle farting around (probably a midwest term) and haven't gotten as serious as I need to be.  Having my 2yo son definitely helps add fuel to the fire that was nothing more than glowing embers.

3 Single Family homes & 1 duplex

All in stable low B to B+ areas and not far from another investment property I have

Sounded as if I'd have one nightmare tenant I'd need to part ways with

Gross monthly rents $3800 - if I updated the units I am confident  I could at min bump that figure $500 or more a mo

Tax value of properties ~$350k  (I need to get inside the SF properties but $330-400 is probably a realistic market value as is now for the properties retail wise)

Owner said they'd sell for $380k and be willing to owner finance for 5 years (w possible balloon payment - I proposed those terms - no cash down)

I really need to get into the 3 single family homes and the other occupied unit of the duplex, but drove by them all and they looked in pretty decent shape on the outside -- one of the SF's they just invested $40k in within the past 5 years or so due to a hoarder situation and deferred maintenance so the house has been heavily overhauled - most have newer roofs and were built in the 50's (which around here was a good time period for construction - good lumber, homes are brick etc, duplex built in 1979 - from the unit I was in it's just cosmetically dated which would be no big deal for me to fix once someone moved out to make it more desireable)

What I was going to propose is if they would owner finance $380k - accept payments from me of $1055.56 per mo (380000 / 360 mos/30 years) - I'd pay the equity down for 5 years then at the end of year 5 we possibly renegotiate to pay part of it off by myself obtaining bank financing, all of it off, etc.

Ideally I'd like to see if I could get them to do this same deal for $350k or a bit less but the numbers work at $380k for me with no cash in.  I'd be willing to pay higher than what they are worth to have no cash in the deal and I'd in essence chalk up the additional $30k to an interest expense if you will.

I've done the numbers and accounting for 7% cap ex, 7% repairs, 5% vacancy, taxes, insurance, $375/mo mgmt fee payable to my property mgmt entity - the deal should still cash flow almost $700 so more than $100 a door and I'm pulling $375/mo as a mgmt fee.

Any other ideas on how to propose this or other creative solutions.  I felt they liked me and my former tenant spoke very highly of me to them.  

Their main concerns are minimizing tax liability and not having to worry about day to day anymore so they can enjoy retirement.  They just sold a business at the beginning of this year as well and are willing to sell the rental real estate tomorrow, january of 2017 etc - they just want to know it's in good hands.

(Another possible bonus - they have a VERY valuable property in our downtown core where their business was located -- it's listed with a commercial firm now - but I'd guess their listing agreement should expire soon - I could possibly see if something could be worked out for it as well -- however I'd need outside partners)

Maybe I'm looking for some attaboys or simply encouragement - this would be my first owner finance deal if I can pull it off.  i dont know I'd want to hold the properties long term as my vision is holding a large portfolio of A- single family rentals...these aren't quite in that but would give me cash flow, management fee income and fall within the realm of what I've been working with the last 10 years.

@Jake Ramstack

Welcome Jake - I think I've seen your name on some listings.  Make sure you stick around - not many commercial folks hang out here for some reason.

@Sam Wichita

Welcome

I do property management for others if the fit is right.

@Kristen Williams is someone whom I met and would likely have manage my properties if I ever want to relinquish the responsibility of managing my own.  I personally use Buildium and everything is done online.

Feel free to message me or contact me through facebook/phone etc.  I'm not sure if I can give other contact information as I do not want to violate the forum rules.  Would be glad to have an offline conversation.

@Austin Whiteley

Welcome from S Central KS.  Do you do most of your investing around where you live?  Concordia maybe?

Starting November I'll be out constantly upland and deer hunting, maybe we can connect at some point.  I travel all over the state to do this.  Sometimes make it up your way if the bird #'s are good.

@Don Carbon

Don I think the most important aspect is the wood selection when buying the cabinets -- Get Beech or Oak - they are the 2 species of wood you can get that will give you the most hardness for the dollar.

Dont get poplar, knotty alder etc -- Maple is ok but will be expensive due to the wood and is not as hard as Beech or Oak.

I'd just get them prefinished in a stain from wherever you order them.  I have an account set up at B&B Lumber and just ordered a kitchen for my home - will likely use them for any kitchens going forward - I felt their prices were reasonable -- I did pay extra to get solid wood drawer fronts and plywood boxes -- I HATE MDF and it is not durable at all.

If you're sprucing up existing cabinets - Gel Stain, Stain or Enamel paint.

B&B can even sell interior doors (paintable hollow core) with solid oak Jams for less than $100 with an account.  Way better than getting a door with a veneer over engineered wood - pretty much non repairable if a dog scratches the daylights out of it, someone bangs their dresser into it when moving and dings the heck out of it etc -- solid jams can be repaired easily and the hardness of oak will take WAY more abuse.   

@Manah Watkins

Welcome to Biggerpockets -- Fellow Wichitan here as well.  As Kristen said best to do your homework and referrals help, however I'd say actually interviewing a few property managers would be your best bet and whichever one you get the best feel from and in your opinion will be the best fit for you is the one I'd go with.

There's plenty who've been doing it for years but do not put an emphasis on customer service to tenants etc and are just check collectors - others will be more hands on.

@Kristen Williams   I've met with Kristen once earlier this year and have had a few conversations as well via bigger pockets etc with her - I manage my own properties presently, that being said if I were to ever turn the reigns over she'd be tops on my list to speak with after having met her.

To add another point above - if your folks will be looking for a solid property manager they need to find one that will specialize in the type of property they are going to buy -- IE will these be lower end class "C" rentals with lower income tenants etc, will these be class "A" rentals with class "A" highly desirable tenants who desire and will need solid customer service etc?  Find a PM who will and does work in the specific type of property they are going to buy.

I do manage my own and one other for another owner and prefer to manage properties that are Class "B" or higher.  Lower end rentals would not be a good fit for me to take on for example, however I do work well with class B or higher rentals which is where all of my experience lies.

@Brandon Proctor