All Forum Posts by: Tarl Yarber

How did I get thrown into this? :) yep! I buy almost everything off market, and it is a challenge at times to get to these quickly and make the decision quickly. But that's not a crap shoot, that's a educated analysis done very quickly based on experience and what ever your teams experience is. Sure, there are still deals on the MLS, but in my opinion, to get the REAL deals on MLS, you have to be faster then the off market houses. On the off markets if you have to compete, you are generally competing with other savvy investors, which I prefer then dealing with EVERYONE on the MLS. Meaning, most savvy investors aren't going to bid a house up too much past an ideal margin, where as on the MLS, you get everybody who doesn't understand real estate bidding the house up past anything reasonable and the new buyer makes a loss later down the line.

That's a really tough question when I don't know your area that well.  Cost per sqft is what ever it costs YOU at this time.  Its a very rough, and I mean rough, estimate.  You can take the houses that you have had bids on or have rehabbed already, see the level of rehab you did or got bid out, and divide that into the finished sqft of the house, and start estimating from there.  You may find out how expensive your rehabs are real quick.  For instance, if you find out that you paid $50/sqft for a cosmetic remodel....you paid WAY too much, no matter what city you are in in the USA.

.....the before pics are in the post my friend, look at the kitchen pic that looks like crap vs the pic that the kitchen looks awesome for instance.

 Answer to your first question about how I find wholesalers: Yes

As for my team.  I have a bunch of agents im friends with, but I have 2 that work with me regularly (one of them is my assistant/transaction coordinator who got her license when working with me).  I hired a full time Project Manager about 6 months ago to run my rehab projects with me (we used to use GC's for a lot of work, but switched to all subs after hiring my PM, the money saved with the PM more than pays for his salary and bonuses, not to mention my time).  The rest of the team are all independent people who work with me on projects as needed. Could be another agent that helped source a deal, could be a floor plan drafter, architect, permit getter, other investors I may partner with, etc etc.  Oh yeah, and private money people too.  This team has been built over the years, but don't ever forget, I started by my self like most any other investor out there.  The first member of your team is you, so you better be a good team member.

I don't know your market, but Id bet there are plenty of contractors out there that will do it for less, stop going to "retail" contractors use to working with normal home owners.  With that said, I don't let GC's put a management fee on the job.  I don't hire guys that sub 100%. If I put a GC on the job, they are a hybrid GC (best kind of gc for investors in my opinion).  This means they sub the major stuff (electrical, plumbing, roof) and they have a couple guys on their payroll for the rest, their own crews.  This keeps their costs down and yours.  The larger the GC, typically the more overhead they have, and the more they charge, so im not looking for that guy.  I like small to medium GCs (this is my area specific). Lots of crappy guys here (only need $300 to get a license, no test required).

At this time, we sub at least half the job out to our own direct subs (roof, electrical, plumbing, flooring, tile, cabinets, landscape) and let the GC do the rest. 

To answer design work, I have two templates I use over and over again (gray tones for higher end, brown tones for lower end).  I developed these designs over the years, we tweak them every now and then, and I stole most the ideas from other investors, which is something we all do ALL THE TIME.  People steal ideas from me, I steal from them, we all win.  My advice is to start a folder and put all pics of anything you like in finish level and start compiling your own style.  Keep it simple, never get crazy with design, needs to appeal to the masses and  sell the house.

I can answer two ways, how we do it now and how I use to do it when newer.  Every market has VERY different rehab costs, every contractor has different costs, and every contractor charges different investors different amounts (my subs would be less for me then for you for instance).  When newer, I got multiple bids at once, asked tons of questions, and sided on the conservative side for rehab costs to estimate.  If you really don't have a clue about rehab, you can take the chance of estimating based on house sqft.  For instance, a cosmetic remodel in my area (update everything but plumbing, electrical, roof etc) would cost between $25-$35 a sqft.  Quick estimate for 2000 sqft house put it at $50000-$70000 rehab costs ( my area is expensive, very much).  Learn your area costs.

How we do it now: we know what everything costs us and our subs.  We make 100% of the scope of work, we don't get bids ahead of time at all since we know what we will be charged and more importantly what Im willing to pay someone to do it since we know what it takes to do the job.  We provide a lot of the finish materials, cabinets, tile, etc and only want to be charged labor for those items.  I get those things cheaper then the contractors since I have great vendors that give me large volume discounts. 

Note, at one time I knew ZERO about construction and how to rehab a house, had to learn somewhere, I learned the hard way by paying WAY too much too many times on flips until I got pissed off enough to start to learn it, and then hire someone better then me to run it later.

MLS listed at 400k. Another person put an offer in too at 410k, I then also offered 410k but I had a 2 week close, 5 day inspection, 20k EM and Cash close (you have to do this in our market for MLS...). I did this knowing my max for the house is 405k. In WA, a 5 day inspection does not include weekends, so you actually have 7 days. I waited exactly 7 days to submit my inspection response (running the clock). I submitted I wanted a price reduction to 400k due to extra rehab costs, still close in 1 week from that date. They were pissed. But they were going through divorce and they hated each other more and wanted this done. We compromised at 405k and I closed on time as promised.

I love you

Hi Xavier.  As much as I wish you did not have to pay taxes on these deals, but you must  pay taxes on these deals (except for very special circumstances).  Disclaimer: im not a tax accountant or CPA, verify your own information, im not providing advice, just my experience.

Typically on flips (12 months or less), you are going to pay ordinary income tax on your profits since its a short term gain.  This is dependent on your income tax rate and where you fall after the profit and all your other income minus expenses etc.

You can set up your entities and tax situations as you see fit. For me and this deal, my business is an LLC with an S-Corp taxation. I am an employee of my S-Corp and owner. This changes how much additional taxes you pay. Best advice I can give anyone that wants to do this business right with flips, get a very good CPA that specializes in Real estate, this is very important, a lot of CPA's don't know crap about real estate investing, interview lots of them till you find the right one.

If you buy and hold, you will set your self up very differently then if you are flipping only fyi.

As for your 250k single and married, this from my knowledge only applies for your primary residence.  But capital gains drops each year at this time the longer you own the investment property

Sorry Ben...you posted this at 930pm...meet up was tonight and it started at 7pm.  There is once a month "unofficial BP meetup" in Lakewood, another in Kirkland, and one in seattle as well.  @Troy Fisher is the man you want to reach out to for more details, im not good at links and such to pages, but Troy puts most of them together so talk to him.