All Forum Posts by: Tom A.

@David Wolf, I'm getting the impression that your repair scenario involves some over-improvement. I'm not one to "cheap out" on things but in this case I might side with your wife and agent. Student housing, particularly in old homes, doens't have to be all new and perfect. It certainly won't be a few years after your rehab. Would you redo it all then again? No.

The windows probably don't all need to be replaced. If they're basically sound you can free them up by cutting through the paint. They might need some reglazing (the putty that holds/seals the panes).

The floors may or may not need refinishing based on the pics. I'd compare to other rental housing in the area. Same for the bathtubs. Try to keep any old clawfoot type tubs.

The floor tilt isn't a defect, it's a character mark in a house that old. I have one that's doing the same thing because some dufus cut a huge chunk out of one of the 10" x 10" main beams. The fix in my case was to add footings and stanchions on either side of the weak point. Not very expensive, materials were well under $500. That merely stopped the sagging. To fix the sagging would have been very involved. The second floor had been completely remodeled and if we took the tilt out of the first floor, the second floor would have been out of whack. The tenants don't mind, they understand it's an old house.

@Nancy H., those HW floor refinishing prices seem high, at least compared to my area. You were quoted $2.20 to $4.80 per sqft. I can find $1.75 all day long, and $1.50 with a little effort. Just a few data points FYI.

Tile seems to be the thing in Florida, but not in Northern climates. I don't think I've ever seen a house up here tiled to the extent they are in Florida.

The newer luxury vinyl tiles (not an oxymoron) look great and wear very well. I'd strongly consider them versus a wood floor if pets are a big factor.

Bad applicants have to live somewhere. Eventually they'll find a place and notch eviction #3. How did you find their evictions by googling? Are you in a state where that's published on the internet?

Originally posted by Beth D.:
As an investor, what are the most important aspects you look for in a contractor? What makes them stand out among the dozens of others doing the same trade?

• Cost - low but not necessarily the lowest if other factors compensate
• Quality - suited for the project, which will be different between high-end flips, mid-grade flips, rentals or my own house.
• Reliability - shows up on time. Calls if he might be running a little late. Doesn't vanish for a day or two in the middle of a project.
• Communication - easy to reach, is proactive in communicating issues or statuses to me
• Technology - can handle emails, texts, sending photos via smartphone, capable of even taking a short video and uploading to a Youtube account for my viewing (this can be a big time saver for both parties)
• Professional - nothing fancy or expensive, just honest, competent, business-like, with a decent attitude. Some one who can handle a well-defined project without much additional input.
• Financially solvent - No "I need gas money" calls. A real business has enough working capital that the customer doesn't have to fund things in advance. We might work out an arrangement where I buy the materials, or pay something up front, but hopefully not because the business has only $17 in their checking account and their credit cards are over the limit. I got a call once from my HW floor guy. He was standing at the supplier counter and they had put him on COD, so he needed my AMEX number to buy the wood and supplies. Not a great impression.

When you have a contractor you use regularly, what would make you consider trying a different person for a job?

There's a pretty low barrier to entry as a contractor. Some you find just aren't up to the minimum standards. Some get comfy with the repeat business and jack pricing up too high, or start to slack off on the quality or reliability, taking the customer for granted.

Strangely, some who are great for a period of time seem to flake out for no obvious reason. I had a plumber who did a number of whole house replumb jobs for me. On one house there was a leak from a 1" copper elbow that he did in the crawl. He came out, resweated it, but it still leaked. Every attempt to contact him after that was ignored. I guess that was his breaking point for some reason. He lost out on a lot of work and referrals. I don't know why, but my guess is that he had enough work lined up that he figured he could burn my bridge. Obviously pretty short-term thinking, but some contractors aren't really business people.

Do you respond more to/prefer one-on-one marketing and "elevator pitches" or by receiving professionally prepared, informative materials? Or both?

Nothing fancy. Give me a verbal elevator pitch with a one or two pager on what you do and why I should use you. It doens't need to be professionally prepared, just proofread it for grammar and spelling.

Try to make the investor's life easy. If you can be a reliable go-to type contractor who need minimal babysitting and occasionally anticipates the investor's needs ("hey the subfloor is all rotted out in the bathroom, do you want me to refloor over it or I can replace it real quick") or goes above the call ("I'll stick around a 1/2 hour to let the cabinet delivery guys in so you don't have to drive cross town in rush hour just to unlock the door"), you don't need to be rock bottom on price.

@Joshua Dorkin, thanks for the link. I looked at the TransUnion Smart Move link you posted and for $5 more they offer a "Quick Check Plus" product that says it includes a "Full Credit Report".

Is this really a full credit report like what I'd see as a an approved, inspected TransUnion client, or some scaled-back version? What I usually see offered to landlords is a scaled-back version of the full report. I thought they couldn't release the full report except to inspected clients, property managers, mortgage companies, car dealers, etc.

Better quality usually comes at a higher cost than low quality but that doesn't necessarily translate into "high cost = high quality".

I had an exterior paint job quoted recently in a fairly upscale college town. I spec'ed the paint so the real difference was for labor. The two in-town guys had a very professional presentation, excellent references, nice work vehicles and uniforms, and employed only non-smoking, no-radio-playing professional painters that even the most uptight person would not mind having in their beautiful house. They bid $5800 and $6300.

Another quote was from a guy about 15 miles down the road. Pretty much the opposite of the first two with respect to appearance, presentation and crew. He came in at $2100. I checked out his previous work, he got the gig, and did a very good job.

In this case the first two contractors' business strategy was to cater to the upscale customer who cared about not just the quality of the job but the quality appearance of the company and crew. The customers had money and found value in the deluxe approach. In fact, I had an in depth conversation with one of them regarding his business because I wondered how they were doing at 3X the price of the lower bid. Turns out they were doing great and had a backlog of work from their target customer segment.

What this illustrates to me is that there are different customer segments and value received is a perception based on customer wants and needs. As investors we don't see value in some things that "retail" customers will pay extra for. Not every contractor is a good fit for the real estate investor. Not every customer is a good fit for a contractor.

@Peter WIlder , welcome and hello from another Michigander!

A couple months ago, after taking my kids to the museum in GR, we walked and drove around the city for a few hours. I was impressed with the activity both downtown and in the neighborhoods. While Detroit gets most of the buzz these days, good and bad, I think GR has more momentum overall than Detroit. The West Michigan economy also weathered the storm better than SE Michigan did.

There are several GR area investors here on BP who certainly have their finger on the pulse better than I do, hopefully they'll pop up on here shortly.

@Luke Redford , I don't think you're being paranoid. I think you're asking very pertinent questions. A new investor buying an out-of-state turnkey is stacking a number of risks. You're pretty perceptive in that you identify many of them in your most recent post in this thread:

Originally posted by Luke Redford:

Doing the due diligence in one's own backyard isn't simple. There are areas in my market where subtle differences in housing style, school district, elementary school or location in the neighborhood have significant economic effects. These aren't apparent even to some long-time local investors who haven't done a deep-dive into the numbers, or don't have extensive experience in that specific area.

Then there are trends or developments (good or bad) which you'll know about as a local but will be harder to keep up on as a long-distance investor. Will you know if/when a local community decides to get tough on landlords? When their budget problems will lead to higher taxes or reduced police/fire/parks/trash services? When a nice looking area flips from being predominately owner-occupant to primarily rental, taking down values and rents? Or when a decline in a particular school district results in higher quality renters leaving and lower quality renters moving in?

I realize there are areas where rentals just don't cash flow. Can you look perhaps an hour away, rather than a couple time zones? Cut your teeth on something closer to home, then branch out once you're an experienced investor. I've seen too many new investors lose a lot of money by making newbie mistakes compounded by turnkey mistakes.

I don't know anything about the track record of our turnkey BP members, good or bad, so my advice isn't in some way "personal". I've just talked to a number of long-distance investors who 6, 12 or 18 months down the line are reaching out to people like me who have nothing to do with turnkeys, to help them formulate their salvage plan. They're shocked to find that their sub-performing rental is in a bad area, is in bad condition, and their property manager has a bad local reputation.

If you do go the turnkey way, you should have a second team that checks up on your primary team. While not foolproof, having for example, a second property inspector to inspect the first inspector's finding for veracity will help you avoid (but not eliminate) some undesirable outcomes. Or have someone who can drive by your property to see if it's occupied (meaning you should be getting rent checks, not excuses from the property manager about why it's taking so long to rent).

Hi. There are online classes offered. I don't know which schools offer them but some googling should unearth them for you. I know one person who did it that way, but another said it was brutally boring so he ended up taking a week off work and sitting in class.

He's crazy. The interior house painting should be closer to $2000 total, not $4400. I just got the carpet cleaned in my own house by a company that's not known for being cheap. 4 bedrooms, hall, large living room, family room, 2 sets of stairs, finished basement = $300. The roof, if in Michigan, should come in at between $200 and $250 / square without much negotiating. Your original quote was something like $380/sq. You said it, crazy.