All Forum Posts by: Tony Reyes

Hey Ervin, 

Welcome to BP. As a GC and a fellow RE Investor, I would suggest you start investing in areas you know and understand.

Good Luck!

Hey @Cristian Niciu,

I have a Construction company as well (General Contractor), and like you I work with many investors; but I also do my own flips.

Just by you being on BP, your moving in the right direction to increase your Financial I.Q. 

I recommend a great book by @J Scott, The Book on Flipping Houses. This will definitely lay a sound foundation for understanding investment side of flipping. 

Being a Contractor you will be able to very accurately account for all the renovation costs, which is where most investors in my experience do there due diligence wrong. No need worry fellow non contractors, J Scott also has a great book for estimating rehab costs. 

To answer your question on where to buy. I would buy where your investors are buying, I often do. That is if your familiar with the area, and your doing enough work there. Whats great about this, is that your comps become your own comps. And you keep your overhead down on the company side, because your already traveling in the area which makes it easier to manage. 

As a Genearl Contractor I look to buy and rehab houses on southside of Chicago, because I understand the area and I'm already traveling there for work I'm doing for other investors.

So stick to areas you know and understand, first. Than you can plan later to move to areas that seem more lucrative, provided you have done your due diligence. 

Hope this helps

Hey @Iain McFarlin,

I have not done any flips or buy and hold deals in Hermosa area. However as a GC I have done somewhere north of 50 Roofing jobs in that area this year alone. 

Like most of Chicago it seems to be very block by block, with nicer neighborhoods on the East side of Hermosa. So be careful with your Comps. 

I don't doubt that some time in the near future(5-7yr),Hermosa will be much nicer than it is today; as Construction and Development continue to head that way. However I would make sure that whatever deal you are buying makes sense financially with the value it has today (no speculating), while your equity builds organically. 

As Robert Kiyosaki (Rich Dad Poor Dad, author) would say, you make your money when you buy.

Hey @Carlo Michelotti,

Welcome to BP. There is tons of useful tools and awesome content to help sharpen the ole ax. 

I believe one of the ways you can be a better GC, aside from what the previous gentlemen stated. Would be to learn the difference between a good deal and bad deal. This will allow you become more of an asset to your investors/clients. You will be a sounding board of reason and even help suggest ways for them to maximize there returns. 

This will help position yourself as a resident expert of construction in the realm of Real Estate. 

Good Luck!

Hey @Ganzorig Sharav, 

Based on the general scope of work and, that all the mechanical trades are involved. I believe the City will require you to get Plans. 

Its beneficial, for many reasons.

-Its a great way of getting an accurate bid from General Contractors. Because they are accounting for the same amount of area, and work to be performed. Nothings less or more. Which in turn minimizes change orders

-It helps in getting inspections (plumbing, electrical, hvac, etc). approved. Because there will be plans that have been approved by the building department, by way of permit. Its in your best interest to not leave these details to a City Inspector

I have worked on many projects with Prashanth Mahakali, with PMPC Architects. They are great! (312)316-0169

Hope that helps

Hey John,

I'll start by saying, that it happens to the best of us. Usually for being uber optimistic. I"m a GC, who works a LOT in the Chatham, Pullman, Calumet Heights neighborhood. We flip are own homes and do work for some prominent investors in this area. 

Secondly. It sounds like your GC never pulled any permits. Hence, the stop work order. The inspection that they are requesting is to see what was possibly done out of code or done without a permit, However I don't believe it is called a "damage assessment inspection". 

I'll answer your questions in the order they were asked.

1.Normally when your buying a home that is on the demo list. Which I'am assuming this was (damage assessment inspection). It means that It has been previously registered with the city. This is typically because the windows have not been bordered up and it has been vacant for some time. Or, because the integrity of the structure is not sound. Either way, it is already on the City's radar so they do regular inspections (drive bys) to see if any change. If not they keep reporting violations to the address. Which your attorney should have been aware when doing the title search. Or at least the next court date. (FYI, If you hold your property in a LLC, your attorney has to go for/with you to court).

That being said, the Inspector probably noticed some activity at your property and saw no permits in the window, while conducting a routine inspection. Which resulted in a stop work order. 

2.The City Inspectors from time to time can request some outrageous stuff, but that isn't the norm. If you have a violation list. The quickest way to resolve your violations, is to consultant an Architect. They will do a walk thru of your property find out what is, and is not in code. Create plans for all the trades and submit to the City. The Building Dept at this point will approve these plans or ask for revisions. In either case by the time the permit is released everyone is on the same page. The GC will manage the schedule and scope of work, based on the approved blueprints. And get you past the critical and final inspections.  This way you are not at the mercy of a disgruntled City inspector misinterpreting the code or giving you a hard time. 

That being said. I do think 2 years is way too long to do any SFR. Contractors build entire homes in less than that. Also, unless your agent is a GC/Contractor, they shouldn't be managing the project/payouts. The agent could unintentionally be paying the individual contractor too much upfront, which put leaves them with more to lose by finishing the job, then to gain. (now, thats not for all contractors).

Also be on the look out for further court dates. 

Hope this helps

@Bryan N. 

Thanks for the info, the court records is something I never considered. 

Hey BP!

I recently started doing background and credit checks. I read in other posts that mysmartmove.com was good, so I tried it and I like it. But I also read several times that background checks can not be done on a national level, only local...

Can someone shed some light on that?

Its pretty important seeing my potential tenant is moving from out of state.

Thanks in advance

@John-Paul D. I have 2 multi unit properties in Berwyn. There both located in the North West part of Berwyn.

I grew up in Oak Park, right down the street from Berwyn.

I believe, you could break up the town into 3 distinct areas. North, Mid, South. There can be arguments made for investing in either area.

North. 

Recently Berwyn, Oak Park and Cicero invested over 20 million dollars in beautifying the Roosevelt Rd, business area. As you mentioned, it is very close to accessing the 290 or the blue line. This area has the most  residential multi units (2-3 units residents per property). Most definitely a working class/family neighborhood.

Mid. 

This area is near McNeal and has 2 stops in Berwyn. On Harlem and Oak Park. This is exactly what Berwyn is marketing with there billboard campaign of "Why Berwyn", that can be seen all over downtown Chicago. this area has many traditional average and smaller size bungalow and ranch homes. But it seems like on every other corner there are large multi units (26+ units) of 1 bedrooms or studio apartments, that don't always attract the best renters, and everything that brings. They also have many overpriced (for the area) condos. 

South. 

This is considered the Berwyn Gold Coast (between Pershing Rd and Ogden). This is the area where they have the larger bungalows or even some victorian homes (look alikes). Homes in this area are typically not for sale and are upwards of $250K. Its a nicer part of Berwyn to live in, but doesn't necessarily have the Cashflow ratio, that I would want as a buy and hold investor. Easy to access I-55 from Harlem or Central, from this area.

So far I have not had any problems as a landlord, renting in Berwyn. I have a very extensive rental process very similar to what bigger pockets recommends. And I'm currently looking for another multi unit in the area.

ADVICE

1. Try to stay west of Ridgeland

2. Get as close as you can to either Roosevelt Rd (Oak Park area) or Ogden (Metra Area)

3. If possible buy a 2-3 unit instead of SFR. They are unbelievablly undervalued at the moment.

Hope some the info helps

TONY REYES

I believe the very best way to make sure, is to get 3 ITEMIZED estimates from 3 Licensed Contractors.

The Estimates should include cost of material, cost of labor; Per trade (i.e. electrician, plumber), cost of permits and dumpsters (for bigger flips).

I believe by making sure everything is itemized, it does 2 things. 

1. You make sure that your comparing apples to apples in materials. Such as cabinets size and quality, Granite selection, etc. 

2. Your also see the margin or profit in deal for the contractor. Commonly know as GC Profit and Overhead. (This is were you would normally be taken advantage of).

SInce you should be receiving estimates based on the same types of materials and labor and they will be priced per line. You can then compare the cost installation.

In my opinion as a contractor the best thing to do is be upfront.