All Forum Posts by: Tony Cimino

Investment Info:

Single-family residence buy & hold investment in Omaha.

Purchase price: $85,000
Cash invested: $29,217

First BRRRR house!
Will rent for $1250 (low end)

Will Refinance at the beginning of the year, and should appraise at $150,000

What made you interested in investing in this type of deal?

Reading the BRRRR book by David Greene

How did you find this deal and how did you negotiate it?

FACEBOOK! A wholesaler put it on there.

How did you finance this deal?

Hard money. Loan of 70% ARV and 12% interest only loan.

How did you add value to the deal?

Pulled up carpet and redid wood floors. Added pass through from kitchen to living room to give house more light. Tiled upstairs bathroom and kitchen. Finished basement. Added 1 conforming and 1 legal bedroom in basement. Added a bathroom in basement.

Lessons learned? Challenges?

Fire a contractor before its too late. It will cost you more money in the end that it would to do it the right way first.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Chad Blythe

That reminds me!  I did take a video of the property before any additional work was done, and talked through what was wrong and what needed to be done.  So not only do I have that documentation, I also have emails outlining our agreement, invoices from other contractors, and all receipts and items that were bought categorized.

I am getting prepared.  Also, that's a great point about the "release of right to file mechanics lien".  I do already have one!

I appreciate the insight and verification that I am not being unreasonable.

Question for the group.

Doing my first BRRRR, I had to fire my GC for doing shotty work, missing timelines...etc.

I have gotten new contractors in there to finish the work and they have had to fix a ton of stuff the old GC did wrong. For example:

• Egress window is not to code by 3 inches
• Added 2 rooms, and closets are not framed deep enough for a standard hangar to fit (seriously)
• Added a bathroom, did not properly vent the toilet and shower (Sewage was ventilated to the laundry room....yeah.)
• Framing in bathroom around toilet was 1 inch off square (now you see why I fired him)

There is a lot more, but you get the point. Further, I put him in my Lowe’s Pro Account to purchase materials, and I would only pay for install.

After I fire him, he hits me with an invoice for the full price of each item he quoted me. I am going through and deducting other contractors cost from his, “price”. For example, if he charged me $8,000 for everything, and the new contractors charge me $3000 just to fix his mess. I am taking $8,0000 - $3000 to pay him $5000.  Then if the materials were $2,000, I take $5000 - $2000, and pay him $3000. I have the invoices and receipts to prove the work done by the new contractors and the materials cost.

My question, could he place a lien on me for the $5,000?  

He did some work, and I will pay him for the work, but I am not paying him for work that he did wrong.

I used a hard money lender for my first BRRRR and they would only lend to an LLC. Further, an LLC allows you to open up a business account at a bank (protection), and also allows you to open up a Lowe's (or Home Depot) business account. This can give you discounts on items, and the larger the purchases, the larger the discounts.

Lesson Learned Working in my adult life, I have already read and seen the age old saying of, “Don’t mix family and business.” So, when I decided to jump into my first BRRRR property, that is exactly what I was going to do. Run this as a business, and not use my family resources. My father was a contract sales man for multiple large lumber stores for 30 years. He is now a project manager for a large general contractor. He has the knowledge and the connections of all of the sub-contractors in our area. So, when he offered to help, I told him thanks but no thanks. The only thing I wanted from him was a recommendation of a good, trustworthy general contractor. He gave me the name of a guy who had worked on my dad’s house, my grandmother’s house, and my sister’s house. From tiling, drywalling, roofing, plumbing, he did it all, with no issues. We close on our house, GC tells us he can start in 2 weeks, with a 6-week remodel. Great! Day 1 comes and goes, then week 1…. nothing has been done. GC explains that he was behind on other projects but wrapping those up and can then concentrate on our house fulltime. Week 2, egress window goes in, but that takes an entire week. The next week, some framing, but nothing substantial. I call GC who ensures that he will meet the 6-week timeframe. We then go on vacation and comeback to little progress. I call GC and have a pretty direct conversation and he again assures me that he will meet the deadline. Next week goes by and he is done framing, but that’s it, and he has 2 weeks left. The next week I have my dad walk through the house with me, and my dad is blown away at the shotty, sloppy, horrible work. At that point, I ask my dad for help. Within a week he finds a GC and now Dad is managing the project. Fire my first GC. My second GC has to demolish some of the framing and redo it. On top of that, the plumbing is not up to code. Dad gets a plumber in who has to also tear out old plumbing done by GC#1, and re-do it, this includes some drywall, and additional framing that then needs to be redone. We are now 2 weeks into hiring GC#2, and having dad manage the project. Plumbing is done, electrical is getting done (at a lower cost that GC#1), framing, drywall, mud, doors hung, and flooring getting put in this week. They have already started on the upstairs and are moving at such a pace that as soon as I get them materials, they are going it. ITS GREAT! Not having my dad manage the project from Day 1 has cost me about $2,000 in holding costs, and $4,000 to get someone to do everything GC#1 didn’t do correctly. Dad doesn’t know it yet, but we are going to pay him for the work he did for us. Next BRRRR house guess who we are hiring to manage the project? The lesson I have learned is that while you may not want to mix some family with business, some family you do. Besides myself and my wife, no one cares more about this project than my dad, and I am forever grateful for that.

Lawn Masters is a great family and business. They also have owned a few rental properties themselves.

Can you call the vendor directly?  Who is the vendor, if you don't mind me asking?

We had a very small leak, and the basement has stick on tiles that we were planning on replacing once the current tenants move out so not much of an issue.  Clean up the water and go about our day.

From the time our tenant called to now, the leak has stopped and hasn't gotten worse, so I know its just from the snow pack and not from the run off, thank god.  Going over there to re-grade the side of the house, but glad its just a small thing.

With the recent mass melt off, ground saturation, and flooding, I am sure a lot of you guys are getting calls from your tenants about flooding basements.  I got a call last night.

What are your typical steps you follow when dealing with these type of issues?

Do you call your insurance and make a claim?  Do add soil to the side of the home to redirect runoff? Get fans to dry out the area and hope it doesn't happen again?

@Collin Schwartz is your man for the Omaha Meet up! Youre in a great spot to house hack into BRRRR, and just roll it over into the next property. Even better you can renovate things yourself and save a ton of money!

Welcome to Bigger Pockets!