All Forum Posts by: Trent Stone

@Lydia R. Of course there are wrong ways to do it, but the wholesaler I'm working with operates this way and they do 50-80 contracts a month with a stellar reputation. So there is a right way to do it too. The problem is, 90% of wholesalers out there suck and do things the wrong way lol.

Brandon Turner or J Scott also recommended at first to interview 30 contractors to find the 1-3 you are going to use going forward. Takes a lot of time up front but will save you countless hours of headache going forward. Then always ask, "okay, where can we come down on this SOW." If you price out materials yourself, then you know who is charging too much and where you can cut costs. If you know that paint labor should only coast $15/hr and he's charging you $25/hour then negotiate down. J recommends breaking everything down into line items so you can negotiate specific tasks. If the contractor you select can't do demo for less than $1,500 but one of your other guys will do it for $500, then sub it out. It will ensure you are getting the absolute best price. Word of caution, do not be afraid to pay a good contractor well for his services. You want a good relationship going forward so do not be cheap or a hardass. Do negotiate and get the best deal you can, but don't screw them over. If you are doing well, he should also be doing well. Make sure you have mutually beneficial relationships with your contractors and subs. 

I agree with @Lydia R. I do however, know successful wholesalers that will use a dollar for their EMD so they really don't have any money at risk. That's all you technically need to have "consideration" and a valid contract. It gives you equitable interest to allow you to market your contract. Depends on how desperate and creative you are, but you can do it lol.

I think it's a great time to invest. It's always the same, people who invest in real estate find ways, people who don't find excuses. The Fed dropped the interest rates to 0% and they are going to dump over a trillion dollars into the economy soon. If anything I think it helps you. Your seller might be fearful so you can use that to negotiate a lower price, and buyers are fearful so you have less competition. But no doubt the world will keep turning, the economy will come back, and people will always need a place to live. 

I do not have direct experience in Europe, but the great thing about the calculators is that they are just a guide as to what you should include, I'm sure they are applicable to any market. Do your own research and figure out all the expenses in your market and simply put them into the calculator, I don't see any reason why it won't work just as well. I invest in the midwest of the USA and the numbers are drastically different than New York city or San Francisco, but we can all use the same calculator. Hope that helps!

I cannot recommend J Scott's book on estimating rehab costs or on flipping houses high enough. He teaches you everything you need to know and look out for when choosing a contractor. The biggest thing I would look for is referrals. Talk to uninterested 3rd parties who have used them before. Ask for samples of his work and check the county to make sure that HE is the one who actually pulled the permits for the work, not a sub. Also, Be VERY careful about when you pay him. DO NOT give him all the money up front. Maybe pay for half the labor, then split the draw for materials into 30/30/30 then 10 when he is COMPLETELY finished with everything, just as an example. I also love the idea of offering incentives to finish and penalties for finishing late. Like up to $1,000 for finishing a week early and $1,000 penalty for every week he is late. A lot of contractors will get just about everything done then leave a bunch of the tiny finishing stuff because they will make more money spending their time on other projects, since they already got just about all your money. You gotta leave a carrot out there to get them to completely finish the job and finish it well. Structuring your contractors in this way also provides you the benefit to fire your contractor halfway through the job if they are not on schedule or if their work sucks. My parents paid a contractor up front for a HUGE job which he said would take 6 weeks, it took him 18 months!! Had they put him on a draw schedule and not paid him all the labor they could've fired him after 8 weeks and got someone else to finish the job. Good luck!!

I'll be totally honest, completely depends on you, and your state. The only reason why you need the school is to pass the test, you won't use 90% of what you learn. I took the cheapest program available online and I passed my first try with ease. I have another colleague who took the "best" school and failed 3 times. Whatever you need to do to pass the test, do it. I test really well and I can learn anything I need from google, so I just signed up for the class to get my hours and direct my study. I didn't buy any books, or extra study helps. The tests are very tricky so be careful, you do need to know your stuff. Good luck!!!

Are you paying all cash for this property? I don't see any financing costs included, that'll eat your profit in a hurry. As it stands, if your ARV is correct, with just purchase and rehab, you are almost 79% all in ARV. For me that is WAY too high and barely hits my minimum target for net profit, especially for such an extensive rehab. So for me, I would pass. We look to be all in for close to 65% ARV and no higher than 70%.

I just responded to a similar question. 

"Depends on if you love the place and you just want to lower your mortgage or if you are looking for an investment. Personally, I would run it strictly as an investment and make sure it's solid. I'm sure you don't plan on living there forever so see what it will look like if you move out. Feel free to run the numbers through the BP calculator and send them over to me and I'd be happy to give you my opinion from an investor standpoint."

You need to include all expenses, including property management, for when you move out and keep it as an investment. Include vacancy, repairs, capex, etc.

What are you looking to know?