All Forum Posts by: Eric Y.

@Bill Gulley Looks like I did--we are in agreement. I was looking at it from the aspect of them running it (or partnering--as you hit on in the last paragraph). I see you're talking about just plain ol' hiring them--they get a flat set rate and that is that, absolutely.

Being on both sides I definitely see where people are coming from with contractors being unscrupulous--I also conflate GC with contractor [actual hammer-swinging types] sometimes as I really don't think anything minus new construction or large commercial jobs require a babysitter in the traditional stand-alone GC sense.

I didn't mean selling something to unsuspecting customer, but just because you've done work for an elderly person I wouldn't call that "scamming". Maybe things are different down in MO and everyone you sell to has some sort of econ or finance background--but I can't do anything besides offer a fair price for an honest day's work (that is if I'm on their dime... which hasn't occurred for awhile).

I should also note that a proper contractor is insured and licensed just like any other trade so that is worth something above the ability to sink a nail in 1 hit. I know too many people think about how they can save $5k off their $30k remodel job by using some schmuck off Craigslist and end up eating it bad afterwards (sidenote: they always seem to give the guy 50% down immediately and act surprised when he disappears) and all we hear about is "ohh the contractor screwed me!" yet they didn't want to hire the guy with proven insurance, a verifiable license, a list of referrals, and that would work in stages for payment upon verifiable completion and goal keeping.

Anyways, way off the OP's point (but good stuff none the less). Personally, I wouldn't do a free workup for an investor unless we had worked together prior or they were already under contract. A proper scope of work can take a few hours to do and needs to be accurate. In a hot market there are a few hundred "investors" popping up daily and I'm sure we all know how that ends up for the majority.

I used to do eg-shel on the walls, but I've recently switched to flat. Normally I would just paint to a natural breaking point (corner/light/whatever) if I had to, but usually you can feather it in and match it pretty close. I haven't had a tenant come through with a spotlight checking for flashing in the paint yet. I wouldn't call my rentals high-end, but they're much closer to that spectrum than the ghetto.

On the other side, we'll see how the flat holds up. I do kind of like the look of it better, though.

@Scott W. I personally use SW Promar 400 for interior stuff and SW Proclassic for all trim work. SW does keep raising prices which is starting to irk me--but definitely jump on an account to get the discounts otherwise you pay through the nose. The 400 is supposed to be "low-middle" paint but I find it spreads better than most of the big box stuff (though I hear good things about valspar and their new tech--haven't used it yet) and the colors look very nice.

The real trick is to buy primer and have them tint it to a similar color (which is ~$10-$12/gal) and prime the walls properly so you can get away with 1 good solid coat of the more expensive topcoat. Doing this I've had fantastic results in my rentals and really drop my cost per painted sqft overall.

As far as big box brands, I had some decent luck with Glidden but they kept upping the price to the point of being significantly less competitive and Behr has just generally been an okay to awful experience. This does vary regionally, though.

@Stephen S. @Aaron McGinnis great stuff.

I'm not sure what the going rate is in each area, but I definitely won't waste unpaid time for the investor projects that aren't even under contract. Owner occupant/residential? Sure--they own the property, more likely to get the work done. It's all been covered here, but when I was brand new I quickly learned the follies of jumping for every "investor" out there that called up needing a bid for his deals.

Sure sounds like @Bill Gulley had a bad experience. I'm a contractor, investor, can analyze deals (have helped out other starting investors identify bad deals), and I do have a college degree. In fact, I was even a white collar private equity guy for a bit before I became some "blue collar dog". I do agree on the GC views. I don't personally like a "GC" in the traditional sense (taking a fee for babysitting) but I'd highly recommend that any investor who doesn't have the experience make sure they get the right guy in there who actually knows the whole scope of work being completed so at least one person can oversee the progress of the job. You sound like you know more than the average bear about construction which probably affords you the ability to hire a basic hammer swinger and run them--not everyone can (or wants to). I can't tell you how many times I've been able to buy a house for less or saw them listed and walked because some garbage contractor that was probably found for pennies on the dollar (or a homeowner DIY job) did absolutely horrible--sometimes unsafe--work in a house.

As far as adding value I'm not quite sure how you can argue that the work performed does not add value? Nice straw man with the wizard comment. You're not swinging the hammer, but value is created. I'm 100% in agreement that the work should be bid roughly equally dependent upon materials & labor and that the workers don't get to (directly) base the job off your supposed profits. They'll be out of work pretty quickly. I personally don't change my bids for a 750k property or a 120k property (as in, I don't use a different multiplier).

As far as "scamming Grannies" I suppose you've never rented a house for profit or sold a rehab for profit to some innocent bystander? Awfully scammy of you to want to profit.

Definitely in. I'll probably bring someone new with as well. Real disappointed I had to miss last month.

@Alex Heifetz some thoughts from a former Chicago native that had some initial business there (and in WI):

Taxes seem low. Chicago (IL as a whole) have pretty crappy tax rates. You also have a terribly tenant-friendly state--disgustingly so. Good luck evicting someone in less than 90 days, especially if they know a little about being a 'professional renter'.

Also like others have said, I'd strongly consider checking it out in person. The neighborhoods change quality quickly. Maybe I'm biased, but I personally would have that entire south side market very low on my list--even if I wanted to diversify out of state. I know there are many people making money there, one of my good college friends runs a bunch of south side multifams out there (his stories alone are plenty of reason for me to consider avoiding) but there are just a lot of places you could get an estimated 9-10% return (which is pretty low, IMO) and have a state that has a little more respect for landlords and other small business owners. Expect your taxes to continue running rampantly out of control, tons of corruption, and a lot of negative economic impacts forcing real estate prices to stagnate, lag other markets, or drop. It's not a guarantee but just things that I would consider.

A few positives would be if they can get their stuff together and really put some effort into making the state a business-friendly climate it should have some absolutely explosive growth. It is a fun city and it isn't going anywhere, you just need to hope the city attracts the right type of tenants (economically speaking) or you'll quickly erode the rather thin 9% cash on cash return you're looking at.

Again... I'm probably a little biased but just be careful. A lot of cheap-looking "honey pot" properties in a city like that for a reason.

@Kyle Webb as a licensed GC who has a RE license (but hasn't hung anywhere yet)--I'd vote RE license. The RE license would have been more beneficial early on IMO. However, I already had years and years of experience as a GC and a license so that was a non-factor. To be an efficient GC you'd need to have more experience and knowledge than the simple test they give (at least, relatively simple). It is not a bad target to get it as well, but I'd go for RE first. Access to the MLS and being able to grunt work your own deal and be front line for all negotiations is absolutely invaluable. Your incentive structure aligns perfectly with your client's ;)

There is also the bonus of possibly getting some extra $$ from the realtor fees or getting rid of them on your side to make your offers that much more compelling to a seller you're attempting to woo.

I'm with @Rick Baggenstoss and @Patrick L. about not raising my rents. I will even tell my tenants up front that is what I do. I never sign longer than a 1 year lease document (just in case things don't work out but we aren't legally breaking anything or not quite in the eviction land wholly yet). However, if we like each other and want to remain I won't change rents on them. The margins are good and my turnover has been nearly 0--even the few people who have eventually moved to get their own place or changed jobs have helped immensely with filling their vacancies or doing me a favor such as moving out 8-10 days early but handing me over a show-ready rental. If I can make the rents I'm making now for the entire life of the loan, I will be happy. If they move out I re-rent and adjust pricing with market. I may be slightly losing out on someone who is there for 5 years and in years 3, 4, and 5 are getting a nice unit for a tiny bit below market but let's not forget (just like you can do in options trading) that if rents were to drop and they want to stay I'm also protecting my downside while those with higher turnover will have to adjust to lower rents (rare--but possible).

Once I've picked someone I basically am upfront with them about what I expect and what I will deliver. If they keep the wear and tear to a minimum, I will gladly (and preferably) hand over the whole deposit. I'm not here to play games or nickel and dime them. I've found that besides offering well-maintained, nicely appointed, and attentive (but not overbearing) management just being up front with them and keeping it a friendly but strictly business relationship has been the foundation to my most successful tenant/landlord relationships. I'm not there to micromanage and babysit adults, and they're wanting to live somewhere that is clean, nice, and feels like an actual home.

Congrats @Daniel Miller that looks fantastic. I have a dumpster at one of my 4-units, but I'm actually going to move away from it. Too many lovely neighbors or passers-by decide its a free-for-all dumpster that is intended for my tenants and paid for by me. Unfortunately, it is quite accessible from the street so there isn't much that can be done to protect it. I am going to switch them back to individual cans (+1 shared recycling) and have started negotiating with companies. They've gotten incredibly competitive out here, especially when I offer up a few more rentals in exchange for better pricing. It's looking like it will be about $55/mo for individual cans with return service and water/sewer wise we're at about $80-85/mo for all 4 units + sewer. Numbers look pretty spot-on.

Definitely do not go directly over the concrete. Concrete is porous and will have moisture regardless if it feels dry at this moment. The product will fail in short time. Just put down a moisture barrier and then some sheathing (I normally rip pieces of plywood into 2' x 8' strips and run them perpendicular to my flooring) so you can nail the floor into the sheathing. You don't have to use a powder nailer to attach the sheathing/underlayment to the concrete (in essence a "floating" floor) but that is also a possibility. @Jon Holdman was pretty dead on with his advice.