All Forum Posts by: David Begley

@Account Closed - use a generator that can power most if not all the house. To start with, if the property is not in your name you probably can't initiate the order anyway - and if you could, do you really want to put the electricity in your name, pay the deposit, etc? Also, since it is an REO property, you'll also likely run into the power company requiring any unpaid electric bills to be paid first. Not sure about Illinois, but in Georgia if the power has been off for more than six months, the power company requires an electrical inspection prior to turning the electricity on, which requires a permit and they also require the water to be turned on before they'll turn on the electricity.

In other words, you really don't want to take this on yourself just for due diligence - rent a generator!

@Chad Clanton  While I agree with your premise that over regulation can choke an economy, I vehemently disagree with your hypothesis that the ratio of bad contractors (like the one in question) to good contractors would be the same in both scenarios. That's just plain irrational.   The examination, licensing, bonding, insurance, and net worth requirements in Georgia acts to weed out such idiots.  I guarantee you this guy couldn't qualify for GC licensing in Georgia.   Further, to pull any construction, electrical, plumbing permits in Georgia, a valid license is required.  You are right about job creation - Texas has evidently created a cottage industry of contractors specializing in fixing crappy contractors mistakes.  You've put people to work in careers that they aren't adequately prepared for to the detriment of your consumers.  (I know there are good, unlicensed contractors as well as bad, licensed contractors, but licensing serves to weed out 90%+ of the hacks.)

Does Texas require licenses for realtors? Appraisers?  Property Managers? Mortgage brokers?  Of course they do, for the same reasons I've stated. 

I need to move to Texas and open an aluminum siding/roofing business and take advantage of this loophole - and its consumers. 

@Jay Hinrichs   I meant to include this in my last missive to address your comment about the hedge funds need to buy nicer stuff so the rents are more predictable.  This would intuitively make sense, but I'd like to share a contrarian perspective.  I don't think Blackstone will be so concerned about the predictability of rent payments as they will be concerned about massive loss in home value.  You can bet your bottom dollar that Blackstone's Invitation Homes property management subsidiary will be extremely aggressive and punitive with delinquent renters. The reason Blackstone has been bottom feeding in Atlanta, Phoenix and Chicago is because those real estate markets were among the hardest hit in the last real estate downturn and they can pick up properties in those markets that have hit their bottom.  There isn't as much risk in these properties values dropping further as would be the case with rentals in the $150K to $250 range, especially if they become more geographically dispersed. Poor tenants won't be nearly as cataclysmic to the pooled security holders as will the "trigger risk" caused by a valuation downgrade. 

@Jay Hinrichs  Also, what people don't realize is that these portfolios are eventually highly leveraged by the hedge fund when securitized.  A lot of folks think the Hedge funds hoover up these properties as a cash purchase, which is basically true, but as they pool the loans they will get a 1st lien mortgage (singular) secured by a pool of 4,000 to 5,000 homes.  The problem then, of course, is trying to hedge these pools - you've got a loan with say a 5-year duration against a pool with an indeterminate duration.  There just simply isn't enough data yet to hedge efficiently.  Also, rating agencies will require a more diverse geographic distribution of the individual assets.  Blackstone now is principally concentrated in Atlanta, Phoenix and Chicago and will need to start diversifying geographically. 

@Robert Reardon @Jay Hinrichs  Blackstone bought 1,400 houses in a single day in Atlanta last year and have been amassing Atlanta properties for at least a year.  I understand their appetite has been equally as voracious in Chicago and Phoenix.  As I mentioned before, I don't think there is as much worry about dumping on the market this time around - the plan will likely be to securitize and sell as securities, IMHO.  The market is in its infancy, so issuers won't be able to achieve AAA-ratings, even with healthy credit enhancements, and so aren't yet that liquid.  It's just a matter of time. 

@Ryan Mullin  If a Turnkey, I assume you already have a tenant/lease and property management company already in place.  Please confirm.  (I sure wish there were deals like this in Atlanta!) 

 Mark, I don't have a dog in this fight, but I think you are missing my point.  Let me state it another way.  If I was in charge of building KC's new CityPlace development and chose you as the GC and you used your subs to do the work, do you really think my standing over your shoulder and good communication would coax you through that process?  No, you likely haven't the experience or skills to do that job, and no amount of coddling will change that.  Same as this case - the guy hasn't the skills and will never be able to adequately resolve the issue.  If Lifestyles has a scintilla of integrity, they will send in a contractor they know to be respectable and fix this mess - on their dime.  

@Mark R.  It's hard to believe a licensed contractor would defend this hack.  (Nor can I believe the great state of Texas doesn't license and regulate contractors.) He was given an opportunity to fix his mistakes, and the result is highlighted in the posted pictures.  I don't know where the comment about "...looking at a contractors hands..." came from, but not from me.  I shouldn't have to stand over your shoulder to make sure you do your job right and besides, how many different variations of scraping a popcorn ceiling and replacing with a smooth texture need to be monitored?  If my contract calls for a 6 panel door and the contractor installs 4 panel doors, is that really a communication problem?  No, of course not, the guy obviously lacks the necessary skills to do the job.  You are  right, however, when you imply Lifestyles should pony up the repair costs for their role in this debacle.   

 Joe, I know this is an extremely long forum post, but if you read it you'd know this isn't a landlord/tenant situation.  The nightmare scenario deals with a squatter, not a tenant/renter.  

@Mark R.  Did you read the entire thread and look at the pictures??  No amount of communication, written or otherwise, would've or could've prevented this contractor from being plain ****** with shoddy workmanship.  How does putting it in written improve a Contractor's basic skills?  GCs should be licensed and regulated as they are here in Georgia.   I doubt the contractor in question could meet these Georgia licensing requirements:

A Contractors License (General Contractor) is required in Georgia when the project exceeds $2,500.

• Pre-approval from the state is required to sit for the examination.
• Please note that the Georgia Business and Law exam is also required to be passed to obtain your contractor’s license.
• Licensure will be required for the practice of contracting in Georgia for any job over $2,500.
• Applicants must have a minimum of net worth of $150,000, a Line of Credit with a minimum of $50,000 one must have a CPA submit a reference letter/form attesting to either a review or audit.
• Must provide copy of an insurance certificate showing proof of workers compensation insurance as required by Georgia law and liability insurance in a minimum amount of $500,000. If applicant is applying as an individual, such proof shall be on behalf of the individual. If applicant is applying as a qualifying agent, such proof shall relate to the business organization.