Discrepancy - what am I missing?

Question

Hi guys,

So I have this acquaintance who owns 40 properties (SFH) in Illinoi and may be 3-4 in Florida. None of the properties are paid off, each property cash flows about $500 per month so he was able to quit his job and do real estate full time. What I don't get is, lets say he gets around 18-20K in cashflow per month... I asked him and he said his tenant turn over is around 1-2 years per property (So in every property a tenant moves out once a year or may be once per 2 years). Ok, mine as well...

Then, he says that to paint a house is about $250 (his handyman charges $25 per hour, so for 1300 sq feet house may be the handyman needs 10hrs, so= $250)

I just got 2 bids to paint a 2500 sq feet house and 2 different bids are for $7000 and $7500 in Florida.

How is it possible that this guys is getting $250 bids and I am getting $7k bids?

How is it possible that the cashflow is not eaten by the tenants turn over/fixes...

Just makes no sense to me....

Chris Seveney · Answer

@Mary Jay

It’s very easy to “say” anything. Real estate investors are like fisherman, they tend to over exaggerate things.

Whether or not it’s true- end of day who cares, do your thing and keep pushing

Terrell Garren · Answer

I've used the same painters for maybe 10 years in NC. Generally, a 3BR/2BA 1,300 sq ft will cost $4-5K in labor and take a full week for two painters. I do not like turnover and keep my rates a couple hundred dollars less than market to retain good tenants. I guessing my average is 5+ years per property. A 1-2 year turnover average would crush my business model.

Jim K. · Answer

Exactly what Nathan and others are saying. These are the kind of numbers that BS artists hand out, not guys who are actually getting it done.

Nathan Gesner · Answer

1. I don't know anyone that can paint a 1300 sq.ft. house in ten hours. On average, it will take 3-4 days for two people to paint a house of that size, including prep and cleanup. Two people, four days, = 64 hours x $25 = $1,600. It will cost another $1,000 or more for materials. On top of that, $25 is really cheap in any market. Most people are paying closer to $35-$50 for handyman now.

2. He's probably not painting the entire house each turnover. Most paint can last 7-10 years. In my turnovers, I may apply some touch-up paint between tenants or even paint an entire wall, but I typically don't paint an entire room and certainly not an entire house.

3. As others pointed out, don't believe everything you hear. People exaggerate all the time. Someone will tell you their short-term rental is making $100,000 a year, but they don't tell you that's before paying the mortgage, taxes, insurance, lodging taxes, utilities, marketing, stocking toilet paper, the cost of their furnishings spread over X years, their short-term license, lawn care, the time they spend working on it, etc.

Theresa Harris · Answer

He's paying a handyman an hourly rate vs hiring a painter to do the job. Ask your handyman how long he thinks it would take to paint a house and what their hourly rate is. Rates will also vary by region.

Alex L. · Answer

Prices in Illinois (and the Midwest in general) are a lot different from Florida. I could easily find a "contractor" to paint my 1200 sq ft property for $15-25/hr, but the quality likely isn't going to be there, which may be the case for your acquaintance. Doesn't mean it's not impossible to find a quality painter, though. I personally pay ~$500 labor for a 1200 sq ft house in Ohio, and the guy I use does a great job. Lucked out after trial and error with other "cheap" painters. More professional companies/contractors have given me estimates ranging from $1500-$2000 for the same property in question. But again, those are Midwest numbers.

Mary Jay · Answer

Thank you !

Russell Brazil · Answer

I dont remember, I found them almost 10 years ago

Mary Jay · Answer

Where do you find those guys?

Discrepancy - what am I missing?

Discrepancy - what am I missing?

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