All Forum Posts by: Andy Whitcomb

@Andrew Syrios I have J. Scotts book on estimating rehab costs arriving today, I'll also check out his book on flipping houses. I haven't read any of his books yet, but I know he's a smart guy with some great systems, so I'm excited to see what wisdom I can glean from those books.

@Whitney Hutten Yes I am using GC's, but' I don't think they are involved early enough in the process. I used this GC on two of my projects where now I'm seeing that his systems were a big part of the problem.  He won't give a bid on the entire project... he just gives me a "not to exceed" bid for labor only (although he always exceeds it by quite a bit) and leaves the material estimating and purchasing up to me. He also requires that I pay those labor hours at the end of each week. In retrospect that is a terrible arrangement for me, but I didn't quite realize this until after the second time working with him. While that was part of the problem, I realize that material costs and timelines increased dramatically due to Covid. I just didn't have a good system in place to track expenses in real time so I could pivot before the budget was blown through.

My more successful project was using a different GC (not during covid), and he did a great job. For that one I walked him through the project with the scope of work in hand (derived from our design changes and the inspection report), and had him bid it out based on my scope. He bid the entire project and stuck to it pretty well. The only variance was change orders on my end. 

This is how I believe it SHOULD work (please correct if I'm wrong here):

1. Get inspection during due diligence

2. Create s.o.w. from inspection report

3. Get a GOOD GC to create a bid based on the s.o.w. before you close

4. GC gets progress payments for work that is completed at certain intervals (either halfway, 1/4" etc., or after bathroom, kitchen, etc). 

 I think step 4 is where I mess up. 

Can anyone recommend a book or other resources that I can use to educate myself on systems and processes to improve the rehab process, specifically related to budget?

I have done 4 rehabs now (buy and hold), and I've found that my rehab management skills, while improving, still need some work. In general details are not my strong suit, and I don't have a good system for managing expenses and keeping the project on budget. I really want to do more BRRRR's, and maybe even some flips, but I'd like to get really good the management side of it first.

I believe it starts with getting an accurate rehab budget to begin with (this was the problem on my first BRRRR, a full gut 4 plex), so I'll be buying J Scott's book on estimating rehab costs as a start.

Any insight would be appreciated!

House hacking using Airbnb is a great strategy, and if done right, can propel you forward financially very very quickly.

In normal times I'd say, without hesitation, go for it and you'll be able to cover a large portion of your mortgage. Of course, the reason I hesitate is because of that crazy curveball we've all been trying to navigate, Covid. I watched my 6 bedroom Airbnb in Capitol Hill go from $26,000+ gross monthly income down to $0 overnight. At the same time my cabins up north have been 110% booked until the end of the year (I say 110% because we have a substantial waiting list).  As @Michael Haas pointed out, everyone wants to get out of the city. On the flip side, most things that bring people into the city have been cancelled indefinitely (sports, conventions, school, etc). However, even during Covid there are people travelling and reasons that people require short term housing, but the competition for those folks is steep since many airbnbs are empty. 

My advice is forget Airbnb for now focus on travelling nurses, who run on 3 month contracts. Buy a house in Beacon Hill, International District, or other areas close to the hospitals and you'll have more potential short term tenants than you can handle. I know this because I switched my Capitol Hill house to Furnished Finder and I got bombarded by requests. I believe you can go to their site and read all of the housing requests, which will help you fine tune your offering. You can also call them and they are very helpful.

Travelling nurses make great tenants because they work alot and are generally very clean. They also pay slightly higher than traditional tenants.

Regardless of if you do Airbnb or cater to travelling nurses, I always advise doing everything you can to make your property photograph well. Furnish it nicely, and if you have an eye for design that is very helpful (if you don't, then have someone help you). 

I hope this helps!

I've been looking into this as well, but as Michael pointed out, Bellevue has some strict regulations regarding this. Better to find a house outside the city limits in Unincorporated King County, but even then there are restrictions. 

In addition to that, you'll want to consider Fair Housing laws. You can't advertise a room as "great for a young professional" or "single male only". 

It really comes down to who you are and what your goals are.  Do you want to NOT be poor? Or do you want to be wealthy? 

In general, Dave Ramsey is very good at helping people who are deep in debt and struggling to manage their money. It's a philosophy for not being broke, and for that reason I think it's a good place to start to build a strong personal financial position before investing. If your personal finances are a mess, then you're going to have trouble investing in real estate, and you probably should NOT use leverage to buy real estate. Remember Warren Buffett's rule about investing: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

With that said, as others have mentioned in this thread, his philosophy of "all debt is bad" is generally counterproductive in real estate investing. Real estate investors know that leverage via long term debt is one of the most powerful tools when combined with an appreciating, cash-flowing property. Of course, this is the Kiyosaki philosophy; and where Dave Ramsey is great for keeping you from being poor, Kiyosaki's method of using debt to buy assets will make you very wealthy. 

As a side note about Dave Ramsey's FPU... my wife is an investment banker and a big Dave Ramsey fan. When I met her she had already gone through FPU two or three times. She persuaded me to go take the class with her before we even got engaged. She did this partially because she thought I could benefit from the financial education (which I did, even though I disagreed with some of it), but mainly because she knew that it would force us to talk about money in ways that most people never do. Money --and the lack of communication around money-- is the largest cause of divorce. Taking that class set us on a trajectory where we fully understood one-anothers views about money, and helped to align them. I highly recommend this for newlyweds or if you are engaged. And when you're done, read (or re-read) Kiyosaki's books and make your own decision on how to use, or not use debt.  

Nice job on the flip! I see it's pending right now, I'm curious to hear how everything went after closing. I agree there's something really satisfying about bringing back something old and run down. And the lessons learned are priceless.

Hey Gary, 

I am actually just finishing up a very similar condo conversion in Bremerton. It's 4 detached houses on one lot. They guy you want is named Bryce Dille. PM me and I'll get you his full contact info. I've also got a great surveyor which you'll need, although Bryce has a few he can recommend also.

Now I'm trying to refi each of the units individually, as they are all on one mortgage. If you happen to have have any contacts for a local lender who would do that, let me know :)

@Kyle Wells would you say you recommend Cardinal Financial? 

I have a few investment properties (in LLC's) that I need to refi but I'm having a hard time getting anyone to call me back. If anyone has any recommendations I'm all ears!

Lots of great advice given! 

I wouldn't list it until you've closed AND had a time to make any cosmetic adjustments you desire. In my experience good design is one of the driving factors that determine price and how frequently it's booked. If you're not a design-savvy person, find a friend or hire a consultant for an hour to advise you. Also make sure you have professional photos! 

If you are listing it during the high season for tourism in your area, then definitely do not discount it. If it's the slow season when you list it, you may need to adjust the price a bit to be more competitive.  From my experience if it's a good location with nice design and pro photos, you'll book up with out much of a discount.

I agree, ditch the PM and start by managing it yourself with plans to outsource overseas. I am still self-managing so I can't speak to the overseas management (although that is my next move i think).  The most important thing is if you don't live in the area you need local support. Find a local handyman who can be on call, befriend the neighbors, etc. You need someone who can pop in if something goes wrong or the guests need some random thing.