All Forum Posts by: Bryan Hartlen

@Account Closed get multiple line item quotes and then ask lots of questions. Ask if the GC has any employees (or dedicated crews). Ask what tasks they handle and what tasks he farms out to other contractors. Compare the lines item pricing across your quotes. If on GC seems significantly higher (or lower) than the others ask why. It may be his pricing or it may be a difference in scope understanding. Whichever GC you decide you want to use, you can always negotiate and see if they’re willing to discount. 

@Benjamin Amaral, if you haven’t yet, you need to have a frank discussion with your GC. If you can come to agreement on how and when things will be done, you give him a chance to continue but you monitor progress closely. Any slips, fire him and move to one of the vetted GC’s.  If you’ve been paying him for work as its been completed, you can negotiate what if anything he’s owed for unpaid work and materials (or let him sue you). In parallel start talking to other potential candidate GC’s to see what their costs and schedules would be like (make sure you ask them how hard it is to transfer permits).  In parallel,

If you’ve been paying him some other way and you’d he behind, the decision can seem to be more difficult as you’d be in the position of having to request for funds back and/or suing him. But realistically, if the work isn’t getting done, you’re already in that position and generally dragging out the decision isn’t going to improve your situation.

I've read the discussions from 5 years ago.  I'm wondering if anyone on BP has recent experience (last couple years) with a Spartan Invest turn-key property purchase. 

@Hoa Nguyen it depends on your terms. Some HML charge you interest on your max loan amount from day 1 (they call this Dutch interest or loan) others only charge on funds actually drawn. If your loan is interest is Dutch (charged on max loan amount) you should sharpen your pencil and balance the cost of the overestimated rehab costs before closing - make sure you know how much playing it safe is costing you.

Regardless of the type of loan (Dutch or non-Dutch), HML's only provide rehab funds for work completed after some kind of inspection (in-person, photos). They call these draws. The max amount of the draw will be from your agreed rehab budget. Most HML will let you make draws less than budget and some will let you make partial draws (eg you have $6000 for new floors, you draw $3000 against the floors completed in half the property). Most HML charge a fee for each draw. So optimizing your draws will improve your return. If your loan is Dutch, there's no incentive on you to draw less than budgeted (you are already paying interest on the full amount). If it's non-Dutch, you'd typically only draw what you needed (especially if your lender allows partial draws). The other consideration for non-Dutch draws is if you came across an oh-$hit in the project that wasn't budgeted for. In these cases, you can use the full value of your budgeted line items to help offset the out of pocket impact of the oh-$hit.

At the end of the project when you close the sale of the property, you'll have to repay what you borrowed. Any ‘left over' rehab budget, doesn't matter you only repay funds received from the HML.

@Brandon Stiles the process steps are identical - how you execute them is different. Key differences for us include:

- we JV with local person on our deals. Their jobs include finding properties (he's a realtor), walking properties prior to purchase (only those we can't estimate rehab from pics), inspecting GC's work and progress.
- unless the property is a complete gut job we pay for a home inspection during our due diligence

- we only hire GC’s.  Bottom line quote that we pay out in specified milestones (which align with our hard money lenders payouts).
- besides or JV partner watching progress, on completion we hold back a portion of the payout pending a final residential inspection.

We do 2 or 3 flips a year. We could do more but finding properties is (at least for us) the hard part of flipping remote. That's actually what prompted us to JV with a local realtor. So they could network for us.

The other headache is that we seldom get to start and finish the job with the same GC. We now spend much more time interviewing and qualifying our GCs and lean hard on referrals.  We’ve also learned that the lowest price almost always means trouble down the road. 

Agreed. That’s why I said “it could”. And for what it’s worth, we’re in the middle of a complete rewire from 2-wire (not even knob and tube) in AL because of the inspector’s view of the code for that particular city. So it can happen. 

As already noted it can be dangerous if the sheathing is cracking.

Aside from this there’s a real business implication of closing without replacing. If you ever plan to rehab the property and have to pull an electrical permit you could be required to do a complete rewire. Your local inspector office can shed light on what conditions would trigger a full update. Assuming you don’t end up ever having to update it will be an issue when you go to sell the property. In the same way that you are concerned now, future buyers will also be. It could cost you on sale price or concessions. 

@Christopher Dunson I have the tool page bookmarked (https://www.biggerpockets.com/investment-calculators) and it’s working.  

** edit sorry just realized your problem was with subscription **