All Forum Posts by: BOB CRANEY

Home inspectors rarely know the most current electrical codes like an active electrical contractor does. A call to a licensed company could clear up if this is a problem or not. If an electrical panel has been properly installed by a licensed contractor then likely it had to be inspected by the location city/county building inspector. Call the local electrical inspector with the city/county and ask about the location. There is no fire hazard with an electrical panel with a door covering the breakers. Panels do not heat up enough to potentially cause a fire. What about building a small wall with a door in front of the panel to physically separate it from any clothing ?

If you have no rehabbing experience then a big rehab job may not be the best starting point for you, to many variables that you dont understand yet. If you want a chance at success, then think of this business as crawl, walk, run progression. Start with a paint and carpet rehab that is an easy base hit. Next do a light rehab job that may include a new kitchen or bathroom. Next step up to a rehab that has some more complicated heavy work that will scare away most retail type buyers.You will find that there are a lot of properties out there that will not qualitfy for conventional or FHA type financing and can only be sold to investors. These are the properties that will be the ones you are looking for because the pool of potential buyers will be much smaller and only investors. One of the best places to find contractors is at material supplies houses where contractors buy their materials. Go there and as for referrals for a decent company that buys there often and has a decent reputation. You are a newbie and you will not get the best pricing on things because you will need your hand held more than an investor who has done several rehabs and is easier to deal with in the eyes of a contractor. Educate yourself on the contracting side of rehabbing so you can talk the talk and not sound like such a newbie.

did you actually read the fine print in the current contract you have ? Everything should be spelled out in the contract and if they are not living up to the contract, move up the food chain and talk to a higher level manager. If they want to give you the run around and are taking more than the contract states ask them to explain why since its not in the contract. Were you sent notice of the payment frequency change before it was implemented ? The laundry business is a low margin, long term game and they may be running a tight ship on a thin margin, which leaves you feeling less than loved. 

When you a look for another company, get some referrals from them or call a management company and as who has the best reputation in the area. They may not have the cheapest split but if they hit the hot buttons you need, then they are worth the split. 

Your price seems high. If you are not working with subs you have experience with and you are working thru a PM there is always a high chance you will over pay. Most times the PM get a % of the job so very little incentive on them to get the best price for you.  You also want to make sure they are not getting some other kind of kickback from the subcontractor. If you are not local you should insist on getting at least 3 quotes on work that costs more than $1000. Perhaps you could hire a local building inspector to stop by the job several times and get up on the roof and get you some pics. Lots of roofers have flat pricing for a square (100 sqft) of shingles including a single layer tearoff. I always want my roofer to have actually looked at the job to determine how many layers need to come off. The only thing they cant see is damaged plywood and that is usually quoted as and extra with a cost of $X per sheet that needs to be replaced. 

99% of tenants want nothing to do with maintaining the rental they live in. This is one one the big reasons they rented instead of buying a house. When they signed your lease their heads were in the clouds about this great new place and the trip to Bed Bath and Beyond for all the fun things to make it more homey. They yard maintenance is a drag and actually costs them money they hadnt really planned for...even though its listed in the lease as their responsibility. 

For any costs like this that potentially incur liablilty for you if the tenant does not pay, you must control them and figure the cost into the rent so it gets done/paid. Same goes for city/town water/sewer bills. 

come up with an addendum to your lease and charge the $XX more to have the yard maintained. At the very least, give them the names of a few dependable lawn services who do work in the neighborhood to call and get service set up. If you leave it in the tenants hands you will loose. 

Sell one of your other less useful vehicles and get a truck with a crew cab and a cap, so you can still haul the family, kids and pets around. If you are doing lots of the rehab work yourself and will be in the business for a while (10+ years), get yourself an enclosed 10-14" trailer to put all your stuff in. A trailer that size can hold everything needed for small jobs-bigger rehabs. With some shelving and strategic design you can organize your tools and supplies and have a nice compartmentalized mobile lockable shop. When you just have some small work to do, you can throw some tools in the pickup and go get it done. I have also been really happy with the 14' dump trailer i have also. I built up the sides about 7' tall to make it a mobile dumpster for bigger demo jobs or tree removal/land clearing. A nice new enclosed trailer goes for about $4-6K and you can find used dump trailers for about the same. 

Walk away and have no more contact with your scammer. You would think a scammer trying to pull off something like this would hire a consultant to make them sound more legit. The email language mistakes are blatant. Sounds like you got a bad referral or someone has hacked into a legit company and is trying to get a quick payday before they disappear. I have heard of title companies that didnt realize their email system had been hacked and at a critical point in the transaction, new wiring instructions were sent to the buyers from an email different than the one that all correspondence had been coming from. You need to be able to speak with someone directly in the company to make sure of anything that doesnt seem kosher. 

Without at least a 3x rent qualification your tenant will not have enough net income from their w2 job when carrying a normal load of expenses. If you are finding a small # of applicants who can actually meet the 3x guideline, you are likely in a very low income area. Its worth waiting for an applicant who can make a 3-3.5x times rent, to give them a cushion and give you some piece of mind. If you are qualifying subsidized tenants, then you are looking for 3x the amount of rent portion they will be paying. If they will be paying 400 a month then they would need an income of $1200 a month from any sources the have. 

The only other way to cover yourself of they are below the 3x income guideline is to take a Dbl Security deposit. Most tenants do not have enough cash to provide a Dbl security deposit. I have taken a 1 to 1.5 mo security deposit upfront and the balance collect over 3-6 months and spelled out in the lease.

@Anita Anand

When you watch from the sidelines for years, with only stories from other investors and cable TV shows that are more drama than reality, you don’t get a realistic understanding of real estate as a business.

You will quickly come to find that when you are small, nothing happens without you being involved. If you get overly emotional about every decision, success or failure, you will drain yourself emotionally.

If you have done you legwork properly you should be happy to get a property you bid on but not for any more than a price that makes sense to produce a profit under your business plan. The person that over pays for a deal is the first loser, they just don’t know that at the time.

Start investing the time and resources to build a pipeline of incoming deal prospects outside the MLS. When you have to bid against the open market, you will always have to pay more.

Hire a demo company to remove it and "encapsulate" it in some heavy duty contractor bags. Double bag it and take it to the landfill with other trash. If yo ever go to sell and it comes out you have Asbestos anywhere, it becomes a problem and you take the hit on selling price. I think of it like lead paint, get rid of it and get rid of the potential liability.