All Forum Posts by: Blair Poelman

@Justin K.

This is terrifying:  "make me...", and "Get playful in the dark".  Who is this guy, Buffalo Bill?  

Anybody brazen (and stupid) enough to send something like that in writing is obviously a few cans short of a sixer.  Unfortunately the guy can do a lot of damage to a property, really in no time at all.

If this were my problem I would be on point at the location with a private security service as well as local PD, camera in hand and rolling the entire time.  

Good luck with this one, dude.  Be careful, I've seen stuff like this get extremely ugly, on several levels.  Be safe out there, people are crazy.

@Account Closed said it best - real investors don't use that term.

I've not heard of this place where business just drops in your lap after making "a few phone calls".  Success in any business takes time, effort, marketing, sales pitches, etc...  Yes, we make phone calls, show property, and write offers, but there is just a tad bit more to the game than just picking up my phone and filling out some paperwork.

There are plenty of butthead agents out there, and the same can be said of appraisers - I've dealt with plenty of turkeys in both of our chosen professions and I'm sure you have as well.  Many agents and appraisers totally suck to deal with, but not all.

@Brian Pulaski  

Example:

General SOW:
R&R kitchen cabinets

Detailed SOW:
Remove kitchen cabinets, replace with white XYZ style cabinets and ABC style drawer pulls in the attached configuration, add a cabinet above the fridge and range, plan for a range hood and access for new outlet for the relocated electric range.

(I actually have had the range outlet get covered by new cabinets - so yes, it does need to be addressed)

I don't ask for (or expect) bids from contractors that I don't have a contract with - and in my experience, GC's are reluctant to go through the entire process to draw up a bid until they have a detailed description of what the job is and they know they have a good chance of actually getting the job, because writing up bids kinda sucks and it takes a lot of time - and sometimes a contractor sees the bid and backs out, which is fine, I'd rather have them back out before they start than mid-way through when they realize I want what I want.  Beyond that, I have yet to end up at the exact original bid amount on a complete rehab job.  There is always at least a 3% fudge factor (+ or -) because surprises are hidden behind walls, houses are imperfect, and rehabbing crappy old houses comes with a level of unpredictability (this is after more than 2000 rehabs).

If a GC is annoyed that I'm requiring specifics on the job I'm paying him to do then that's his problem and he's probably not the guy for my job, but there are no "gotchas" and i've never had it lead to any bad blood.  I explain before any hiring is done  the difference between the general and detailed scope, and that bids are to be created from the detailed scope (and I always know the numbers are going to be a little bit off).  The detailed scope makes it clear from the get-go of exactly what the finished product should be, and helps to eliminate some of the mid-project meetings of "what do we do here...".

"investor friendly agent" means different things to different people depending on what side you're on, your experience, and your understanding of Real Estate.

In my experience, an investor asking for an investor friendly agent says a lot about the investor - typically that investor is inexperienced and does not have a full understanding of the market they are in, or what the market demands and what it takes to do a deal, and they are hoping they find one of the many sucker agents out there who will spend ridiculous amounts of time writing unrealistic offers that are very unlikely to get accepted.

A good agent is "investor friendly", and a good agent is going to provide accurate and appropriate advice and recommend their clients write realistic offers on properties that meet the required criteria and that actually have a chance of getting accepted.

I am very "investor friendly" and I've done hundreds of transactions with investors - in fact, at least 99% of my career earnings has come from my work with investors - but I pick and choose who I work with, and I don't and won't write lowball unrealistic offers.

Remember that a GC is just a person who has worked in the construction industry long enough, has a bond and insurance, and has passed the test to get a state-issued general contractor license - but that license has literally nothing to do with their ability or desire to FINISH your project.  They could really easily start it, but completion is another thing.

I suggest you interview at least a couple GC's.  Check references but remember they are giving you references to their buddies who would never talk smack about them.  Look at their existing projects, call the licensing body at your state and ask if there are any outstanding cases against them, etc... Do your research, and then go with your gut of who WANTS the job, who CAN DO the job, and WILL do the job.  

I always hire pro-permit contractors. To me, skirting permit rules indicates a lack of professional integrity.  If they are willing to put their license on the line by breaking state and local laws and rules, what's to stop them from screwing little-ole me?

Additionally, I recommend you provide your potential GC's with complete full disclosure of your expectations, desires, etc.  You are hiring them, but they are also agreeing to (or not agreeing to) work with and for you.

I do 2 versions of my SOW - one that is fairly general that I'm comfortable sharing with prospective GC's.  It is detailed enough to give the GC enough intel to make their decision to take on the project or pass on it - but not so crazy that it would scare off a good prospect.  Then I have an extremely detailed version -this is the one that has no chance of being misunderstood - this is the one that the hired GC gets.  It is extremely granular and has proven to be very helpful because it sets clear expectations and puts the guy to work on a specific directive.  I have an abundance of printed pictures that I've marked up with notes or with references to a SOW sheet. My SOW leaves no room for interpretation or misunderstanding. Unless there is a specific "I don't really care about ABC, just want XYZ as a result", the guy will know exactly what his job is.

A GC is just a person doing a project, and most people and projects need to be managed by an owner.  Be prepared to play the boss role by keeping your workers in check.   Remember that people work for people, and then get paid for their work - and nobody likes to work for an A-hole so be cool, set clear expectations, manage the project appropriately, keep things professional, and you're GC will likely take good care of your project.

Lastly, I always tip my GC and his/her guys.  On a 50k project I tip between $1,200-$2,000 in cash.  It's on the lower side if there's no dirty sewer work or dead animals or real gross tasks involved.  Higher if the team is dealing with some.... stuff.  A case of beer is only $15 but I usually get $500 worth of brownie points out of it.

You could bring in another partner and do a JV and rev share on the sale. I believe your dilemma is more common than most people realize - you put out 10 offers expecting to get 2 that you can easily cover the costs on, but next thing you know you get 4 and you have to scramble.

I've come in to a handful of deals this way - I can easily cover rehab costs if it means i'm going to get a split on proceeds of a sale. 

@Trevor Bingham There is a calculated risk that people take when doing a deal out of state. I know several investors who have had, and continue to have great success out of their state or their local area - these people all started in this business doing deals in their home town, or within a short drive (1-2 hrs) from home.  I know more people who have lost a substantial amount of money by getting involved in deals that are outside reasonable distance to where they live. 

Our market here is really tough to get into, so I don't blame you for wanting to look at other areas - be patient, a change will come.  However, I know of no better way to get your a$$ handed to you than investing out of state when you are inexperienced, or do not understand how this business works.  Reasons:

1.  "out of town investors" are easy targets for unscrupulous people to take advantage of.  This is a shrewd business.  Make no mistake about it. 

2.  Out of state properties are just that - out of state.  You are not there to take care of things.  If you're not taking care of things, nobody else is going to do it for you unless you're fronting the cash.  Even when you hire a GC to do your rehab and then hire a property manager, or you buy a turn key - nobody cares about your deals like you care.  If you're not there, nobody takes care of the property like you want it taken care of.  

3.  Out of state properties are largely out of your control. Yes, you will get substantially more property for your money outside of our little utopian paradise, however you will not have control of the deal and you are in a substantially higher risk position, even when you spent less money.

There are countless members here that will disagree with me on every point - and they're right to disagree because everybody has their own way of doing deals and for the most part we've all figured things out on our own - we all have a certain specific level of risk we are comfortable with, we all started with some nugget(s) of intel we learned from a mentor or from a book, or on a podcast, etc... but then we all developed our own unique strategy that works for each of us and our unique way of doing things. 

Please don't take offense to any of this - but reading about deals, analyzing numbers, and listening to podcasts will only expose you to, and teach you so much. You will learn more in your first few deals than any podcast can ever teach you, and if you do those deals the "right way" (whatever that is to you), it can springboard you into great success.  However even a minor oversight or simple mistake can nuke you pretty quickly -  and when that minor mistake is 1000 miles away, you really can't just jump in the truck and go fix the problem in a couple hours. 

I am absolutely not trying to poopoo your ambitions, but simply put, it can be a devastating financial mistake to start getting involved in this business by investing in out-of-state properties.  This can be a very passive business - once you get the thing figured out.  But if you really want to "know" how this business works, my advice is wait for the right opportunity and start local. 

I have had limited success with rent-based Incentives - like 1/2 off first month of rent when you sign the 12 month lease.  Or 6th month free... I never give first month free. 

Gift cards, flat screen TV's, gas cards, etc... has never worked out very well - but I get a lot of broke people calling on those ads.

The real problem is likely the property and the location.  

LOL, I don't usually spend the time to read long posts, but you had me at  "the birth mom is a very shady person".  I really have nothing more to add to this one...

@Saji Ijiyemi  

My experience with REO's recently is there is very little room for discounting beyond an approved list price. The demand for REO's is so high right now that if you don't buy the place for what they are asking, somebody else will. You can try to justify a low offer all you want, but chances are somebody else will come by and pay what they are asking.

REO's are ordering multiple BPO's and CMA's, and in many cases they are getting rehab bids and even doing the rehabs & selling on the retail market. Banks know the value of the assets they have. Gone are the days of a stupid banker selling assets for pennies on the dollar.

A comment on "rules":  1% isn't a rule. it's a guideline. Works in some places, doesn't even come close in others. 70% isn't really a rule either - every deal is unique, so if you peg yourself into these "rules" you will miss out on everything that just barely doesn't fit in the rigid box of rules.  These guidelines help to create a system - but guidelines are not hard and fast rules.  The most successful people I know in this business are incredibly flexible and creative.  Rules can kill flexibility and creativity.