All Forum Posts by: Bobby Gerry

One more point on the equipment. All of the filtering equipment was still in working order except I of course had to replace the filters. We got lucky that everything still worked.

Aaron, that is such a great question. This was one of my first pools, and I was so obsessed with figuring out what kind of permanent damage (if any) was in the pool that on day one I was obsessed with fixing it. And the neighbors were furious about it because of all the mosquitoes. Once I figured out that there was no serious damage, I absolutely should have stopped to cut all the friggin' palms. We cut a bit during the pool rehab but we left most of it until after I filled the pool. I probably filled the pool quickly because I was of worried that leaving it empty might cause it to come out of the ground. But anyway, your point is right on. I should have done all that cutting while draining the pool or before. After we filled it back up it was me who was standing there poolside scooping all the debris out of the pool as it fell in during the cutting! :)

Here's one more photo from when we were draining it.

You should have seen the size of some of the water bugs that came out of that pool. It was Jurassic Park in there.

I just realized that one of the awesome things about going to Phoenix is how cheap the hotels are. Oh my goodness, amazing. (Okay, I know these hotels are maybe not the best, but at these prices I'm getting excited. And yes, I am one cheap traveler.)

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Since I live in Houston, I seem to get a fair number of houses that come with pools. Here's one I bought at auction a while ago.

This is probably one of the most revolting pools I ever had. The prior owners had abandoned this house almost a year before it was foreclosed on. The entire back part of the house had turned into a jungle.

Here's the video of the blackened pool:
http://www.youtube.com/watch?v=ciaNQvbRriU

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We drained the pool and then scrubbed it with powdered chlorine.

Then we hosed it down and used some acid. (I actually forgot what specific type of acid.) Warning: Be very careful using acid after you use chlorine. The mixture of the two will create a lethal gas that can kill you. If you're down there in the bottom of the pool by yourself and and pass out, you will not live to tell about it.

I wish I had a good video from after we fixed the pool, but unfortunately, all I have are photos.

Here are the after photos:

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Okay, I've probably been posting on BP a bit too much lately, so I'll take a little break now. Heading to Phoenix tomorrow. Pumped to see what's going on there.

Mark, absolutely! Glad to hear it! I know you sleep much better at night that way. Me too!

Jon, yes, exactly, a ball valve. Many thanks!

And Ed, nice point, thank you!

Let me try to explain this point Ed made just to make sure no one gets confused.

First and foremost, we're advocating the quarter-turn valve over the multi-turn valve. That is the key takeaway here. If you remember nothing else about this post, just remember that point! :)

Then, to get a little deeper into the kung-fu of shutoff valves:

There is usually half inch copper tubing coming out of the wall under the sink or near the toilet which carries the water into the room for the sink or toilet. The shut-off valve attaches to this copper tubing.

Now as Ed pointed out, he prefers to have the shut-off valve attach to the tubing by screwing the valve onto the tubing. This would occur if the tubing was threaded at the end to allow for the shutoff valve to be screwed on to the tubing. Valves designed for this have what's called a 1/2 inch FIP Inlet on them.

Here's a photo of one:

The other way of attaching the valve to the tubing (if the end of the tubing is not threaded but is instead smooth) is via a type of valve inlet called a 1/2 inch NOM Comp Inlet. (NOM Comp stands for Nominal Compression, but this isn't important.) That type of attachment uses the compression method of securing the valve to the smooth copper tube. As Ed points out, it can be easy to screw this up. Please note that this compression method of attaching the valve to the tubing has nothing to do with what type of valve we're using. We're still using the quarter-turn valve.

So if the copper tubing coming out of the wall is smooth and not threaded, Ed prefers to have a threaded male adapter sweated onto the smooth copper tubing, is that correct Ed?

In such a case, then the smooth copper tubing is in essence converted at the end to a male thread via an adapter, and a valve with a 1/2 inch FIP inlet can then screwed on to the adapter. You'd just want to put some teflon thread tape on there and then screw it on.

However, in this scenario someone has to sweat the adapter onto the smooth copper tubing. For folks who don't know what that means, it involves a blowtorch. This then, in my book, involves a professional.

I agree with Ed that it can be very easy to screw up attaching a shutoff valve to smooth copper tubing via a 1/2 inch NOM Comp inlet on the valve. But sweating on a threaded male adapter in my book means calling a professional. If you have a handyman that can sweat on the adapter at a reasonable cost, then I say go for it.

For me, if the copper tubing is smooth, I just use the 1/4 turn shutoff valves with the 1/2 inch NOM Comp inlet. I put these on myself so you can be darn sure I make certain those puppies are on there securely. I also use a little pipe dope in there as well before I crank it on which just helps me sleep better afterwards.

Pretty much any house you walk into in America has compression shutoff valves at the water line hookups under every sink and behind every toilet in the house. These compression valves where never designed to last. They must have all been made in the most cost savings oriented factory in the world because the compression aspect of the valve just simply fails after any period of time longer than about a decade.

Now, when I’m talking about a compression shutoff valve, what I mean is the multi-turn angle valve for the hookup lines. Here's a photo:

A multi-turn angle valve shuts-off the water via compression in the valve. It’s the compression aspect in the valve that is guaranteed to fail after a lot of use or simply the passage of time.

Job #1 when I’m doing a rehab is to replace every single compression shutoff valve in the house with a quarter turn shutoff valve. The quarter turn valve is in essence a ball-joint valve and you can be darn sure that puppy isn’t going to fail.

Below is a photo of this kind of valve.

Once all of the shutoff valves are converted to the quarter turn valve, I can always breathe easier when I'm having subs change things out in the bathrooms or anywhere in the house where water is involved. Other than a fire, water leaking anywhere in the house is the most destructive thing that can happen.

If you have your own rehab crew, I recommend teaching someone on the crew how to change out these shutoff valves. If you don't have a rehab crew, heck just learn how to do it yourself. It's a bit of work but you can learn to do it. Plumbers themselves would love to charge you something like $50 a valve and there's just no way you should be paying that. You can learn to do it yourself and save a good chunk of change.

If you have questions about why I'm kind of obsessed about this, please feel free to ask.

Best, Bobby

Most of my rehab properties have been acquired through foreclosure auctions. As such, I have been faced with a host of situations regarding ways to coax or move foreclosed owners out of properties when they'd really rather just stay for free.

When faced with a foreclosed owner who appears calm and not highly aggravated, I derived a method to simply trade time in the property for their actually leaving the property in relatively cleaned-out condition. I started using this method after experiencing the significant expenses of cleaning out tons of junk that owners decided they wanted to get rid of when they moved out.

Here is a basic contract I uploaded to Bigger Pockets that exchanges additional time in the property for later leaving the property in relatively clean condition.

http://tinyurl.com/86ehwur

I would use this contract also when I was busy rehabbing other houses and I knew I had a bit of extra time before I'd be able to get to the occupied one.

Now with all of this said, I do not recommend trying this with a foreclosed owner who is furious and combative. In those situations, long experience has told me that such a person is more interested in extra time perhaps to destroy the inside of the property or simply to never leave the property at all. But for foreclosed owners who are not angry and combative, the Occupancy and Move-Out Agreement has worked quite well.

Hi to the Phoenix folks. I am heading to Phoenix on Sunday (May 13th) and will be there until Wednesday. Would enjoy saying hello while I'm out there. I'm actually headed to PHX to look at office building and attend a couple of meetings. Best, Bobby

You know, after writing my post, the one thing that subsequently occurred to me about looking for the lowest DOM subdivisions or neighborhoods is this:

Sticking to low DOM subdivisions is equivalent to following the old maxim in commercial real estate of “location, location, location.”

I really think that lists like HAR’s “Most Viewed Subdivisions” are incredibly powerful tools. For example, where in commercial real estate do you have simple validation data that helps define what “location, location, location” means?

Generally speaking the location maxim is somewhat subjective. Yes, you can point to rents per square foot in office or retail space as a metric for desirability of location, but then you’re subject to variations in class A, Class B, class C buildings etc.

HAR’s “Most Viewed Subdivisions” is an astounding tool for a single-family investor in Houston. In fact, it’s like a super-weapon. And I don’t think Houston investors have really figured out yet that they should completely take advantage of it. Heck, it’s free. And I’d be hard pressed to find a more useful data set.

In cities other than Houston, I say call your broker right away and get ask him or her to make a list of subdivisions that have the lowest days on the market for single family homes. My goodness, what a tool, what a phenomenal tool that would be.

If your broker can't seem to do it with the search tools he or she uses to access the MLS, heck figure out how to find the people who run the MLS and beg them to make the tool. It can't be very difficult for the people behind the curtain to make the tool (or maybe just give you the list). Just bug the heck out of them until they cave!

If you have a list of the 50 subdivisions with the lowest DOM in a given metro area, my goodness what a huge advantage you have. You have the actual treasure map that defines “location, location, location.”

(DOM here stands for “days on the market”.)

When looking at potential flip, it’s always important to get real clear on what the expected exit price is. And, when considering exit prices, it’s critical to do solid work on the current comps (comparable sales) in a given subdivision or neighborhood.

But when I was first starting out, I didn’t pay attention to the days on the market when doing my comps. And it ended up costing me.

When I was making my first house purchases a few years ago, I was so enamored by discounts to the general clearing price in a particular subdivision that I would jump at a deal no matter where it was located in the city. If I had clear evidence of sales figures from the last six months in a particular subdivision showing a specific clearing price, and I thought that my exit price would be decently under those clearing prices, I took the deal. Sometimes they were just screaming deals (or so I thought) with mouth-watering margins in subdivisions that to my naked eye looked fine, or even better than fine. Eventually I found out that a subdivision that looks fine to my naked eye is sometimes not the same thing as a subdivision that people want to move in to. ..Doh!

A brief digression..

The north side of Houston is a whole series of subdivisions that go on for miles. In fact all of Houston itself is just one giant patchwork of subdivisions. And by Houston, I’m actually referring to Harris County which is the real area that everybody just calls Houston. Harris County is the third most populated county in America. A whole teeming mass of subdivisions, most of which contain houses with construction dates newer than 1980.

Houston is a newly constructed city. In fact, it’s a disposable newly constructed city. If something gets too old here, we tear it down and put up something new. There are no zoning laws, no regulations that tell you that you can’t do something, no barriers, and no real historical preservation societies to speak of. We’re the great capitalist experiment and Houston is the natural result of that great standard of Texas: a seemingly endless supply of buildable land everywhere.

A few years back, I jumped on a deal in the Timber Forest subdivision in Humble on the north side of town. The margins looked super sweet to me. I bought a 2,300 square foot house there for $80,000 with the expectation that I’d be able to sell it net of rehab for $140,000 if things went great, or maybe $130,000 if I really had to sell it under the market to find a buyer quickly. Little did I realize that no one wants to live in the Timber Forest subdivision. Yes, there are pretty houses there. Heck, it’s a pretty subdivision. But Timber Forest is located just off the road that everyone drives down to get to the super hot community of Atascocita. I eventually realized that no one really wants to live in Humble, but they’re certainly happy to drive right past it to get to Atascocita! …Grrrr…

After I finished my house and got it on the market, it sat for weeks with maybe one person every fifteen days looking at it. And it was such a pretty house! It was gorgeous! Heck, I wanted to live in it! But it didn’t matter. No one wanted to live in that subdivision. They wanted to drive right past it to get to Atascocita Meadows and Atascocita Trails and Atascocita Shores. …Grrr....

Eventually I had to cut price on the house just to get out of it. I actually can’t remember how long it sat on the market (I blocked that out) but it was months.

Around the same time that I finished the Timber Forest house, I started working on a house I'd bought in the Lakewood Forest subdivision in northwest Houston up on the way to Tomball. When I was finishing that house, I stuck my usual sign in the yard to get ready for listing it on the MLS. The house never got to the MLS. An attorney, who'd been driving around the area looking for a home, walked right up, took a tour of the property, and sent me an offer the next day. The DOM on that house was minus three! (i.e. I hadn't even listed it yet)

Needless to say, these two experiences taught me a valuable lesson. Even if you think you’ve found solid sales prices for comps in a subdivision, stay out of areas with listings or recent sales with high DOM numbers! Ask a broker to make sure to give you the DOM numbers on all the comps they send you. Don’t trust a comp price unless it comes with a DOM number. This will save you lots of headaches.

The online MLS system at HAR.com provides a good deal of information to public users about real estate here in Houston. They actually have a list of the 50 Most Viewed Subdivisions. Here's the list: http://www.har.com/neighborhoods/most-viewed-subdivisions.html

Lakewood Forest is #23 on the list out of over 10,000 subdivisions in the Houston area. - Wow - That helps explain why my house was bought before it even got listed. If you did nothing else but focus on just 10 of the 50 most viewed subdivisions in Houston, you’d do very, very well. Heck, you’d do great!

I wish HAR.com listed the 50 Least Viewed subdivisions. That would be awesome. Then you could easily stay away from them. But no matter where you are or what city you’re in, try to figure out a way to make lists like this. See if your broker can break out the subdivisions for you with the highest DOM figures and the lowest DOM figures and then adjust all of your activity accordingly. Forget about mouth-watering deals in less desirable subdivisions. It’s just not worth it, trust me. Stay in the areas where people want to live and you’ll do great.

Best, Bobby