All Forum Posts by: Corey Conklin

Quote from @Eliott Elias:

Big surprise, most contractors don’t follow through. I’m not going to give you advice here, that is up to you how to move forward. Thank you for sharing this with everyone and showing how sleazy contractors are.

 You are definitely painting with broad strokes here. I'm the first to admit that there are a lot of bad contractors out there but the way you speak it makes it sound like the ALL are sleazy which definitely isn't the case. 

Your risk doesn't lie with the animal, it lies with the owner of animal. If the tenant has a clean background and good credentials, from my experience the risk of any issues with the animal is incredibly low. People are always the higher risk when it comes to liability and not the pets. 

The best dogs I've owned or been around have been "aggressive breeds". I've allowed many of these breeds at my properties in the past.

It's your call whether or not to allow animals in your properties but in my opinion it's not one of the biggest risks in being a landlord.

Quote from @Michele Velazquez:

Quote from @Bill B.:

The one month of vacancy already cost you 8.5% (more than $100/mo). If you’re still vacant in another month you could have started $200/mo lower and been in the same place. 

You’re problem is either advertising (bad locations to advertise chosen or bad text/pictures) or price, you can only fix one without changing PMs. 

 So is your answer that it is better to keep lowering my rent no matter how much because it costs less than a vacancy?  I don't know what the problem is to be honest.  The location seems ok, the PM said they rent " all day" for the price.  They advertised on all the major platforms and had a great amount of leads but no applications.  one thing I don't like and I don't know if it is normal, is they just put it on a lockbox.  They don't check on the property while it is being listed or meet any tenants to show the property.  I am attaching a photo of the leads?  I don't know I should change PM's, I just signed with them not too long ago but they sure charge a lot of fees and have underdelivered in placing tenants. 

 Using a lock box in lieu of doing in person showings is becoming a lot more common. PM's are squeezed hard by investors to keep costs low and this is a way they can do it. Unfortunately it seems to increase vacancy and the risk of placing bad tenants. This is an overlooked question when hiring a PM that I'm sure you now know to ask. 

I wish you luck in getting the properties filled!

The issue I see with all of the comments on this thread is a clear lack of perspective. Contractors aren’t willing to understand the Investors side, Investors are willing to understand the Contractors side. If everyone would zoom out and really try to gain perspective of the other side it would help clear up so many issues.

Contractors,

You need to understand why the Investors are asking for bids without materials. It’s because they have been burned in the past by paying a contractor for materials up front who walks with their money and doesn’t do any work, or contractors trying to overcharge. Why they are looking for the best deal. It’s because they are looking to maximize their investment. Why they are choosing the contractors they do. They don’t need someone who isn’t accountable and will want to charge insanely high prices. Once you begin to understand what they are after you can help provide a service to them that will benefit all parties.

If you as the contractor are always on the defense and pushing back to potential clients needs with a “my way or the highway” attitude it’s not going to solve anything. It also doesn’t help when you say you’ll charge 2-3x what the going rates are either if they don't bend to your will. Would you want to work with anyone that has that attitude? What if you went to a nice steak house and requested your meal prepared a certain way. In return the staff was rude and said that you’ll get what you are served and if you don’t like it, you can leave or we’ll just charge you double! That’s not the greatest business model.

Trust me, I understand the difficulties of the construction industry. It’s not for the weak! It’s incredibly easy to get jaded over all of the crap that happens in our industry such as clients who don’t pay, labor shortages, supply chain issues, tight schedules, incompetent inspectors, terrible drawings, weather, safety, etc. If handling that is too much go do something else because it’s not going away!

Investors, homeowners, business owners, etc. need our expertise. As contractors we need to be great communicators and keep the client’s interest in mind at all times. Contractors need to be clear on the expectations the owner should have on their work and what’s in their bid. Unmet expectations lead to frustration, so make the expectations crystal clear! Take accountability for everything and do what you say you’re going to do, period!

Investors,

You need to understand that without contractors, your dream of financial independence doesn’t happen. Acting like you are some high and mighty investor that deserves to have contractor bow to your every demand is a load of crap. It’s amazing how many times I’ve heard “If you give me a good deal on this job, I will have future work” or “I don’t want to spend much on this project, it needs to be cheap” or “can you do it cheaper”. Newsflash, contractors don’t want to hear this at all.

Advice – don’t ever say the word “cheap” to a contractor. There isn’t a quality contractor that wants to do “cheap” work. Instead, you should ask for value, or ways the contractor can meet your expectations for the project for maximum return on investment. If you are open about the goals of your project, they will be able to help you reach your goals with their expertise. If they can’t do that, they aren’t a good contractor or you have unreal expectations.

It is your responsibility to be a good client to your contractors. Their jobs are far from easy and it’s only worse when you have unreasonable expectations and treat them poorly.

Let’s use the steak house example again. If you are provided with great service and a great meal but only make your servers/cooks job harder by being ridiculously nitpicky, rude, and never showing gratitude no one is going to want to serve you. You may get by for a short while but eventually they are going to find a way to keep you away. In the contractor world, word gets out quick (at least in my area) about bad clients so it’s best you don’t get a reputation you don’t want.

Pay your contractors timely, understand sometimes schedules and budgets aren’t met, things can and will go wrong. It’s not always your contractor’s fault and you need to understand this concept.

To sum this all up, I used to be a bitter contractor that always cussed working with clients, Architects, Engineers, GC’s, etc. Then I became an investor who needed different contractors to help me scale my business and I realized what the client goes through. There are some BAD contractors out there, I mean awful. It really opened my eyes to what they have to go through and why they request the things the do. Now I have a better understanding of both sides and it’s helped me provide a better service to my clients as a contractor.

Grow your perspective and it will change so much. Be good to people because you may not understand their perspective.

Quote from @James Hamling:

Quote from @Corey Conklin:

Overall a pretty good post....from a non-Contractor point of view :-)

Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....

If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones. 

It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.

This is just an argument of a polarized world view, from a person working in commercial construction, expecting everything to work as commercial construction, biased that commercial construction is the "right" way to do things. 

So I pose this; would you like to see your residential project operate as a commercial construction project operates? 

Because that would mean your bidding process will take 3-4 months. And from there is mobilization phase of another 3-4 months. And yes there is paperwork, ooohhhh all the pretty paperwork and details upon details upon details, that FYI you the client paid for because let's remember that in commercial construction a nail doesn't get hammered in for less than $20 nor a sink caulked for less than $100 because of the ridiculous amount of red-tape associated with everything and paying for 7 people to do all that red-tape so 1 guy can hammer a nail or caulk a sink. 

And than unions, we can't forget the unions oh-no what would we ever do without the unions. We need a 49'er to unload trucks, and we have to calculate all the costs of everyone standing around waiting for the 49'er to unload a truck, and the breaks, and the time it takes to get to a designated break area, and and and..... 

There is a reason why commercial job's move at a snails pace. Yes, vendors in commercial construction, sub's, wait months to get paid on completions, and that fact get's billed into the job so now your paying more for that which would make it... financing. 

You want a gant chart with per line item break-downs of ever last material item and labor second, ok, that can be done, AT CHARGE. Oh..... you don't want to pay for that you say.... yeah well I'd like to get the lambo for the corolla price too. 

One CAN get all these things your saying you want in residential, it's called a Design Build Firm, I know because I founded and operated one for a couple decades. The issue is everyone wails how it's too expensive. And it is for the majority of REI projects unless in HNW (High Net Worth) projects, as we majority did. Our "average" project was $145k.

So by all means, hire a Design Build firm, but expect the bill to be commiserate with the service. Expecting an average residential remodeler, to operate as a Design Build firm, and to deliver such FOR FREE is ridiculous. 

Why do most residential remodelers not have detailed per line item scopes broken down into material, labor O&P, because there cutting OUT all that over-head of doing such, so they can offer that lower cost. Most residential remodelers have OPTIMIZED there systems to deliver everything needed, cut-out all things un-necessary, so to reduce cost's there in reducing price, to give YOU the consumer a better service price. 

It's called EFFICENCY. I understand this is a foreign concept for the commercial guy's, but it's a reality none the less. 

 I didn't come here to argue with a couple of "know it all's". I came here to offer advice to a real estate investor. 

I hope you have a good one!

Quote from @Bruce Woodruff:

Quote from @Corey Conklin:

Overall a pretty good post....from a non-Contractor point of view :-)

Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....

If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones. 

It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.

 First of all, there are far more good Contractors than bad ones! And your lack of experience is showing. 10 yrs of commercial PM experience is nothing. You've obviously never been on the Contractor side of the equation. You absolutely NEVER let a customer make you put your money in the game while they have no skin in the game.

 I've been in construction for 20 years. 10 years in the field and 10 in the office for large/small GC's and Subcontractors. I also have a degree in commercial construction management. I feel I know a little more than most and absolutely understand the contractors side of the equation. But I also understand the owner's side too. 

I've never paid any contractor to do work for my personal properties before the work is done, NEVER! If that is their stipulation I will move on to the next guy. If I can't find a good residential guy, I call up my commercial guys and go that route. I also choose to do most of my renovation/construction work myself to avoid outside contractors as much as possible.

I can write books about all the times I've had to help clean up the mess from someone dealing with crap contractors, or dealing with them first hand. There are a lot of good contractors out there, no doubt, but it's easier to find a bad one.

Overall a pretty good post....from a non-Contractor point of view :-)

Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....

If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones. 

It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.

I’ve been in commercial construction for over 10 years as a project manager and estimator and have struggled to find residential guys that I can trust for my properties. I’ve even had some commercial guys do work for me and paid a premium to not deal with the residential guys.

What you are doing isn’t anything crazy when you ask for labor only quotes to get your contractors apples to apples. The lousy bids that these guys put together that have almost no scope definition make it hard to compare bids so it’s one of the only ways to get a true bid comparison. They’ll always cry wolf when they do the work and claim “that work wasn’t in their bid”, if there isn’t a detailed scope of work how can they be held accountable? Every contractor will claim that they are legit and that they know what they are doing. 90% of them are no where near what they say unfortunately, even the guys that always talk about “that’s what you get for hiring the cheap guy”. I’ve heard that phrase from some companies that I wouldn’t let build me a dog house.

Here are some red flags when you are choosing a contractor to do your work.

1. 1. Did they show up on time to any on site meetings with you to look over your property to provide a bid? If they are unreasonably late or don’t communicate that they’ll be late – RED FLAG
2. 2. If a contractor refuses to provide a detailed scope of work that clearly defines what is in their bid, such as materials – RED FLAG. This means they are not good communicators. Is that something you want when they haven't shown up on your job for the last week with no heads up?
3. 3. Will they provide a schedule to get the work done? If not, RED FLAG! They lack accountability and will have a ton of excuses throughout the project.
4. 4. Do they need a deposit to pay for the materials? RED FLAG! You offered to pay for the materials which eliminates the burden on them to cash flow the materials. A GOOD contractor will understand what the materials costs and add 10% to that number to include into their bid for handling owner provided materials. This eliminates the need for them to cash flow your project while also compensating them fairly for the work involved in handling your materials.
5. 5. Any other excuse they have to not be held accountable – RED FLAG

At the end of the day any contractor that says it’s their way or the highway, ALWAYS chose the highway. They must have plenty of work and don’t need your work.

Now for you as the owner you aren’t off the hook. You have the responsibility to be a good client and understand that your contractor is your partner, not some low life that you can squeeze to make yourself rich. It’s important that you treat your trade partners fair, pay them timely, and help them be successful on your projects. After all it’s how they make a living. Treat contractors how you want to be treated and hold your contractors accountable to do the same to you.

Quote from @JD Martin:

Quote from @Corey Conklin:

I did this once and it was a disaster. I would recommend to NEVER, EVER, EVER, EVER, EVER let a seller stay after closing! 

 If you have the right agreement and safeguards in place there's really very little risk that can't be managed. Key is holding significant money in escrow until they vacate. I've done it a couple of times and no problems; the sellers were too broke to go without the funds from the home. $10k or more in escrow is a powerful motivator to get the sellers moving. Now if I was in a tough eviction state I would require more escrow money.

 Even with the right agreements in place there is always still a risk that the agreement gets broken which creates a headache. I've done it before and I'll never do it again. If you or anyone else is ok with letting a seller stay after closing then that's fine, I'll never do it again.

I did this once and it was a disaster. I would recommend to NEVER, EVER, EVER, EVER, EVER let a seller stay after closing!