All Forum Posts by: Corey Conklin

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.

 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! 

There are a lot of comments that addressed the reality but I figured I would add to the message. Out of the inquires you receive only 5-10% are really qualified to rent the property (at least in my area). So if you have 35 people interested I would say only 3-4 of them actually qualify to rent the place.

I suggest only doing open houses and not doing individual appointments if you haven't received some sort of prequalification from the prospective tenants. You'll get ghosted by a lot of people if you don't do it this way. Unfortunately its the down side of online postings. You'll get a ton of people window shopping for places that they know they don't qualify to rent but don't consider it rude to waste your time in inquiring and setting up a viewing that they know they won't go to.

My wife saw real estate as risky too which I have had to show her that it's actually one of the most stable assets you can invest in. Its been crammed into everyone's head that 401k and IRA retirement accounts are the only way to invest in retirement safely and that real estate is risky.

I've been able to show her over the last few years it's actually the opposite. Our retirement accounts have been getting hammered and our real estate business equity has gone up almost 300%. 

I've had to gain her trust and prove to her that I can make it happen, I'm just thankful that she gave me the chance to prove I could do it. That's really all you can ask from your spouse.

This needs to be preached to every new investor! If you aren't going to take action for yourself why would anyone want to be on "your team"? You have to actively build something before you can have a team. Good stuff @Travis Biziorek 

There are a lot of people that don't understand how hard it is to get your significant other on board with RE Investing. I've had a similar issue getting my wife on board with my plan to build and expand the RE portfolio. We have a 2 year old boy and are expecting another child. Balancing family life and starting RE is incredibly difficult.

From my experience it will be a constant issue that you will need to be sure to address through good communication with your wife. Just because your wife says she is on board today doesn't mean she won't second guess her decision when you have a few properties and go through some hard times. You cannot stop communicating with your wife, this is huge!

It sounds like you and I are similar in that we are both really ambitious and want to achieve a lot. Since I starting investing I have obtained my RE license, started a PM company, and manage all of the work on our (6) property portfolio. I also have a full time job in commercial construction management.

There are times you'll be second guessed, you'll second guess yourself, you'll make a lot of mistakes, get burned by bad people, lose a lot of free time, sacrifice current relationships, and much more. 

My advice would be to make it very clear on why you are going to embark on this journey. If you are clear on why you want to get into real estate and don't lose sight of that vision it's easier to push through the bad times and justify the sacrifices you are going to make.

I wish you all the best as you start your real estate endeavors!

I like to approach paying debt off the same way I look at buying assets. What is my CoC return?

Here's the example: I have a rental property with a $28,000 loan balance at 9.25% interest and the monthly payment is $350. If I pay that amount off today that would be 15% CoC for the $28,000. 350*12=4200/28000=15%. I would lose the monthly expense which I consider my return.

I've got other loans that I would get 4-5% CoC returns so I wouldn't care to pay them down.

The big thing you are missing is a timeline of when you want to be financially free. Is it by 2025? 2030? 2035? Once you get that figured out you'll understand the moves you need to make to have it happen. Obviously the sooner you want to reach your goals the more you will need to sacrifice.

Make sure you understand fair housing laws before you go too much further. College major choice is not considered a protected class but if you do discriminate based on college majors in your application process you better be consistent. Also be careful that you don't actually discriminate against a protected class while doing so.

House hacking is a great way to get started. It allows you to buy a property with a low down payment and provides a place to live while you continue to improve your financial situation.

The only piece of advice I would offer from my experience is to make sure you detach yourself from the house. The house is no more than an investment that will eventually be a rental property. Don't treat the updates to the home like you would if you planned on living there for the next 30 years. I don't mean skimp on quality work, what I mean is don't go overboard with crazy design changes or high end finishes. Keep it simple.

It's also smart to consider staying away from things that don't work well in rental properties like pools, hot tubs, extensive landscaping, etc. when you look to purchase.