All Forum Posts by: Daniel A.

Sadly, sometimes there isn't much that can be done. If you have a written contract with the contractor, you can always take that to court and have a mechanics lien put on him. You can file a complaint with the state licensing board. If you feel that it's worth it, have an attorney give him a call letting him know of the potential legal ramifications of his choices should he continue to be a no-show (even if you don't plan on suing him). Receiving a message or a call from an attorney letting you know of pending legal action generally has more of an impact than getting a message from an owner saying they'll sue. 

Have you already paid this contractor in full? Or is there still payments to dole out? 

My personal recommendation would be that you start getting other contractors out there and at minimum get some bids. If your contractor shows up, then great. He will be responsible for paying for the damages that ensued from his absence, which shall come out of his final installment. If he doesn't ever show up, then you're not wasting time in having the project sitting around.

It stinks when contractors just stop showing up. It's like their reputation means little to them. Once you've paid, you are no longer important. I recently had a contractor who had a guy cleaning the property say that he was out here volunteering his time when he could be at another job making two grand painting. (This was after I essentially declined to pay him $250 for $50 worth of cleaning. It was my understanding that cleaning up the site was a part of the contractor's job.) I asked him how he figured he was out "volunteering his time" when I had just given him another $3,500 installment a week prior. His response: "Dam*, since when was cleaning part of the job?"

Backing out of deals is a part of the game. Oftentimes you find things that absolutely need to be replaced, and it's tough to want to back out. Outdated wiring, large foundation crack, big leak. Those are big things that should not be overlooked.

While backing out isn't an unwise option, another popular option would be for you to have a contractor come out and take a look at what needs to be fixed. Have him give you a bid and then convey that bid to the seller. (I usually try and get at least 3 separate estimates from three separate contractors - paying each for their time.) If the bid comes in at, say $25k, then let the seller know that you would need to have the sales price bumped down to $40k. I know that that price seems absurdly low, but what I would do is either tell the seller that that is the price you can work at (because, given its current condition, it's not worth more - to you, at least). Or you can tell the seller that you'd still buy the property assuming  they  fixed everything up to a standard that a contractor that your trust says is up to par.

You also want to consider the neighborhood. If it's a C+ neighborhood, you don't want to spend the time and the money making a B+ property. The comps of the houses sold around it will bring the value of your house down, assuming you want to sell. If you're looking to rent, then any optimal tenants would be dissuaded by the surrounding C+ houses. If you're just looking to bring it up to habitable C+ property, then it would be worthwhile to get some bids and see if the seller is willing to bring the price down. The key is to be as transparent to the seller as possible. If they know and understand where your low offer if coming from, they're less likely to get angry. And who know, they likely know what is wrong with their property and might feel like no one else will want it after an inspection, yet here you stand, an offer in hand.

I wish you the best of luck. And remember, if this property doesn't work out, another one will. I personally backed out of three separate offers before I landed on my first rental triplex. The first house was dated. Bad wiring. Foundation issues. Separating ceiling joists. I provided the owners with the inspection report and they promptly fixed what was seriously wrong with it, but by that time I had realized that that house was not right for me.

Keep your eyes peeled, keep your hopes up, and keep searching for a good deal.

I think it largely depends on where you want to take your business. What are your business goals? Are you looking for a quick buck, or are you looking to build wealth long-term? I know it may be the desirable route to see which option you think will yield more cash, but if your business model is to buy and hold, then you're misusing your time trying to figure out how the wholesaling process works.

I mean, personally, those three options are three different business models. You can be great at one of them, or okay at all of them.

I can't personally speak to which loan would be the best for you, so I will leave that topic for someone else. I will, however, speak to rent possibilities. Where I live, oilfields are nearby. Many people come to work in the fields but have no desire to do long term rentals or to own a home there. Most of them work 10 to 12 hours a day and want only a place to sleep. A lot of people find great success in putting two beds per room and renting them out at $100, $125 per week. There is a lot of profit potential in that. 

I also have a friend who rents out three of the four bedrooms in his house at about $550 per month per room. That's $1,650 into their pockets every month. And you could also consider the possibility of renting out the whole house. I have a friend who rents a two floor, 3 bed, 2 1/2 bath for about $1,800 a month. Of course, location dictates prices, but there are a lot of possibilities. 

I will start by asking you, How many offers have you made on multi-family properties?

I, for one, prefer multi-families because they tend to generate more cash. One single family home will bring in, say, 1,200, where as a duplex can bring in maybe 1,800. (Numbers, of course, vary.) But if you are solely relying on what you're seeing on the MLS and are subsequently considering changing your business strategy based upon that, then you should stop and consider a few things. If you're not making offers, then you're not trying. If your offers are getting rejected, why are they getting rejected? How do you propose an offer to a seller? Do you just throw out a number that works for you and hope that they assent? Or do you take the time to run comps, consider costs on your end? Do you convey these costs to the buyer? Do you also let the buyer know how it is that you will be paying them? If they see that you've been pre-qualified, if they see that you have an itemization of your anticipated costs, then they will be more likely to accept your offer. But then again, rejection in real estate is like face masks in an airport. It's abundant. 

Don't let your eagerness to get into real estate allow you to cut corners. Embrace that eagerness and use it to drive you to make outstanding presentations. Let your motivation shine through in ways that the seller can be nothing other than impressed.

I don't believe that you're obligated to have someone come out at your tenant's request (I could be wrong), but I would highly recommend that you do have a licensed electrician come out and take a look. My reason is twofold. For one, and this is the main reason, it shows to the tenant that you value his tenancy and that you take his concerns seriously. Even though plugging exposed extension cords into an electrical outlet isn't altering what's going on behind the walls, your tenant feels uncomfortable and unsafe, and having a licensed electrician come in gives him or her a piece of mind. Also, in the back of your mind, if the electrician says there's nothing wrong, you can sleep well knowing "I told you so." But on the other hand, if the licensed electrician does notice something wrong and fixes it, you limit your exposure to liability. If something is genuinely wrong and you neglect to fix it, and damage ensues, then you're liable for failure to act. If a fire occurs and it is deemed that the wiring that the tenant was complaining about was the source of the fire, then you are liable.

Consider bringing out an electrician as an insurance policy. Spend a couple hundred to (possibly) save a couple thousand.

I just want to reach out and congratulate you on the start to a prosperous future in real estate. It sounds like you are taking the right approach in that you are educating yourself. A lot of people tend to undervalue education, thinking they can handle anything. The way I see it is that as soon as you think you know everything, that's when you start failing. Real estate is an ever changing landscape, and continued education is like your car in that you need to keep gassing up.

Keep on keeping on and best of luck to you and your wife.

Plain and simple, the best advice anyone can give you, and the best route that you can take for yourself, is to educate yourself. Start broad and narrow your focus. For instance, Real Estate Investing For Dummies is not going to give you an in depth analysis of anything in particular. It will, however, give you an overview of a lot. It will give you a baseline of what you need to know, whereupon you can then begin enriching your knowledge. 

As for having an interest in multifamily properties, you should probably start with reading up on how to be a good landlord. You can get a great investment, but run it into the ground because you don't know how to  knowledgably  handle situations that arise. You must learn and understand the importance and the reason why late fees should never be waived. You should learn and appreciate what the landlord/tenant boundaries are. Learn about what makes a good lease. Learn about what you can by reading top rated books. Listen to podcasts. Read forum posts.

What is it that brings you to conclude that it is the tree roots causing the back-up? Tree roots are a surprising force underground as they grow and expand. They can, although rarely, cause damage to PVC pipes. Could it be that some tenants flushed something other than human matter and toilet paper down the toilets? I have been hearing that a lot of property managers have been dealing with back-ups recently thanks in part to a lack of toilet paper.

Is there any way you can provide the forums with a little more information? Like, what are you looking to do? Are you looing to be an investor, providing only the money to someone who is well versed in real estate? Or are you looking to buy properties to hold so that  you  yourself can manage them? Are you looking to buy them yourself and then hire out a property management company to handle the day-to-day operations?

In order for someone to provide you with some worthwhile guidance, it's best that we know precisely what you're looking to do. I don't want to go on and on about reading the right books about being a landlord if you're only looking to be an investor. I also don't want to go on and on about finding the right property management company when you're only interested in, say, finding deals. 

You're looking to buy properties with cash. Excellent. You want to hold them. Also excellent. Then what? Are you looking to rent them out, lease them, owner finance? Are you looking to do this, or hire someone else? How much experience do you have in real estate?

I hope these things will give you an idea on what to say to give some potential help some clarification. Last thing you want is someone who has valuable information skipping over your post because they can't see how their knowledge can apply.