All Forum Posts by: Kumar Tummalapalli

@Account Closed

I read two pages of responses , I think I got a good idea of different types of responses.

I feel that there is nothing wrong in your process. But if an agent is upfront and educates you why your expectations are unrealistic , I would listen .

When I started talking to agents - some say "flipping is impossible" , "you can't win against seasoned investors - they have money , crews " , "never buy in suburbs" ,"never buy in the city " . None of these are completely true or false , but a good agent would have said " hey you can't win against seasoned investor s, they have access to hard money , crews but you have access to cheap money , you can buy the same property with 3% down and insanely low interest , so that means if they take 6 months to rehab , you could take 1 yr to rehab and still have lesser holding costs" . 

Some people seem to say : You are a time waster , tire kicker , unreasonable - you have to find the property , run comps , look at it , decide and the Agent will do the great job of filling out paper work and submitting the offer . Wow , that seems so unfair for the agent , he has to fill all the 20 pages of the real estate offer , how dare you waste their time - you deserve to be fired .Ha ha

Lets start with the basics , 95% won't help a newbie , This percentage decreases a bit and your odds of finding help increases if you become experienced . So I don't think 95% agents are dumb , Its just that 95% won't help you - it can be incompetence , laziness , wrong thinking or their strategy .

I know the people asking you to find off market deals have the best intention . Some of them might have found . But per my experience of doing direct mailing , cold calling - this is not easy , this is infact the toughest thing that any one can do in real estate  , Its like asking some who is struggling to learn to drive a car , hey why don't you drive that 12 wheeler truck .  

but  I strongly believe - a good real estate agent is worth his weight in gold . But just be realistic of finding one .

You might not be able to find some one who is great in all aspects - for ex , If I find an agent with not much experience but he is hungry , motivated and is willing to work and grow with you . I would give him a chance .

Similarly -lets say you find an experienced agent , he has great market knowledge , know his numbers , very honest but he does not have good availability , some times he responds in a day or two - That's fine , try to see how you can make it easy for him , Fill out the contracts yourself and let him review , don't wate his time asking what "FHA" is - use him for his expertise and not as a form filler .

I also see lot of agents - complaining that , they dont have time to run comps or don't have time to do X or Y . as most buyers take lot of time to put in an offer . But I have never seen one complaining about that out of state investor who had to do a 1031 exchange and bought a 1 mil property in 5 days . Do they only want the good aspect of their profession and not the "not so good" . if they were only interested in making a steady income , then why did they choose to become an agent . 

I consult for lot of fortune 50 companies , sometimes I get a great client , easy project . and sometimes I get in to a project which was already in lot of trouble and with a client who is already pissed  off - I don't get excited when I get an easy project and feel bad when I get a tough project . If I don't have this attitude I should take up a boring fulltime job for less money . 

General BP advice:  When you post these questions , you get a variety of responses , some just come here to bash you ,some to defend their profession ,  some want to help you , but they are too biased to provide a quality answer and finally some who genuinely have the intention to help you and provide practical suggestions ( they might be right or wrong but they have the best intention )

Some don't realise the impact that they will have on a newbie - when they call you tire kicker , time waster , unreasonable ... I would say , please give weight-age to suggestions which are balanced .

I wish you success

 @Laureen Youngblood I agree with not stereotyping contractors. But - come on 30% down , that will be a nightmare for @Account Closed Please aninze , don't do that .

I trust Laureen but , she is experienced in the industry where she developed relationships and perhaps the contractors know not to mess and they have the incentive to provide better service.

As a retail buyer , you can't do that . I request laureen to add some helpful tips to not get ripped of . Lets say - the job is 30k , Aninze pays 9 k , contractor stops answering the phone or the typical scenario is that Contrcator does some demo work and then stop showing up .

How could she protect her investment ?

On the other hand lets assume , the contractor completes the work perfectly with out any issues , then that's a win win for everybody .

 thats a good qn to start off - but what about the second qn , Can I find a good GC / manager , who is honest , reasonable , willing to communicate with basic professional skills ?

For any one reading this - to answer the second qn , i would do a small real world test . Either ask around your friends , colleagues , or just get a list of licensed contrcators in your area , call them up . If it goes to VM leave a voice message and explain that you are conisdering a project and want a bid

1. How many people will respond ?

2. How many of them will let you even complete your sentence?

3. How many who say - they will get back , will actually get back ?

4. How many show up to the appointment ?

5. How many will give the bid in the detail that they agreed to ? or atleast respond to you with a bid

6. How many are reasonably punctual ( 10 mins here and there is no big deal ) in phone calls , meetings

7. How many of the bids are reasonable  for you -( now a contractor can quote anything , I dont find fault with that . Market will determine , but as this topic is how to hire a GC )

8. How many of them , after all teh negitiations , decide to honor the commitment  ( cases such as a highly "lucrative" retail kitchen job , I have no problem with these 50k medium end kitchen jobs , if the owner and contrcator are happy , but do you think they will show up to your job site - this is a continuing threat )

Now if you start working with them :

1. Repeat question 8 , because that will happen after the work starts as well

2.How many are genuinely trying to bring the costs down ( a simple test is see what are the costs of materials that they are buying , I understand they have overheads and all , include everything - but do you feel that the GC wants the cheapest material for you )

3. How many are genuinely trying to honor the scope of work and not say , hey there are three hidden electrical boxes , which we didnt count for , so it will 1000 extra :-) 

4.  Forget about the complicated stuff , how many will show up on time and have the crews that they say they will have so the work keeps moving forward . 

May be an investor should also ask these qns before they decide to find some to "manage" their projects

P.S: I agree that there are bad apples in any industry , not all investors are good , there are lot of  bad people in investing - slumlords , risking the safety of tenants and so on . If from the above exercise , you find contractors who you are satisfied with , then catch them, pay them well , respect them  and your life will be much easier . 

I dont know how long have you been doing this , if all investors/ home owners even those who are doing remodels , read and reread this post , they can avoid lot of sleepless nights .

In many states , even in my home state of IL , anyone can become a GC , no exam , no skill test , no background check , no experience needed ,  no crew needed , no financial proofs needed . I dont find fault with people who are becoming GCs because of this , if I didnt have any experience , no skill , no  money , no crew , cant get any job - why would I not do that ? And I know blaming government is not going to help in any way - so I wouldnt even try that . 

Particularly you hit the nail on head in your last paragraph . 

Having a GC is awesome but with one important consideration : They should be good ( I am not defining "good" here because - as long as its reasonable , every one has their own definition of good , for me honesty is the most important thing , for some one else they are better equipped to handle some drama but the price has to be low enough  )

Now I wont say its impossible - but its pretty darn tough to find a good GC  . So an "investor" should have the skillset to handle this situation . 

Some common arguments I hear :

1.  Point: An investors time is well spent finding deals , but not managing projects so hire a GC

Reality : Even if you have a GC , you have to manage the GC , you stop going there for a week - work doesn't get done or is extremely slow

so if you have to manage anyway , why do you want to pay extra ?

2. Point: You get what you pay for

Reality : This is the biggest myth , Its not true in contracting and its not true in any industry . 

Infact an expensive GC - sent a contract to sign after a conversation . We talked about my concerns and he answered with some good suggestions which manage risk for both of us . when I reviewed the contract , he very diligently modified the contract , but hey , he only included the terms that favored him and excluded everything that reduced my risk  . This is just an example . One guy sends a contract and asks me to sign - it says " the scope of work attached in the addendum " and it is not there in the contract he sent me to sign , he was angry that I didnt sign it right away . The trick is to get it signed and now he can write whatever he wants in the scope of work .

So these are the expensive "crooks" - with expensive "fraud" mechanisms . 

Summary : If you have a good GC - who is fulfilling his duties , yes please use them , pay them well , grow your investing business . But no matter what sort of due diligence you do , the probability of that happening is pretty slim . so whats your plan B - get that ready

@Jonathan Bouren  

This is pretty much like construction contracting but multiply whatever you see by 20 times as - unlike contractors , they don't have to be local ;-)

I happen to be a Mechanical engineer with masters in Information systems and supply chain Management . Though I work for fortune 50 companies as an Independent consultant , In my capacity as a program manager , I am a techie and know about a lot of stuff .

I happen to be a real estate investor so that might help . If you have found some one you like , i can just advice you . I don't need any money :-)  But if you happen to a rehabber/flipper I would welcome some construction knowledge

Hi @Anthony Fecarotta  - I am not a super experienced investor or anything , but learnt a ton from all the helpful folks here .

1. I don't think there is nothing more to add that what @Michael Facchini has mentioned in his reply . 

NOBODY knows what is the peak , what is the low - Its very tempting for some one to look back and say , my friends bought a great deal during recession . This is called "resulting" . Hindsight is 20/20 .  How can any one know what is the low point ? Some one might be thinking 2009 is the low point but in chicago there are lot of markets which kept going down until 2012 , so if you bought in 2009 - you would still loose value . 

Another suggestion would be - Think of "forced appreciation " . 

2. I would say - if you are confident of adding value - through rehab , then 200k is a better option . The key is to have multiple exits . Play devils advocate - or find some one who can argue against your theory . We are all biased and have blind spots .  

3. 203 k or homestyle will be good . But this itself is a very broad topic and adds an extra layer of complexity . Nothing that could not be handled but just be prepared.

General suggestions :

1. Listen to what everybody is saying - but keep an open mind . No matter who that "expert" is . You will come across statements like 

 a. Never take up a full gut 

  b. Never buy a turn key

c. Never buy a SFH

These are not right or wrong . To understand if they apply to you - you got to ask more qns . For ex : the most common advice is to avoid a bigger rehab initially . This made sense to me until I lstened to a podcast where

@JScott mentioned why a gut rehab might be better . So To summarize

"Challenge everything - Challenge all your assumptions  "

2. Team

To succeed you need help from evryone - you need to find great team members.  And this is not easy . Infact one of the most under estimated tasks involved.  There is no magic bullet , you could make an educated decision but its just trial and error . 

3.  People will help

I am one of those weird guys , who doesn't like to ask for help . If you are Type A - "in the face" , kind of guy , it is much more tougher . But I started to ask for help - and surprised to find that "People will help "  . I drove 2 hrs to meet with an investor who responded to my request , He was gracious to spend 4 hrs of his time and took me to his rehabs . I begged him to take a consultation fee , he frowned when I sent him gift cards and told to STOP - Even now I feel guilty to waste his time . 

4. Read books

I know this is a very common advice , but let me qualify this statement . "Read books " that will help with your weakness , For ex : being an engineer - I have issues with making decisions . Just because every one on the podcast says read "Rich dad poor dad" you don't have to . The best book that helped me was "thinking in bets" because it helped with my weakness - How to make decisions. Also remember that , I subscribed and read all the Harvard business review articles on this topic but the book beat all of them . Also listen to the podcast episode of this author . 

The Most important  but might be most cliched as well:

*** ITS ALL ABOUT MINDSET ****  

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some questions that you will need to find answers:

1. How to find right experts

2. How to find right information especially how to identify the advice that's most common but which is nonsense

3. How to develop the right mindset

4. How to identify your biases and safeguard

Sorry guys ..didnt see this..

Counties are always tricky - not saying its not possible , but most of them throw up captchas , visual captchas so automating it might be pretty tough . Even if you find some one who can build , the problem is that , the county websites keep updating and then the program breaks. For county information , I just found lot of data providers .

But one more thing , some counties have pretty basic websites...so the scraping becomes easier

I use zillow for collecting lot of data : For ex : when I researching a new area for flipping ... I will collect the data and find properties which were bought and sold with in a year time frame , which means they might have been flipped..

I use this to predict the flip prices ....

Other use cases :

1. Find properties which have teh fastest percent price drop

2. For a specific realtor - what is his list/sell price ratio - this tells whether he consistently over prices his listings

3. Find properties which got sold with in a week after hitting the market - This will give me examples of good deals in that market

4. For multifamily , 2-4 units , I use it to calculate rental income 

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APIs won't solve this problem - as they are restricted in terms of number of calls you can make .. meaning number of records you can extract , the type of data and so on...

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Programming language : I think selenium with beautiful soup - makes it easy to build these. If you want a destop application - then C++ or .net

Also keep in mind that - you also need to use proxies so you won't get banned 

But once you do it for one website , the process is essentially the same...

@Brookshire Harris  - we built a zillw scraper - which kind of met my needs , I just go to county site.. But yah , have learnt quite a bit on how to scrape and use data ...

@Kenneth Garrett  Just sent out a note via messaging here - I need lot of help :-) 

Great Suggestions from @Mike S. ( To learn more about this , I recently listened to a podcast where the investor spoke how land trust helps and protects - was very eye opening - search in best real estate investing advice ever podcast with landtrust )

@Kenneth Garrett also hit the nail on the head - work with small local banks and they will accommodate .