All Forum Posts by: David S.

@George Nyquist

Thank you for your advice.

The personnel list only shows the sole owner, so it sounds like this SF guy could be illegally paying to use someone else’s license as you suggested was a possibility.

You also said that “IF you do use him, one important thing is to make sure that all of the proper insurances are in place (I.e. Workers comp and CGL).”…..That also implies that I should getting proof of proper insurance from the SF guy, not the LA guy that is renting out his license, correct?

Since we are just mom and pop operators, seems like the safer route to go would be to get a more legitimate roofer that is prepared to get his own license rather than rent someone else’s.

By the way, why wouldn’t someone just get their own license? Is it a cost and/or education issue? 

Why do the GC's accept the scenario above? Is it because they get better pricing when they do?

I am bullish looking out 5-10 years but do expect a dip over next 2-3 years in line with my personal expectations of an economic recession during that time.

Wait for the buying opportunity rather than out of state.

While checking out a roofer to do some roof maintenance on a flat tar and gravel roof, I discovered that the license number that he Gave me belongs to a roofer in Los Angeles instead of San Francisco where we are located. This roofer in San Francisco said the license is his partners although these guys do not seem to work under any corporate entity.

Should I be concerned about this?

Can 2 self employed partners work under one license?

Both of them appear to be under the radar of review sites like Yelp. I have also asked for references but he has not been forthcoming except to say that he can show me a lot of contracts whose value is much more than the small job he is quoting me.

As I write this, I think I should pass on this guy.

What do you all think?

@Dylan Vargas Hope all is well.

Re-visiting this post to see if you can offer a view on this property and the neighborhood that it is in.

1748 Neal Dow Ave

Chico, CA 95926

I am about to enter a construction contract that should take about 4-6 weeks. For the sake of argument, let’s say the contract is for $100,000. The contractor’s proposed contract plans for four progress payments...on 25% completion, 50%, 75% and 100% completion. However, it does not provide for any holdbacks/retainage from each payment.

I have heard construction lenders will hold back from each draw.

Even though I am paying in cash, should I not require some sort of holdback (5%?) from each draw to protect myself from incomplete work and unpaid subcontractors/suppliers? And how long should I hold it for?

I am about to enter a construction contract that should take about 4-6 weeks. For the sake of argument, let’s say the contract is for $100,000. The contractor’s proposed contract plans for four progress payments...on 25% completion, 50%, 75% and 100% completion. However, it does not provide for any holdbacks/retainage from each payment.

I have heard construction lenders will hold back from each draw.

Even though I am paying in cash, should I not require some sort of holdback (5%?) from each draw to protect myself from incomplete work and unpaid subcontractors/suppliers? And how long should I hold it for?

@Account Closed. Thanks for the summary.

A $3M offer on a 14-unit building in "our market"....Surely, this cannot be located in the San Jose Bay area where you are located....Can you add any additional detail?

I am about to enter a construction contract that should take about 4-6 weeks. For the sake of argument, let’s say the contract is for $100,000. The contractor’s proposed contract plans for four progress payments...on 25% completion, 50%, 75% and 100% completion. However, it does not provide for any holdbacks/retainage from each payment.

I have heard construction lenders will hold back from each draw.

Even though I am paying in cash, should I not require some sort of holdback (5%) from each draw to protect myself from incomplete work and unpaid subcontractors/suppliers? And how long should I hold it for?

@Owen Dashner Thanks for bringing up the stock market analogy. I think that as in the stock market, you can invest in RE for cash flow (dividends) or for growth (appreciation) or a combination of both. You just have to determine your goals and where on the spectrum you want to be. In both you should do a lot of due diligence. You can use a spreadsheet to do a 10 year projected DCF analysis or a simple analysis on the back of an envelope. Just make sure the inputs are realistic. You can have a concentrated or a diversified portfolio of RE. You can also invest anywhere geographically also you may be constrained by location...how much do you know about OOS markets.... or capital...how much money do you have to invest.

Given the growth of the RE market, I think this site has probably attracted more newbies that 1) need cash flows and therefore are drawn to OOS low cost opportunities or 2) ones that see all the money that can be made from flipping (the traders in the stock market world).

It will be interesting to see what happens to the activity on this platform if and when another RE correction takes place. In the meantime, it is a great place to learn from the experienced investors.

This has turned into one entertaining and informative thread. Its been time consuming but I have enjoyed reading almost all comments.

It seems every few months @Diane G. posts about some data-points leading to the inevitable downturn. These kinds of posts usually results in a lot of replies and the thread evolves into the classic no need to worry, just go to the markets where there is cash flow vs. “buying (on spec) for appreciation...This debate could go on forever.

I am sure there are a lot of ways to make money in real estate, in any cycle. As an investor in Bay area real estate and the stock market, I share the view that we are due for a correction. While there still seems to be plenty of buyers in our markets, I think the risk at this point is to the downside. Its certainly not the time to be aggressive. When interest rates rise, VC funding dries up and corporations and consumers start defaulting, there will be plenty of opportunities to invest in the Bay area.

I am thankful for the graph posted by @Amit M. I will be waiting for the time when the market steps down and provides higher yielding opportunities. I am a believer that rents in the Bay Area will continue to be more sticky then prices.