All Forum Posts by: Eric Wood

At the beginning of April I purchased my first investment property, and now I've found myself in my first dispute with a contractor. I'm definitely learning a lot from this experience, but I am really hoping to receive some solid advice from our community because the situation is also quite nerve wracking and frustrating. If it is at all relevant, this property is in Florida.

When I purchased the property, I knew that there were some structural repairs that would be needed. The full extent of the repairs were impossible to know until the floor was opened up to fully access the damage. I shopped around for contractors, and found a GC who I felt was fair and straightforward based off a few initial conversations. My big mistake at this point was sending the contractor a large deposit ($8,000) before he ever started work. After receiving my deposit, I was told by the office manager and others at the company multiple times that I would be followed up with to be put on their schedule. I had to constantly call and follow up because these dates I was provided were not honored and I received no communication or updates. Long story short, the contractor finally sent a small crew out to open up my floor. The damage ended up being significantly more extensive than I ever would have anticipated, and he then came back with a contract price to finish the work of $57,000!

At this point, I called the contractor to see what my options were. With a repair this extensive, I did not want to blindly proceed forward before assessing the situation completely. The contractor told me ver batim "I'm not going to refund any of your deposit if you are going to turn around and have one of my competitors do the work. I will only refund your deposit and release you from the contract if you sell the property and provide the closing documents to prove it." So according to the contractor, the options I had were to

1. Pay him an enormous sum of money to repair my property
2. Sell my property (not a realistic outcome because selling it as-is without repairs would require me to write a huge check at closing)

After this conversation it became very clear that I no longer wanted to do business with his company. I emailed him saying that I wanted to be released from the contract, which he refused. Per his contract, the next step of the dispute process is to move into mediation. I could honestly live with the expensive lesson of losing my $8,000 deposit, but the possibility of a lengthy court case that could get extremely expensive is terrifying to me. I'm not sure exactly what my options are now, but I'm hoping for some advice from the community

I'm searching for some honest feedback from the group here. Am I in the wrong as the consumer? This contractor incurred what was probably less than $1,000 in expenses related to my project (literally just sending a small crew to bust up a section of flooring in the living room), which I would have more than happy to compensate him for if things ended amicably. He is now threatening to sue me for the "expected profit" that he would have received if the project were to have been fully completed. To me, he just seems like a bully and an egotistical jerk for trying to strong-arm me into staying under contract with him - but maybe I'm not looking at the situation objectively?

I've made it more than clear that I have no intention of working with him. If I wanted to hire someone else to complete the repairs, should I wait until my dispute with him is completely resolved and I've officially exited the contract, or can I begin work with someone else now? I need to complete the repairs as soon as possible so that I can stabilize the asset and get a tenant placed

Hi everyone,

I have been shopping for my first rental for a few months now and came across an interesting opportunity in my local market. I would appreciate any insight from more experienced investors in our community :)

Property Details:

4 bed, 3 bath (3 kitchens!). 1650 square feet. Basically turnkey, maybe some minor lipstick required to bring it up to 2022 standards. Asking price $135,000. Property is located less than a mile from my local community college. 1 bed and bath current rented @ $650 / month through March of next year. After analyzing Zillow, Rentometer, and HUD FMR estimates it looks like gross rent range would be between $1450 and $1750 if the entire property was rented on one lease. However, I think with the third kitchen and proximity to the community college it could pull in more if rented by the room.

Financing Estimates:

Method: DSCR

20% ($27,000) down payment, loan amount of $108,000 @ 8.318% APR ($802 per month). Total cash down ~$30,000.

Taxes and Insurance: (According to Zillow) $1,150 / year & $780 / year

Assumptions: 5% vacancy, 15% maintenance, 5% capital reserves

Estimated Returns @ $1125 net per month ($1500 gross rent - 25% for assumptions) :

CoC: 6.5% (1,950 / 30,000)

NOI: $11,570 (($1,125 * 12) - $1,150 - $780)

Cap Rate: 8.5% ($11,570 / $135,000)

DSCR: 1.00 ($11,570 / $11,554)

I feel pretty good about these numbers, especially considering that I calculated them using the rental rate that Rentometer gave as the 25% percentile. If I rented by the room, I could hit $1500 gross rent per month by charging under $300 per room. As mentioned earlier, I appreciated any insight on this deal. For those of you who have rented by the room before, have you found it to be worth the trouble? Am I forgetting to factor in something obvious? TIA!

Thanks for the information, Jeff. I'll look into everything that you mentioned! 

Hi everyone,

I'm planning on purchasing my first investment property in the next few months. I'l be purchasing via my LLC, but will likely be getting a private loan from family for part of the down payment. Before beginning the transaction, I want to make sure that everyone involved feels comfortable and protected. To accomplish this, I want to provide my lenders with a personal guarantee and Promissory Note. I also need help drafting up rental agreements and other paperwork. I know that you can find a lot of templates for real estate documents online, but I'm not totally comfortable just ripping something off the internet and hoping that it would hold up in the event of a lawsuit.

Should I be working with a lawyer / attorney to create templates for this paperwork? If so, what qualifications should I be looking for to know I'm working with the right person? Any advice is appreciated 🤠

Hi everyone! I have been interested in real estate investing for a long time and finally reached a point personally and financially where I feel like I'm ready to start. I recently passed my state (IN) and national REA licensing exams, but haven't yet hung my license. 

In the next ~3 months, my goal is to acquire my first rental property. Once my partner and I both graduate from school next May, I'll also be purchasing a property to house hack. I'm planning on mainly using my license to represent myself in transactions to save myself money via commission, while helping out some friends and family with a few transactions as well. I know that there brokerages out there who work with investor agents and have no problem with this type of arrangement, but I still feel a bit nervous. 

I've learned a lot during the pre-licensing course that I took, but I know that there is a lot of learning on the job that takes place as an agent. Is it realistic that I can find a brokerage to hang my license with that will be hands-off enough to let me "do my own thing", but will still provide training and enough support to make me comfortable representing myself for my first few transactions? My other plan of action would be to leave my license unassigned and work with a more experienced realtor for my first few deals until I feel more confident. Am I overthinking this? Is it worth giving up 3% on my first few deals to learn from someone else? Any advice is appreciated!