All Forum Posts by: Brian Garrett

 Sure - send now - 

I think the 2 MOST important things about a BRRRR deal are to get the ARV and rehab price as correct as possible before you begin so you're putting the correct numbers into your analysis. Really research those comp sales and get a good contractor, which I know that is easier said than done. Perhaps get multiple quotes from multiple contractors and use the highest bid to be safe. just a thought.

@Brian Garrett sure. 

so I bought the property for 205,000. with 25% down which ended up being about 55,000 out of pocket with all closing costs. So now I have a loan for 155,000 and equity of about 50,000.  I was able to get a 30-year fixed loan on the deal. 

I then rehabbed the property over 3 months and that price for that was 53,000. So now I'm up to 108,000 (55,000 + 53,000) for down payment and rehab.  Add in my holding costs as I still have to pay mortgage, utilities etc while I'm doing the rehab and the total all in was up to about 114,000. 

So after renting out the property and holding it for 6 months collecting rents which is the time frame that some banks require the property appraised at 350,000.  For the refi the bank will loan 70% of the appraised value which is 350,000 * .7 =  245,000.   That leaves me with 30% in equity which is  105,000 (350,000 - 245,000 = 105,000), which is great since I originally only had 50,000!  I then take the 245,000 that they loan me and pay off the original loan of 155,000 which leaves me with 90,000 for my next deal.  I had to pay some closing costs on this refi too. Im leaving a few smaller numbers out of this.

So I didn't get ALL the money out in the end actually.  I put in 114,000 and only ended up getting out 90,000.  But I feel ok about that because I do still cash flow over 1k per month on the property after the refi deal and I have that newly created 105k in equity.  

@Brian Garrett

I would not necessarily call this advice as much as a warning of what to watch out for regarding my current experience with a GC. This person came highly recommended from two other investors who I know and trust. He gave me reasonable bids for the renovation of both units in a duplex I purchased two months ago.  I had seen his previous work and was satisfied. I drafted a contract and a scope of work based on the detailed bids he provided and he began working as scheduled. Quickly, there became issues where he would tell me numerous times dates and times he would be working on projects, and would not show. He would lie about work being completed. He would change the cost of things he had bid, and if I agreed a few days later it would go up again, etc. He was paid for a few projects that I was told were completed, only to find out later after a thorough inspections they were not. I have learned this is totally our responsibility as investors to double check any work that is alleged to be complete before payment of schedule draws. I also learned that even if you have a solid contract, even if you have penalties for missed deadlines, which he is way beyond, even if you do everything you know and have learned to do. There is very little control of contractors once you turn the property over to them. As it stands currently, I have paid out about 3000 dollars worth of work that has not been completed, and I have initiated a legal process to terminate the contract, and seek a return of my funds, or completion of the paid work.

Key takeaways so far: 

Do not use 1 GC unless you fully trust them with your livelihood. Instead I will do more of the work myself, or sub out work for individual projects, not a total rehab. This gives you more control if one contractor is horrible. 

NEVER pay out a penny for a draw that is not 100% completed to your satisfaction. As soon as you do, they will not return to complete work that was supposed to be finished. I was way to understanding, patient, and trusting. I will verify every single repair before I pay a draw. 

Even with great references, a great contract, and good practices, contractors are human beings and have all the good and bad qualities human beings are capable of. A contract is a piece of paper, if you are not willing or able to spend thousands in legal fees and wait 6-12 months for a resolution, they might as well be toilet paper. 

I hope you have much better luck than I have so far, but we live and we learn! I have not given up yet, I am currently hiring new contractors now to finish the other unit. I will persevere! 

http://www.ccpbusinessloans.com/ try this company you also can try lima1 capital as well

@Brian Garrett it'll depend on the contractor. Some GCs won't care to give you the sub's info because they have a close relationship with that sub and that sub probably won't work directly for you unless it's through that specific GC.

What you should do is get an itemized bid from the GC. Look at the prices he's bidding for certain items and then get tradesmen to give you bids for that same work. Compare the two and see what the difference in cost is. Keep in mind that if you use a GC; that GC will manage any subs he brings in. If you decide to use subs for some of the work, you'll have to manage them yourself. So again, what's more important: saving money or saving time? Do you want to coordinate 3-5 subs on one project and save money, or do you want to only communicate with the GC and pay a little more. Managing 3-5 subs and coordinating all the trades can turn into a full time job. 

The flip you're working on is going to dictate a lot of this too. If you're flipping a million dollar property, you definitely want to be more hands on and make sure the work is top notch. If you're flipping a house in a lower income neighborhood, you're more concerned with "cleaning up" the property and getting it sold or rented as quickly as possible with as minimal expenses as possible.

Keep in mind that every flip is going to be unique to its needs and the schedule will reflect that. A quick $10K flip may take 3-4 weeks, where a $50K flip may take up to 8 weeks.