All Forum Posts by: Garrett Bowser

How much should a general contractor charge to allow my company to pull permits for each renovation and how much should he charge per onsite visit to spot check subcontractor work?

DETAILS:
I'm registering a general contractor as an officer in my LLC. He will name my company with SOS to pull permits under his license. His time spent on each project is super minimal but I need his ability to pull permits and construction expertise to spot check subcontractor work while I am studying to take the Residential Builder Exam myself to get my own license. (My company has it's general liability insurance, of course.)

So, this is a temporary arrangement, at least for now.

He will charge a fee to pull permits and to do periodic inspections to make sure my subcontractors are doing quality work but I will be project managing the entire job and handling all components of the renovation from design, floor plans, estimating, purchasing, hiring and overseeing the subcontractors, etc.

The general contractor and I are regrouping next week to discuss what he would like to charge and I just want to get some feedback from you experts before we meet. Thank you in advance. 

Thank you @Malcolm Stapel and @Benjamin Aaker for your feedback.

It's my understanding that an appraiser should look for comps with the similar square footage and the same amount of bedrooms and bathrooms. If the square footage of the comps are the same but the number of bedrooms and bathrooms are different than they should make a value adjustment to compensate for the differences.

I'm still learning the ropes but I was studying for the real estate agent test in Mississippi and that adjustment method I mentioned above is how my online course says an appraisal should be done when the comps vary slightly from the property being evaluated. So, I was surprised that an appraiser in Mississippi would suggest otherwise.

The appraisal is scheduled in a couple weeks but we'll definitely speak with our lender beforehand. Thanks for the advice. Have a great day!

Do appraisers make adjustments for converting existing square footage into additional bedrooms?

We're converting a storage closet into a 3/4 bathroom and turning a sunroom and nook into 2 additional bedrooms.

The appraiser says the extra bathroom will add value to the appraisal but he won't add value for the 2 new bedrooms because he compares houses of equal square footage and not by the number of bedrooms.

Is this method the industry standard or do appraisers in other cities make adjustments for additional bedrooms?

Hey Mark, I'll give you a hint ... they're not located in California. LOL
Although, that said, I'm sure a more savvy and experienced investor than myself could make other people's ADU's, homes, condos, RV's, tents, or whatever be quite profitable as California-based STR's with the right deal but we're talking about buying real estate aren't we?

Personally, I use a combination of AirDNA, Realtor, Zillow, Airbnb, and VRBO along with Google searches like "Top US Cities to Visit", "Best Places to Visit in the USA", or "Best-Kept Secret Vacation Destinations" to find deals like the ones I mentioned that peeked your interest.

I also think reading the news and sifting through social media posts help too. For example, if you know a city or town is about to receive millions of dollars in funding to make improvements to attract more tourists and the hotels are investing in the area then that could be a hint that great deals can be found before the other investors swoop in and start driving up the real estate values. Of course, that's more speculative and the occupancy rates might not reflect that reality yet. I'm not ready to gamble on those types of properties yet but I definitely would if I had more money to invest in buy-and-hold types of assets. Right now I'm focused on vacay STR's with stats like I mentioned before. 

I also hear cities with large hospitals and a higher than average population growth rate is a great place to invest in to rent to traveling nurses. They might not be great tourist destinations but the numbers have worked for a few investors I've listened to on the BP podcast. I haven't looked for those kinds of deals yet. Maybe down the road. 

Hope that helps! Happy investing, my friend.  

Hi Eric,

I'm a new investor too but I'll still offer you some advice. I am curious to read what other more experienced investors advise you. 

Sounds like your strategy is to buy real estate to flip rather than buy and hold or cash flow as STR or LTR. If you have the funds to pay for the renovations on the new flip without the HELOC then I'd keep the house, rent it out, and use it as a sort of "fall out shelter" in the event money got tight or the economy goes haywire and I need a place to live without worrying about a mortgage or rent

If you need the HELOC to finance the renovations on the new flip then I'd definitely take use those funds to renovate the property to sell. If the heloc is enough to buy even another house under market and pay for some light renovations then I'd buy that too.

Personally, I would use the HELOC to purchase more short-term rentals in areas where people like to travel, the real estate is still relatively inexpensive, and the STR occupancy rates are pretty high but that's the strategy I'm using to build my own portfolio.

Best of luck to you on the new flip.

Hi Jack,

wow Wow WOW! I love all of the pine floors, walls, and ceilings. You did a great job picking out the perfect fabrics like the red and black plaid shower curtain and Earth-tone furnishings. You should be really proud of yourself. I normally don't go for this kind of rustic look, but everything works! I'm excited that the BiggerPockets podcasts and forums have helped you so much. Very inspiring. 

The only thing I would recommend you do is to be more descriptive in your headline and description. The headline should change often and be something enticing like "40% OFF Gorgeous Mountain Views! Lumberjack chic interior! Family-friendly arcade games. Hot tub. Outdoor fireplace. Spacious decks. Best in Morganton!"

Even though you list all the great things that your STR has to offer I would still word the highlights in an alluring paragraph or two that tantalizes the interest of potential guests.

Some large area rugs would look great, but I understand if you want to keep the housecleaning super simple. Some nature-inspired artwork would help to elevate the space as well, but I wouldn't poke any holes in the walls. Instead, I would use a molding picture hanging system to suspend the artwork from the ceiling molding at the top of the walls with picture framing wire or multiple strands of monofilament. 

Congrats on your venture and I wish you all the best!

Hi Scott,

I'm a designer who is new to real estate investing (particularly short-term rental properties) using the BRRRR method after listening and learning from the experts featured on the BiggerPockets podcasts over the last year. So, take my advice with a grain of salt as I am still a rookie! I'm sure you'll get some excellent advice from way more experienced investors than me.

However, I'd still like to share my perspective as someone who doesn't have a regular salary either to acquire traditional funding on my own but who possess a talent for design, creating 3D models of floor plans, project managing, and spotting STR potential. So, I must seek out partners who can supply capital until I get a few solid BRRRR's under my belt to venture out on my own or with other partners on bigger investments at a time when I'm able to share equally in the financial risk.

HERE'S MY ADVICE:
Since you have $1.5M cash available, I would use that money to purchase five to ten properties in tourist areas where the cost of real estate is low but the short-term rental rates are high and have an average annual occupancy rate above 70%. If for some reason any of those properties dip below 50% for a month or two I would also invest in other STR's located in places where they make more money during those low periods. (i.e. winter ski cabins may do really well with a 92% occupancy rate in the winter but may dip down to 26% in the summer ... So, I'd want to make sure that I had STR's in other locations in summer destinations where the occupancy rate is much higher to help balance each other out).

If each property is then generating on average $3K-$5K/mo. then I would expect to make $5K-$25K/mo. (60K-$300K/yr.) on five STR's or $30K-$50K/mo. ($300K-$500K/yr.) on ten STR's minus the taxes, utilities, and maintenance of each property.  

Then I would cut myself a check from the LLC every couple weeks to prove a salary so I can apply for traditional mortgages later on. I would also seek out loans based upon the real estate value of my portfolio and the rental income of the combined units to finance my next deals.

Like I said, I'm still learning but that's the strategy I would go for with the limited knowledge I have now. I'm interested to read what other more experienced investors advise you. Best of luck to you and keep us posted if you're able to secure a loan without a job. Inquiring minds want to know!