All Forum Posts by: George Azita

Quote from @Jason Nesbitt:

Quote from @Jennie Berger:

Quote from @Crystal Smith:

Quote from @Mario Morales:

I am using a reputable company to do some work for me under 5K. They will bill me when the work is done. I will look at the work, and if satisfied I will send them a check. Do I need them to sign lien waver at some point?

If they are a reputable company they will have no problem signing a lien waiver.  Get one.

THIS. PERIOD. ☝️☝️☝️ Especially if you're planning to sell the house or property you're renovating right after. The title companies (in our experience) always require them before closing! We get notarized lienwaivers along the way, for each payment, from most of our contractors.
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'YOU WANT TO BE PAID? GIVE ME A LIENWAIVER.'
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This includes 'contractor' LWs and, if the GC or Sub is buying materials, a 'Materials' LWs or a paid receipt from their vendor.
 
(*The only ones we may not get LWs from are one-off smaller jobs like post construction cleaning, material movers, snow plowers, etc.) 

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Hope this helps!

This is definitely the way do it.  We don't go as far as getting them notarized and I just use DocuSign, but the notarized signature is a good idea.  All you have to do is pop into a UPS store to do that.  

If you don't get a lien waiver signed, the worst thing that could happen is that the sale of your property is held-up due to a mechanics lien. This would be a disaster on a flip as the goal is to get in and out as quickly as possible.  The lien waver is just certifying that you paid them for work completed and they can't place a lien on your property for that amount.  The GCs that we work with have no issue in doing so.  Send me a message if you want me to send you a blank copy of the one we use. 

This is not accurate since you don't need to get a lien release from your contractor because you signed your contract with the General Contractor, you know how much you owe  your contractor, the contract you signed states the amount you owe your contractor and copies of your checks prove whether or not you paid all moneys due.

The lien releases need to come from the sub contractors who work on your job and lien releases need to come from material suppliers who deliver materials to your jobsite. You do not need a lien release for materials when the materials come from the general contractors warehouse and you don't need a lien release when a supplier delivers materials and does not give the property owner a 21-Day Preliminary Notice and you don't need to get a lien release from sub contractors who don't give the property owner (you) a 21-Day Preliminary Notice.

Banks and lenders may ask the general contractor and material suppliers to provide lien releases, but that is a request solely so the bank can protect itself, but the general contractor does not need to give the property owner a lien release and is not required to do so by contracting laws.

The lien release laws have to be the most-misunderstood laws in the contracting business and thinking you are free from lawsuits because your prime contractor gave you lien releases causes property owners to lose hundreds of thousands of dollars and are often put into bankruptcy by bad contractors.

The reason the lien release laws are very serious to understand is general contractors work on very small profit margins and even the best contractors make huge mistakes when bidding jobs. Even though a contractor has a good reputation one mistake when bidding a job can cause the contractor to lose more money than he can afford to lose causing his business to spiral out of control and crash down like a set of dominoes and all this is happening when he is working on your job. Then, the contractor robs Peter to pay Pail and guess who Peter is. He is you!!!

Quote from @Crystal Smith:

Quote from @Mario Morales:

I am using a reputable company to do some work for me under 5K. They will bill me when the work is done. I will look at the work, and if satisfied I will send them a check. Do I need them to sign lien waver at some point?

If they are a reputable company they will have no problem signing a lien waiver.  Get one.

But, don't forget that getting a Lien Release from the Prime Contractor (the contractor you hire) is not worth the paper it is written on when the Prime Contractor does not pay the sub contractors nor material suppliers. A Lien Release from a Prime Contractor does not release the property owner from money owed to sub contractors and material suppliers.

As someone mentioned, the property owner needs to get a Final and Unconditional Lien Release, but it needs to come from the sub contractors and not from the Prime Contractor.

The only way I will give a Final and Unconditional Lien Release is when the contractor hands me a bonafide Cashier Check from a well-known bank because the word ' Unconditional' means the contractor and property owner are released from all obligations to pay the sub contractors even if the Cashier Check is counterfeit and bogus. I think some Unconditional Releases stated that they became effective when the payment cleared the bank, but I can't remember. The problem with the Unconditional Lien Release is the lender who dibbies out the money for the job will release all the remaining funds to the Prime Contractor. So, the Prime Contractor will have all his money by the time the sub contractors find out that the checks they received are bogus and then the subs get to sue the Prime Contractor, get to pay tens of thousands of dollars to try to collect money owed to them and most-likely will never collect one penny. I had a friend who got stiffed for $240,000 by one of Los Angeles' largest contractor who was building thousands of homes in Universal City near Universal Studios and this contractor stiffed every contractor who worked for him and still remained in business because he knew how to work the system in regards to Lien Releases and construction laws.

Every rental unit should have a bathtub combination tub and shower, or a bathtub and a separate shower, or you automatically eliminate the number of potential renters who want or need a bathtub for personal preference or for health reasons. While I take showers 99.99 percent of the time there are times when I need to soak in a tub for sickness and medical reasons. I can't remember ever renting a hotel or motel that did not have a bathtub and that should be a clue regarding your question.

I am a plumbing contractor and bathtubs are usually less-expensive that stand-alone showers because tubs require less tile walls. You can save money by installing all plastic shower pans and plastic walls, but being a plumbing contractor we encounter cracked shower pans almost every day and we encounter the drains leaking in plastic shower pans because when people stand on shower pans the plastic flexes and the drain strainers loosen causing significant damage. We currently have an apartment building customer who has 20 units and the shower pans strainers leak through the first floor ceilings no less than 1 or 2 times every month. The leaks always cause damage to the ceilings and carpets on the first floor and there is no way we can resolve the recurring leaks because there is no way to stop the shower pans from flexing with the exception of removing the entire shower stall and putting concrete under the shower pan to stop the flexing. The contractor who build the building about 15 years ago did not put concrete under the shower pans as is required.

I like bathtub with showers because they don't have the same problem as shower pans where shower pans have a life expectancy of 20 to 30 years, but a high percent of shower pans are not installed correctly and I've seen many brand new shower pans leak the same day they were installed and you don't see this problem with bathtubs. If a place had a shower stall and I could install a bathtub in its place I would remove the shower stall rather than repairing or replacing it with another shower stall. I like to make my rental units as 100% maintenance-free as possible.

You should pay a million dollars more than the asking price if you did your math and you can still make a huge profit. You cannot rely on others to tell you whether or not you should offer more than the asking price. Only you can make that decision after you crunched the numbers and after you have determined your potential profit based on the increased price that you are willing to pay.

YES!!! I will pay more than the asking price when I can still make the profit based on my business model. 

It is apparent that you don't do the math and you don't have a business model you adhere to since you don't know what the maximum price that you can pay for a property. When you don't do the math and don't have a business model you are making your investments based on opinions, poor judgement and with blindfolds.

For my business model, I try to double my investment capital every 1 to 2 years, or can earn 50% to 100% on my money every 1 to 2 years. So, if I have $50,000 to invest I look for investments where I can earn $50,000 in one year, or 100% on my money. While this sound like it is difficult it is actually very easy because all you need to look for is a property that is $50,000 under market value, or look for a property under-market value where you can also do a little cosmetic work and increase the value and look for a property where the rents are under market value and you can increase the value of the property by increasing rents and increase your rental income profit at the same time. I usually earn 150% to 200% on my money in less than 1 year for most of my investments.

If you don't have a business model like the one I use then you will not and cannot achieve the goals I am explaining with the exception of blind luck and if you don't crunch the numbers thoroughly then you will never know what the maximum amount is that you can pay for a property and still make a terrific ROI, or you will never know which properties you need to avoid purchasing.

Quote from @Bryant Blackwelder:

Hey guys just wanted to get some advice about people that work for me.

We have been remodeling a duplex I own and they have been asking if they can rent them out once I’m done. My first reaction is don’t mix business! But wanted to ask and see what others thoughts are

NO!!! Don't ever rent to someone who works for you because you definitely put yourself in a position where it is impossible to be a boss to your worker, a landlord to your employee and responsible for the income your employee relies upon to pay you the rent he owes you. This situation you put yourself in makes it very difficult for you to make the decision to terminate (fire) your employee, lay off your employee and the situation makes it difficult for you to refuse to give pay raises and other perks to your employee because anything you refuse to do gives your employee the opportunity to use that situation against you.

This is an interesting question about handicap parking for apartment buildings and something I've never seen mentioned during my 50+ years of renting to tenants. It is definitely something everyone should know before getting sued if there are some laws about this we need to adhere to. I am guessing that if a tenant is handicapped then the tenant has to make a request for a handicap parking space and the landlord had better take some sort of action and make an effort to accommodate the tenant, or get sued for millions of dollars. I am also guessing that landlords have to abide by federal and maybe state laws, but not local laws.

Since pets are not mentioned on the lease then pets are not allowed. I would look at the problem the same as when the lease indicates the number of persons named on the lease who are allowed to reside in the rental unit. If tenants are not listed on the lease they are not allowed to live in the unit. If pets are not included in the lease they are not allowed to live in the unit. 

Of course, you also have the problem with Companion Animalls where your your tenants can bring goats, chickens and horses in your unit and you can't do nothing to stop them. I have a clause in our Lease Agreement that states that any tenant who wants to bring in a Companion Animal must get approval directly through our attorney and so far this has deterred every tenant from pushing us to accept Companion Animals.

I am guessing they your tenant is claiming he (or she) wants to bring in a friend's pet only a few times a month, but the pet will be their permanently and every time you see the pet your tenant will tell you it just happens to be that time of the month when the pet is visiting. Just say no and nip the problem in the bud.

Incidentally and contrary to the belief of many rental unit owners, I tell every tenant I am the owner of the property and every tenant has my telephone number and my wife's telephone number.

When I have to deal with tenant issues i.e. evicting a tenant, charging a late charge, or increasing rent I always soften my part of dealing with the issue by telling my tenants that I have partners I have to answer to and I tell tenants that I get audited every year by my lenders so my lenders know that I am managing my properties (their investments) properly. By telling my tenants that I am the property owner then the tenants are well-aware that they are dealing with the top dog and then they don't try to get sympathy from a property manager that may or may not exist.

Tenants live with the expectation that they could get a Notice To Vacate at any time. So, it is not a surprise to tenants. Especially, when a new owner takes over a property. Then, every tenant expects a Notice To Terminate Tenancy or a rent increase.

On the flip side, tenants will stay in your unit for many years even when they know they are paying under-market rent and they don't worry about your business problems. Then, the tenants move, anyway, when they want after you lost $3,000 to $5,000 every year after being generous with your discounted rent.

Treat your rental business like every other business in the world like every business owner who wants to charge the maximum amount the market will bare.

We have tenants who are dying from cancer and can't work, tenants who lost their jobs, tenants who lost a loved-one i.e. a husband or a child and as a property owner we don't have the luxury to have feelings for our tenants and then try to explain to our banks and business partners why we are not collecting 100% of our projected rental income.

I always think of running my businesses like I am a manager who works for a corporation on the opposite of the country and ask myself how I would explain to my boss why I kept rents below the market and how I would explain to my boss why he is not earning maximum profits or maybe even going in the red on his books. You have obligations to yourself, your family and to lenders.

We renovate every rental unit 100% so when tenants move out the only thing we need to do is clean, paint and then we can get a new tenant in within a few days.

We don't want to do a partial renovation where we have some major repair or partial renovation to do every time a tenant moves. For example, we don't want to renovate the kitchen and then have to renovate a bathroom then next time a tenant moves.

When we renovate units we try to renovate them so they last the rest of our natural life. Everything wears out, but when we install 100% wood kitchen cabinets vs. crap and we install cabinets where we can easily change the faces then we don't have to worry about ripping the entire kitchen apart down the road. We always make sure the electric wiring, drains, sewers and water pipes are copper or PEX (polyethylene) so we don't have to do major plumbing repairs down the road.

We never install dishwashers and never install garbage disposers in our units and this save everyone a lot of time and money down the road.