All Forum Posts by: Grant Liddle

@Zack Karp I mis-understood your comment about max leverage. I was assuming this was applied across the entire portfolio such that all (or majority of) capital was being used to invest in properties. If maxing out the LTV ratio on a single property to conserve available capital and act as a cushion that way, then that makes sense, and I agree it is always easier to pull money from my pocket than it is to pull it out of an asset.

Thanks for the clarification!

@Zack Karp I appreciate your comment on how max leverage can be useful for buy-and-hold investors, and certainly if a property is not being sold and tenants are still available to pay the mortgage + expenses, then it's not a terrible situation to simply stay put until the market rebounds.  However, there is still a potential downside to being max leveraged from an opportunity cost perspective.  Take the example of a market downturn where property values plummet.  This will mean that I will have little to no access to capital within my asset portfolio to gain some once-in-a-lifetime opportunities on some really discounted properties to add to my portfolio.  If I have sufficient cushion in my property values such that I could still sell a few or tap into the (albeit less) equity of my properties, I may still be able to purchase new properties that will accelerate my LT growth plans.  To me, market downturns are an excellent way to accelerate my wealth and I want to be prepared to invest during those periods (because we all know they are coming).

@Chris Hains

I use the House Flipping Spreadsheet (https://www.houseflippingspreadsheet.com/) to do the planning, analysis and estimating prior to purchase.  Then it has an expense tracker to compare budgets to actuals during project execution.  

There is a free version that allows you to do the planning, analysis and estimating that I would recommend you try before deciding to purchase the full version to see if this meets your needs. The expense tracker, reports and rental sheets (useful if you are planning to do the BRRRR method and need to calculate 2 different sets of loans).

I used to have my own custom spreadsheets that I built but this one does everything mine did plus much more.  And the owner is very responsive to questions or issues (emailed him at night and received a reply within a few hours).  

@Gabriel Graumann  Thanks for the excellent suggestion of acquiring a structural contractor.  I will definitely utilize this approach in the future!  Also thanks for the excellent advice for moving forward.  

 At this point I'm 2/3 complete in the attic so I'm going to try to give him an incentive to complete the structure work. I'm planning to have a discussion with him on how this can be accomplished as quickly as possible with no interruption and if he can do it the bonus is his on top. I'm also planning to find another carpenter to work with him to help speed it up.  I'm loosing out on 3k+ of revenue every month it remains uncompleted so I'm considering offering 2K-3K bonus.  I estimate there is a months worth of structure work remaining.  Once the framing is done I already have 4 different teams ready for Plumbing, HVAC,Electric and drywall.  What's your thoughts?

@Parker Eberhard  Thanks for the reply, I definitely see what you are saying and I have developed a friendship with this contractor as well.  He does have a kind, helpful spirit but his finances are dragging him down in the same way a bad habit would.  I do think in this case if I do a better job of challenging him on time and price then this project can finish.  

@Jim Goebel That was exactly one of my thoughts to do both of what you mentioned.  Both give him an incentive and see if I can bring in another carpenter that could work with him.  I need to get this project done asap.  Every day cuts away from making profit!

@Lynnette E. I agree also my fear that it is very difficult to find someone willing to work on repairing these old houses.  A lot of the structural repair tasks are grueling to say the least and most contractors are looking for easy reno finish work.  New construction dudes don't even want to look at something relatively minor like a joist replacement on an old house and therefore ask for way too much.  I feel as though I need to better manage how much he is paid to make sure it stays profitable for him and I get my tough task list completed.

@George W. Yes I'd rather not start over looking for someone at this point being I'm 2/3 done.  What would you suggest would be a large enough incentive/bonus?  The total for the attic work is around 12K? 

I have an extremely complicated, difficult and large project of restoring a 1900's duplex.  It has been gutted to the bones and needed significant structural repairs.  It needed the center beam running under the party wall to be replaced and the roof was incorrectly built.  It was originally a slant roof, but along the way they decided to get more room and built a hip roof on top of the old wall of the slant roof.  The roof repair is significant and involved due to the way they added the hip roof.  Several new supports need to be added and all the floor joist needed to be upgraded from the orignial 2x4's in order to safely use this space.  The property was acquired for such a low price it justified these repairs.  The contractor I eventually found via another investor contact.  He is knowledgeable and definitely competent however...prior to his working on my project he came with financial baggage.  He also is a poor estimator on both the contract price and time.  He gives bids that are too low but will stick to his word and complete the work.  This causes a majority of his financial issues as his contracts exceed his original time frame then he loose money.  I have additionally compensated him in some of these cases on my project to make it more fair for him.  

He eventually completed the 40' long steel beam repair and lifted the house 4+ inches back into place.  It is amazing and perfectly done! He then started on the attic framing, truck issues sprinkled with these financial difficulties sent him off looking for other sources of income.  He would find hopeful in-out work that was always more complicated and set my project back weeks.  Finding another contractor able to complete the complicated attic repair at this point would be difficult and I have no other leads and not sure even where to find such a contractor. My question is does anyone have suggestions on where to look for a good structural framing contractor? or is there a way I can keep my financially burdened contractor on my project and incent him to not take any other projects until mine is complete?  The original contract date was not upheld due to his poor estimating skills and transportation issues.  He is still committed and comes to work but keeps taking other jobs to supplement which always end in setting him back even further and delaying my project.  I can't move on until this framing is done so I'm a bit stuck.  Any suggestions as to what to do to keep my project moving would be appreciated.   

Thanks for the feedback, @Don Gouge and @Greg Dickerson!

@Greg Dickerson .. The total scope of work includes replacing the rotting center structural beam in the basement across the full length of the house and jacking up the floor 4 inches so that it is level.  It is not a full basement and therefore there are 2 crawl spaces in the front and rear of the house that were filled with dirt.  This dirt prevented using jacks to level the house sufficiently.  So, the scope of work included removing about 3 tons of dirt and pouring concrete to provide a stable base for the jacks.  Two steel I-beams are then replacing the rotting wooden beams currently in place.  Contractor was including materials in the price.  

Total price of work including the change order is $3,900.

@Samuel Cardenas I used a HELOC to do a cash purchase on a duplex that I am now renovating and plan to rent out. After renovations are complete, I plan to refi the property to pull my cash out to pay off the HELOC and the renovation costs.

The HELOC I am using has a variable rate that could change quarterly. So, I don't mind using it for a short term project, but would be reluctant to tie it up for longer than a year due to the interest rate uncertainty (Although the Fed Reserve Chairman recently mentioned that they are not planning on raising interest rates anymore this year). So far, I have only experienced one interest rate bump that I factored into my estimation when planning the deal.

The HELOC was very easy for me to use as it was setup as an account with my credit union and I could withdraw funds whenever I wanted for any amount up to the limit. I found it to be useful in negotiating the deal and the time to close is greatly decreased when you do not include financing in the deal.