All Forum Posts by: Chris Adams

@Katharine Chartrand Yes, it would be a LOC rather than a Heloc.

@Jon Klaus This closing was for the pre sold on the first building I started. The other half of the building was a spec, I sold that side also right before drywall ( 60 DOM) 

Just a quick update. 

Closed on my first sale Monday of the week. 

Sales Price of $177k, Profit after removing lot cost is 13.5%. I can sharpen this up on future units. Still quite a respectable number.

Its nice to put money back in the bank. Next unit is scheduled to close by November 21st.

Its time to dig another hole before winter sets in.

 Will this be a rental property? Is this going to be your first rental property? Banks differ on what they will do on this. Some banks will require a property to season 6 months before giving you a loan. Other banks will just require a signed lease and occupancy by the tenant to give you a loan.

Your best bet is to check with banks prior to putting $40k into a property so you know how long your cash might be tied up. Rarely does anything in the world of finance go as fast as you expect.

@Richard C. I don't read it that way, and since you and I read it differently thats one more thing @Cynthia B. should get clarified.

My first thought was 

"A" get a new wife  or  "B" get a new plan

But seriously, the article posted by @Eric Fernwood should help a lot. I would be very upfront about your plans with her. And keep her involved so she understands the details. Once she starts seeing the revenue stream, an understands the benefits of REI I would expect her to come around.

That fact that she's a bit hesitant right now will force you to be a bit more conservative. This is a good thing, and its going to put pressure on your to bring her good deals if you want to grow your portfolio. In essence your going to have stronger investments as a result.

Without seeing interior pics, i think he's out of line on the paint price. $2,300 in materials? Thats a butt load of paint. SW is higher than most, but the quality is worth it and I use it. I use the 200 series for my rentals.

If the house has carpet that you are keeping then he will have to protect that, but if not then  this makes his job easier and his price should reflect that. $1,750 for labor is kinda ok. Not too high if the walls and trim are different colors.

Im not sure about the green treated floor joist being needed. This might be common in Houston since you guys have salt water so close and I'm sure its humid there. We only use green treated when the lumber contacts the concrete, But there should be a 2x4 plate between your joist and foundation.

He doesn't state how many joist he's replacing, or the square footage of flooring repairs. Get this in writing so both of you know the details. If he opens this up and its worse than you think then this could be important.

He's done a decent job of breaking down his estimate compared to most contractor bids Ive seen.

When it comes down to it. I would tell him your at "X" and my budget is at "Y". How much wiggle room do you have to get me to my goal.

Be sure to get copies of his insurance, his agent should email this to you no questions asked. Always get references and at least a couple different bids.

Saving $66,000 in cost

One of the most noticeable changes on the construction scene is the lack of skilled labor in my area. Many subcontractors shut down or laid off during the crash. Now that new construction is starting to build some momentum the lack of workers is showing up. When I started the first building it was damn near impossible to find a framer. I met with a few different companies, but slab/truss construction wasn't their forte.

I ended up using a company that was actually subcontracting to other framers. The price was in my budget, but I always felt the budget price was high. I had to get this down.

After a week or so on the job I talked with the framers on the job site and asked them why they subcontracted themselves. His explanation is probably very common right now. He said he struggled thru the crash, and the cost of insurance and workers comp was to much to cover. So he worked under someone else's license and insurance to keep his overhead down.

After a few minutes I explained my situation, I just bought the remaining 22 lots in the subdivision and I am going to build every building. All of my plans are similar with a few variations, and I need a framer that can commit to me. But I also have to get my cost down. Im paying $5/SF for framing, I need to get this down to $4/sf. And I will pay the crane charge as I am now.

I explained that he was framing for me, and getting paid less by working thru a middleman that was taking a cut, and as a result I am paying more. I asked what it would take for him to leave this guys shadow, work straight for me, and In turn I would give him all of my work as long as he can handle it. 

He had to speak to his partner, which he did, and he came back to me with his situation. He would need to start his own insurance and workers comp which he could do. But he was going to have problems making his payroll if he had to wait to get paid until he finished the job. I said OK what do you need? He asked for a draw of $5k halfway thru the job and the balance after he's finished. And for that he would make me a priority on his schedule, and agree to the $4/SF price.

This translates to a saving for me of $3,000 per building. With 22 buildings that a savings of $66,000, and this guy is now making more than he was, and he's back running his company again rather than working thru someone else.

# WIN/WIN

Building #2 is currently at the end of framing stage, today we are setting windows and doors, mechanicals are scheduled to start next week on Monday. I try to get mechanics done in 1 week, then comes insulation and drywall. 

Im closing the first construction draw on this building today.

I need to get off my butt and pic exterior colors. Never a dull moment. I personally do all of my own siding. I enjoy doing the work, I make a few extra bucks and it keeps me on the job site which helps assure things run as smooth as possible.

I use https://biggerpockets.mysmartmove.com

I have been very happy with it. Especially the option to have the tenants themselves pay the fee. This is also listed under the resources tab above.