All Forum Posts by: Hugh Ayles

@Daniel Levine

If you PM me your email I can send you a few temcplates.  Please be aware that some documents are state specific.

My lien notices were copied from the state (TX) because a couple of years ago there were laws passed limiting lien release language. You can also download the lien releases from my company's website www.hsaspecialties.com and click on the resources tab.

One thing you still did not address:  who holds the contract for the millwork?  Even if the GC subbed out work, he holds the contract unless you directly contracted with someone.

It sounds like the GC has the millwork in his contract, but I am still not sure.

Also, was there a written scope of work?

Your GC should have a detailed scope of work that indicated what millwork was being provided.

You need an itemized accounting from the GC for the millwork billing.  You said you know you added some scope.  That added scope pricing needs to be separated from the base scope of work.

I wish I had a clean, easy answer for you, but this sounds like a bit of a mess.

My contracting experience is commercial, and we have a very detailed scope of work which leaves little to interpretation.  Personally, I am thankful for that.

I am a contractor in Austin.  Texas does not require a license to be a GC.

If you are intersted in this property, you need to get at least one more bid.

Also, you definitely need someone to oversee the project.  "Trust but verify".  You want to know the work is getting done.

Austin is 3 hours from Houston.  If it was closer, I would offer to help as a consultant if your deal goes through.  I have a GC friend in Houston who might be available as a consultant.  He is in commercial, so doing the work is not in his company's wheelhouse, but having him check the work is easy to do.

I am confused.  Did the GC have a contract to provide the millwork or did you contract directly with the millwork contractor?

If your contract was just with the GC, he has skin in the game.  Also, he should have been involved with the millwork company.

The millwork contractor's attitude during the selection process should have caused red flags to go up.

If your contract is just with the GC, you need to get him involved in resolving this.

I am a contractor also.

I was at a meetup the other day and met a guy who has 5-6 private lender funded rehabs going at the same time.  He mentioned cash flow concerns and if I heard him correctly, he sometimes uses funds from property a on property b until property b funds come in.  Again,I may have misheard him.

I bet that is why your lender caps the number of projects he funds.

The risk of comingling funds is if something goes wrong on b, a may get taken down with it.

With that being said, build a solid track record that you can share with lenders.  Lenders want confidence that they will get their principal back with interest.

@Brian Eastman

Thanks for the further explanation.

Can you invest your IRA in someone else's flip? Or does that trigger tax consequences?

I asked a self-directed IRA person more about this last night.

My takeaway was I should consult an accountant as she indicated you can have gains within the IRA and not get taxed much the same way stocks can grow and not get taxed.

Someone else on this forum indicated they got stung a bit not realizing the tax consequences.

I figure it would be best to ask a tax professional (IE an accountant) in order to protect myself.

I've now been to a few of the Austin meetings.  I finally figured out I need to show up 1.5 hours after the meeting starts to avoid seeing the presentation again.  I've  kept coming back in hopes of networking.

They have a Big Dog meeting at the same time and I was surprised at how many people were in that room.  There had to be 50 people.  That represents at least $1 mil in guru fees paid this year.

I went to an Austin meetup the other day that had better content. I feel like the REIA is bringing in a fresh group of faces every month. At the meetup I noticed many people were familiar with each other and the meetup is free.

Bottom line is the meetup seemed to have doers and the REIA has dreamers.

lots of good advice so far.

You definitely do not want to pay cash for your house.  You may need 20% down,  Try to find a duplex and rent out half.  Now you are a real estate investor.

Get rid of consumer debt (credit card debt).  Keep the cards open but put them in a drawer.

Continue to live off of your salary.  Avoid the temptation to dip into your savings as once you dip in, you will contniue the trend.

Put some into mutual funds and keep some for real estate investments.

I will second the idea of charging yourself interest.  Money is not free and this will help you remember that.

Lastly, you should be commended for thinking about how to invest this winfall rather than planning what toys you will buy.

@Neil Narayan

My wife is a Realtor adn can help you.  I just sent you a PM with her contact info.