All Forum Posts by: Jason Bohling

@Matthew Irish-Jones it surprised me and sounded excessive to me, too. He said he’s not done buying properties so he wants to scale, but I can’t help thinking this is hindering him in not just how quickly he can scale, but in scaling, period. When we were talking, he said he was over-leveraged and lost the properties he did have in 2010 and had to start all over, so it sounded like he had a touch of Great Recession PTSD, which would make sense he wouldn’t want to come close to that again. It makes sense to him, though and in the end, that’s what matters. He’s happy where he’s at, so I say good for him.

@Bruce Woodruff thanks for the advice, I do appreciate it. I had my 10 minute pissed off/pity party, so now it’s time to move on, take action where I can and do better next time.

@Chris Davidson for me, 9 months of rents and 8% vacancy and 12% repairs/capex. I fall in the camp of putting the 20% aside in perpetuity, as the money goes into savings which will not be keeping up with inflation and repairs can come out of nowhere. I know that’s probably a bit more than some would do, but I like a good foundation as the more my bases are covered in life (not just real estate) the more comfortable I am with taking calculated risks.

Quote from @Nikhil Agarwal:

This is the first time I purchased a unit that needs to be renovated before it can be rented. Before I closed, I went ahead and purchased two more. All 3 units closed last week. So now I have 3 units that need renovating!

I think we are renovating the units quite well:

1. Tile in the bathrooms
2. New vanity
3. brushed nickel hardware
4. LVP flooring throughout
5. Tile backsplash in the kitchen
6. New white shaker cabinets
7. Granite countertops
8. Paint, New Outlets, New Doors if damaged etc.

Given this context, there are a couple of choices I'm facing:

Choice 1: The Bathtub:

Should I buy a more expensive Cast Iron Tub ($479) vs. a cheaper Acrylic tub ($385). The contractor is charging the same for the installation so the only difference is going to be the purchase price of the tub. I think the main thing I'm thinking is if the more expensive tub will actually result in less maintenance. I don't think it makes any difference to what I'll be able to rent the unit for (we expect to rent it for $2K)

Choice 2: The Appliances:

We currently have a mix of appliances.

Unit 1: All white appliances except Hood is Stainless Steel
Unit 2: Dishwasher and Hood is Stainless Steel. Everything else is white.
Unit 3: Dishwasher, Stove and Hood is Stainless Steel. Fridge is white.

I'm wondering if I should be upgrading all the non-SS appliances to stainless steel. Will it make a difference? Once again, the only incremental cost I would incur would be the appliances themselves. There is no additional labor charges for upgrading the appliances.

Appreciate your thoughts and advice! Thank you so much!

It really depends on your market. If you choose to upgrade them, check out the big-box stores Scratch and Dent section; you can often find perfectly good appliances for a bit of a discount (chances are, within a couple months they'll be 'scratched' or 'dented' anyway).  From what I have seen and been told by other investors, what tends to matter more than whether stainless steel or white is that they all match (all stainless steel or all white).  Good luck to you, and congrats on the 3 properties!

Got to speak to an old acquaintance recently who I just found out is a real estate investor. He has a small portfolio of 5 SFH properties in the Boise, ID area where I live with mortgages on all of them. What surprised me is the amount he puts away for vacancies/capex/maintenance. He said his rule is he puts either 2 years of rent or $25,000, whichever is larger, PER PROPERTY in an account to start with, (meaning he’s sitting on $125,000-plus just for reserves, I didn’t ask him the actual number he currently has saved), with 15% of his gross monthly rents going into this as well (if I understood him right, he just has 1 pooled savings account it all goes into). He said he doesn’t purchase a property until he has the amount saved up and put away first.

I totally get that this is what helps him sleep comfortably at night, and glad it works for him. This was just surprising to me, as it was such a significant divergence from the typical '10% vacancy, 5% Capex, 5% maintenance' type answer you usually see on the forums. I hadn't really thought about that there may be some people that only feel comfortable investing if they have substantial reserves set aside, first.

My questions to everybody are, at what point do you feel like you have enough set aside? Do you set aside so much until you hit a certain amount, and then count the full cash flow as spendable money/monthly income, or do you just keep putting away those percentages in perpetuity? At what point do you feel comfortable with the amount you have put away?  

Quote from @Bruce Woodruff:

Quote from @Jason Bohling:

@Bruce Woodruff you know what, in hindsight you’re absolutely right. I’m new to the game, so I’m taking this as a mistake to learn from. I know there’s people out there who’ve lost several thousands, tens of thousands of dollars to deadbeat contractors so I learned at a much lower amount, so I’m grateful for that. However, it still pisses me off, as it’s one thing for me to make a mistake and deal with the consequences but when it affects my family, that’s way worse.

You're right, my friend, and I wasn't preaching, just cautioning for the next time. It sucks to have crappy people teach you a lesson, but as you said, maybe you got off easy....

 I know you weren't, and I appreciate what you had to say.  In the end this was my mistake and I have to own it, learn from it and do better next time.  It burns me the most because I see what I could've done better, such as more due diligence beforehand which is a basic thing, and that I see this as, my mistake took $1,000 from my family, which stings that much more than if it only affected me.

For those wanting to know who this business/person is, his name is Abraham Delgado and the company is Layers Deep Landscaping and Fencing, LLC based out of Nampa/Caldwell, Idaho.

Quote from @Caroline Gerardo:

 The police will do nothing. Filing small claims and service fees maybe $300. If he's licensed (check),  has a stable address, a website, and on Angie's list/Houzz etc maybe you can get a judgement and maybe get paid in the next four years. To perfect the judgement you need his social and exact legal name so it pops up on his credit. Is it worth another $300, a day off in court, and worry?  Only you know these answers. Meanwhile post his name here so we can mention his name to Saint Vincent de Ferrer in our prayers. 

 I'm definitely going to pursue it, its the principle of the matter for me and I have to try.  Luckily, here the filing fee for small claims is $69 and the cost to have the Canyon County Sheriff's Office serve him is $50.  This mistake is definitely mine, I didn't do enough due diligence in researching him/his company beforehand.  He was referred to me by a friend who is more family than anything, who is a very experienced GC himself and who cares deeply about his quality of work and doing right by his customers, and had previously used him with good results and was currently using him again.  This went a long way with me and I should've verified and I didn't, so I gotta own that.  He's since bailed on my friend's job and left him hanging as well, costing him a good chunk of money, too.

Quote from @William Hochstedler:

Contractors have been stiffed by owners and owners have been stiffed by contractors.

I only pay anything up front if the contractor can give me a W-9, liability insurance certificate, proof of trade licensure, and workers comp cert.  This means they're a real business and not some fly-by-night crack heads.

If the latter are giving me a screaming deal and might be worth working with, I buy the materials and only pay them their labor and profit after a milestone is completed to my satisfaction and that I know I won't have to redo it.  This way the contractor has no hard carrying costs.

Make sure you have a way of verifying that they've done the work satisfactorily.  If you don't know what to look for when signing off on a phase, make sure you have a trusted resource to come give it a set of eyeballs.  The barrier to licensure is way too easy these days and there are a lot of fully licensed hacks out there.

In this market, if a contractor is available to work in less than 2-3 weeks and they're inexpensive, start looking for the fish you smell.  No one who's any good at what they do is readily available right now.

For $1000, I'd go straight to small claims.  Going after their reputation or license (if they have one) won't do anything.  Did you check the BBB or state licensing board before you hired them?  If they did no work and won't refund your $1000, what is their defense?  Most likely they will be a no-show and you'll get a default judgement...that will also be worth nothing.  If they do respond to the summons, a company worried about it's reputation should try to settle so it won't impact it's reputation or legal standing.  This way you'll be done with it and you can move on with your life (and landscaping).

Good luck!

 This is great advice, thank you!  I'm actually doing something I should have done beforehand (like I said in an earlier response above, this is a lesson learned) and creating a list of for what I need to see before hiring and during the job and I'll be taking these recommendations.  I realize in the end, I'll most likely never get my money back, but I'm going to exhaust every avenue possible, regardless.  Looking back on the situation with everyone's responses in mind, there's so many red flags I didn't, and I should've, picked up on.

Quote from @Bruno Morales:

@Jason Bohling is there no way to sue or send a document letter?

 I'm going down to the Canyon County courthouse tomorrow morning (Canyon County is where they are set up) to begin the filing for small claims court.  I've never had to do anything like this before, so I'll learn as I do.  I have every confidence I would win, my big question with small claims is how would I enforce the judgement and actually receive the money.