All Forum Posts by: James Bowie

We get all of our vanities from local cabinet vendors. The cheaper houses we use prefab and the more expensive houses we use custom.

For lighting and fixtures, it's all a matter of how much time you have. Our goal has been to streamline all of our rehabs as much as possible so we do use a lot of HD and Lowes. I would suggest you find one local lighting vendor that will work with you on higher end stuff and provide discounts for repeat buying. 

The key is to find vendors that have good prices and good stock. As nice as it may look, most buyers won't pay you the difference for a custom light fixture, vs something that you bought at Home Depot.

Whatever you do, establish good relationships with local vendors that can maintain good inventory. Those relationships will allow you to negotiate better pricing over time, and having only 3-4 stores that you buy from will greatly reduce the time spent looking for things that matter more to you than the buyer anyway. For example, I just installed Home Depot light fixtures at a home I'm going to list next week for $1.3M, but we spent a ton of money in the master bath and kitchen, where it matters. 

Let me know if you need me to expand on those ideas.

-James

Almost Forgot! 

The best tool we use is Evernote to track progress. Every time work gets done the pictures get put into Evernote and it gets attached to Podio. 

To create a punchlist, we create a new note with some checkboxes, then put the photos of each item inside the note so the punch list, the photos, and the notes are all in the same place. 

Evernote notes can also be attached to the corresponding Podio Record. 

This really helps as photos tell you the real story. No contractor or sub gets paid without sending over the photos. Then inputting them into Evernote is as simple as drag and drop. 

We use Podio for both lead management and project management. Podio is very customizable so it serves as the "central hub" or "interface" and creates the relationships between items. We then use Google Spreadsheets to track the numbers and then attach the spreadsheets to the Podio project page via soft link. All of our books are kept in Quickbooks. 

This method has worked pretty well and we just hit 200 rehabs, but we did our first 100 out of Google Sheets and Quickbooks. 

I have also heard really good things about Smartsheet for project management. Smartsheet is just a spreadsheet that allows you to attach files, make comments, and create relationships between different sheets. 

Ultimately - there is no "best" software. MS Project is not cloud based which makes for access problems, Buildertrend costs something like $99 per project (which is a lot), Podio needs to be built from scratch, but it's really customizable, and Smartsheet is just a spreadsheet with more features. 

Just for reference, these may also be worth looking at, please take a look at them and then choose the best for YOU. All of them will have strengths and weaknesses and none will do EVERYTHING that you need:

• Zoho Projects
• Wrike
• Podio
• Smartsheet
• Builder Trend
• MS Project 
• Basecamp 
• Teamwork

Here are a couple of things to keep in mind, especially if you are working in a team:

• Cloud based PM software allows for easy collaboration and access anywhere
• Don't suffer from "Shiny Object Syndrome" (just pick one and go, yes, there will always be a newer, fancier one, but constantly worrying about it will give you analysis paralysis and you just need to get your projects done)
• Make sure it has a mobile app so you can work on the go
• Don't spend too much money! Podio at $9 a month / user, plus Google Sheets is a good bargain for us, and we have as many as 25 rehabs going at one time. 

Hope that helps!

-James

@Heather Ippolito Great question! 

We do this all the time. obviously it is advantageous to be able to write "cash" on your offer, but there are advantages to leverage. We pay cash for each house and then refinance, the difference is we don't use standard mortgages, we replace our equity with debt from hard money lenders. We also found a local business bank that was willing to fund our flips at a very competitive rate.

If you intend to fix and flip, and your hold time is 3-6 months, the difference between and interest rate of 4-5% and 8-10% for private lenders is not all that substantial. Especially if it means doing a deal vs not being able to do a deal. 

If, on the other hand, you intend to hold the property as a rental, there are many small business banks out there that have started to do 5 year loans with fixed rates. Since these are considered commercial loans, the lending scrutiny vs. a Freddie/Fannie loan are much less, especially if its a bank that you have an existing relationship with. 

Bottom line - the capital is out there, but it won't come from the big banks. Think outside the box! Start by calling some of your local business banks and private lenders and see where that takes you.

Good Luck!

-James

@Neil Schoepp That's a tricky question. Technically the answer is no, you cannot move a GSE property into an LLC. There is a provision buried deep within their loan docs called a "due on sale clause." That means that if you sell, transfer, or in any way convey title to the property to anyone other than the borrower, they have the right to call the loan due effective immediately. This provision is designed to prohibit exactly what you are proposing.

I would never advocate violating a loan contract, but with that said, I do know that investors still do this with regularity. Similarly, many other investors buy properties "subject to" the existing GSE loans in place and just keep paying the mortgage. As you can imagine, any "subject to" purchase could also trigger the "due on sale clause" as well. 

Ultimately, the bottom line is that you are not supposed to do it, but lots of investors still do it, and as long as I have been investing I have never heard of any GSE actually try to enforce a "due on sale clause." If you think about it from their perspective, they would really have no incentive to call a performing loan due. It would not make sense for them financially. 

I hope that helps, and proceed with caution...

-James

Hi Nick! 

You will find different answers from different people, but the bottom line is that if you can afford it, set the LLC up as early as possible. You never know when you will get your first property and it might even catch you by surprise - it sure caught me by surprise and I ended up taking title personally.

The cheaper way to set it up is to use online services such as legal zoom, they do make it pretty easy, but it is still possible to make mistakes with an online service. If you can afford to have an attorney set it up for you and make sure that you are compliant for all of the necessary regulations in your state, that would be even better (in California it costs me around $1,000 for an attorney to set one up). 

Just an aside - keep in mind that Fannie/Freddie will not loan to entities, so if you are buying rentals where you intend to get permanent Fannie/Freddie type financing, you will need to own those either in your own name or in a trust. 

Hope that helps! 

-James

@Lynn M. & @Josh Norris

@Lynn McGeeinYes, you can sue for specific performance, but you also need to prove to the court that you were ready, willing & able to close the deal...and the burden of proof can be high (at least in California).

For example, if at any time during escrow you contacted the seller and asked for a change to the contract (i.e. repairs, price reduction, etc), a good attorney could point to that and argue that your attempt to change the contract means that you no longer had intent. Maybe the court agrees...maybe it doesn't.

The bottom line is this: The only people that actually win lawsuits are attorneys. Everyone else just wastes a lot of time and money to reach a settlement that nobody is happy with. It's not worth the effort.

As @Michael Quarles said, have "Enough contracts that one leaving doesn't matter" and move on to the next one!

Get in touch with a local Realtor that knows the area well. They will be able to help you with your ARV. A good start is to call the Broker of Record for a local brokerage and explain your need. A Broker of Record knows which of their Realtors does good work. I did this once and the Realtor I was referred to ended up doing 25 deals with me.

Once you get the ARV you'll know if you have a deal. If you do, pitch the deal to local investors, if not, then have her accept her tenant offer.

Also, be careful with your repair estimates. A house that expensive is probably going to need more than $20k to make pretty.

Good luck!

@James Sutton Find out how many times the property has been sold since the original DOT was recorded in the 70's. If the property has sold multiple times, with a new mortgage recorded each time, then you have a 99% chance that whoever the lender was on the 28k loan did get paid off and then just forgot to record a reconveyance.

Most large title insurance companies would look at this situation and insure you as if you bought a 1st TD.

@Brent Malone If you are concerned about your offer getting being less attractive with an inspection contingency in it, you could always try to get the inspection before the offer is submitted and then you can satisfy yourself with the results before you submit.

@J Scott Good advice, but I would add that if the foundation is brick or river rock held together with mortar, it may indeed keep the house standing, but when Brent goes to sell the house the buyer's home inspector may call it out as unsafe.

Good Luck!