All Forum Posts by: Jerry Powers

Stacy - Derek is correct - you can save money by putting in basic finishes. What most people don't realize is that the level of finishes does very little to affect the value of a property. Appraisals are based primarily on square footage, number of bedrooms & bathrooms, location, condition of the property, and school district. Having premium finishes very rarely increases the value equal to or above the cost. As a home builder, I always consider the perceived value of any item built into a house. If that item is not considered standard for the area or does not increase the perceived value, it is not included in the house. 

You are fortunate that you are planning on living in the house for some time. (I assume you're planning on a 1031 exchange.) This will allow some time for appreciation to catch up with any cost overruns - just don't overdo the overruns.

If you haven't already done it or considered this, you should consider performing some of the work yourself. As you probably already know, YouTube is a great resource for training videos on any home improvement projects.

Have you thought about searching for a handyman who would be willing to perform home improvement projects in exchange for a reduction on a portion of the rent in your rental unit. However, you really have to conduct a great amount of research on anyone you offer this arrangement!

Good luck on your first rehab -  you have learned some valuable lessons that will help you in your future endeavors!

Orlando,

I'm wondering if a possible solution would be to have your name added to the property deed in order to protect your interest. That should have the added benefit of allowing you to obtain a home equity loan to fund the rehab. What are your thoughts?

Justin,

It all depends upon your knowledge base. If you have experience in construction and are confident that you can oversee the addition, I would get three competitive bids for every task. However, short of that experience, the best option would be to find a general contractor who already has all of those resources. Again, I would get three competitive bids. As someone who works in residential construction, a source of good contractors is using the local home builders association such as Gold Coast Builders Association in Palm Beach - http://www.goldcoastbuildersassociation.com/  Usually they will be glad to provide you names of qualified contractors / remodelers who can provide you with a quote.

I have a Home Depot Pro account and I get 5% off all of my purchases! Every little bit helps when you're controlling your costs.

I have been hanging around here for some years, but I haven't been very active and I never posted my introduction - shame on me!

I have decided that it is about time that seriously get started on launching my real estate investing career. I became really interested in real estate investing after the housing market crashed in 2008. Since my career has been in home building since 1990, I felt it was an obvious transition.

A business partner and I attended Rich Dad's 3-day real estate investing training. After being unsuccessful in securing funding for some deals my partner decided to quit. I had two separate rehab deals under contract that my hard money lender originally approved and then backed out due to the housing market crash. Therefore, due to the housing market crash and the failed launch of our real estate investing business, I decided to return to college and major in Marketing. I felt this would complement my Construction Science coursework and home building experience. 

After attending the real estate investing training and receiving Rich Dad's deal analysis software I felt it was not user-friendly. I felt it did not provide enough exit strategies analysis. Therefore, I created software for my own use that addressed what I needed to provide me with a very quick analysis. (I'm not revealing the name of my software - or promoting it - so that I don't violate forum policies or appear to be promoting my product. I also will not reveal the name of the software on the site - only privately, if requested).  While I was back in college, I was able to create a business plan for my software in the Marketing and Entrepreneurship classes. Additionally, I presented the business plan in four business plan competitions - placing 1st in a state competition and 1st in a national competition.

Therefore, I feel with over 25 years of home building experience in design, estimating, site superintendent, purchasing, land development, as well as marketing and entrepreneurship, equip me with what is needed to succeed in real estate investing! However, I have to overcome challenges of investing with no money - the housing crash was hard on the family! 

I will be focusing on wholesaling once I get a new website launched to generate leads. Fortunately, I am experienced in website design and SEO! Additionally, I am seeking private investors that recognize the experience and knowledge that I bring to the deal.

I hope to network with lots of people here on BiggerPockets! I hope to be of some help to anyone needing advice from me concerning construction, etc.

Cordell - There is a good podcast on low-cost ways to find real estate deals (http://www.biggerpockets.com/renewsblog/2015/06/03/askbp-033-low-cost-methods-finding-great-real-estate-deals/) #askbp podcast 33. There is some discussion of using direct mail. However, as I have learned from experience and as a Marketing major in college recently, response rate for direct mail is typically only about 1-2%. I personally prefer using a website that is optimized for keywords targeting sellers. That requires either hiring someone to do the work (can be expensive), or doing it all yourself (what I did). If you haven't listened to the podcast, you should do it to get some more ideas of how to find some great deals.

Ben - As someone who has built thousands of homes over the years, a word of advice when determining anything that goes into a house is to ask yourself, "will buyers value the improvement as much or more than it costs?" New windows is typically a resounding "yes" as long as you don't go overboard with high-featured expensive windows. Good quality energy saving windows are good enough.

Lawn sprinkler typically does not have a high value in most buyer's minds unless it is "standard" in the area.

A refrigerator is really only needed when you are selling to first-time home buyers or those buying a vacation home. Everyone else usually brings a refrigerator with them. However, buyers usually place a good value on a coordinating refrigerator.

I question mixing a traditional 5-1/4" base with a more contemporary wood-look tile. A traditional look calls for real hardwood floors - if you can get a good return on that expense. Otherwise, I would consider a quality laminate or glue-down wood floor.

What is the architectural style of the house?

@Joel Kadlec - Here's an early welcome on your move to the Tulsa area!

Listening to one the BiggerPockets podcasts today, I believe it was Chris Clothier - owner of Memphis Invest, mentioned that when looking for prime areas for investments he finds the paths of progress. With that in mind, Owasso and Broken Arrow stand out from the four great cities that you mentioned. However, as someone who has a granddaughter whose family just moved to Broken Arrow, I was not pleased with the school ratings. While Broken Arrow is constantly expanding, it doesn't really seem like it is adding major new employers. 

In contrast, the Owasso area is currently adding some new employers, including the recent opening of the new Macy's distribution center. Additionally, there are many national retailers building new locations in Owasso. However, I have not researched the quality of education.

Unfortunately, commute time to downtown Tulsa will be a challenge for any of the cities mentioned. The major highways heading to downtown Tulsa are sadly too narrow with no evidence of any forthcoming expansion.

Midtown Tulsa has some excellent property with good appreciation. Additionally, there is a youthful appeal for your family in Midtown. However, you will probably want to explore private schools for your children.

@Cordell Hinton-Brown  - Welcome to Bigger Pockets! Thank you very much for your brave service to our country! You are in a great place to learn. If you haven't discovered it yet, you should check out the BiggerPockets podcast on iTunes - great education on many subjects!

There are a lot of people in the same boat with challenged credit and little cash. However, don't let that stop you from getting started in real estate investing. Obviously, wholesaling doesn't require either. This method will provide you the cash you need for your business and you could build your credit with a secured credit card or other measures.

Good luck on your endeavors! 

By the way, be careful on quitting your job too soon - great podcast on that subject by Bigger Pockets!

Henry - You have certainly come to the right place to learn these things! If you haven't discovered it yet, the Bigger Pockets podcast is an incredible area for learning.

Since I have been in residential construction for over 25 years I can give you some advice on rehabbing when you are ready.