All Forum Posts by: John Collins

We'll be about 500 miles away so definitely need a property manager, but really wondering if it makes sense to pay an extra 4-5% (monthly) on an upper tier property manager or are most property managers more or less going to provide the same service?

You need to be specific about the property itself. When was it built, what did the inspection report say, how are the tenants and the neighborhood, etc. etc. Just pure numbers is pointless.

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Originally posted by @Nathan Gesner:

Originally posted by @Kathryn Schauer:

@Nathan Gesner the price is not discounted, it is market value.

At this point I share the report w the turnkey company and state they need to do the repairs?

Or I take on the repairs myself in exchange for a reduction in price. Correct?

I’m investing from out of state, which is why turnkey was appealing to me in the first place.

You can:

Negotiate a lower price
Negotiate for them to make the repairs subject to another inspection and approval
Walk away

I vote for walking away. A "turn key" rental means you turn the key and that puppy is ready to go. This sounds like a property they bought cheap, maybe did some fixes and cleaning, and then threw it back on the market hoping for a profit.

If you look at a company like Memphis Invest, they will fully renovate the home, place a tenant that is qualified and paying rent, and then sell the property to you under their management. You're buying a fully operational investment from day one.

Just want to add that Memphis Invest is now known as REI Nation .. but the whole fun of it to me is doing what REI nation does for you (and takes a big cut for). People get into that to say they're into real estate investing ... but don't really make money from it, or anything more than you'd make putting your money in a mutual fund.

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Originally posted by @Kristine Groemping:

@John

@John Collins that's great feedback! Could you say more about drainage? My husband just wants to dig a trench in the middle of the yard that I guess leads to the neighbors. I think there might be a better solution that doesn't have to cost a lot.

With drainage - order maybe 3-5 yards of 2" bullrock or river rock to put around the house or in areas where water accumulates. I would try to get there right after a very heavy or long rain and make a note with flags of all the areas water accumulates. Have gutters on the house leading away from it. And with the yard, you're going to have to grade it (slope it away from the house) anyways, so make sure it's discussed with whoever you contract, all water should eventually or immediately trickle away. These steps are more than enough. French drains are expensive and ineffective unless in the most extreme circumstances, and alot of times they accumulate flies and pests. They're also better left for fixes to existing situations instead of starting out from scratch like you are.

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Originally posted by @Roberta Marcos Marcos:

@John Collins not sure I phrased it right. I was referring to the future appreciation of the house based on the neighborhood and location. Why wouldn’t that be a reason to invest?

It's not a "primary" reason to invest. If it happens great, but don't rely on it. You really should have cash flow, tenant vacancy rates, neighborhood, surrounding demographics and jobs, upcoming major builds in area, etc. as more important factors. Particularily when you start out, always look at cash flow based on approved loans etc.

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Originally posted by @Roberta Marcos Marcos:

Hi All,

My husband and I are in the process of purchasing our first buy and hold property in Austin. I used the rental property calculator and show positive cashflow, but the 1% or 2% is not met, with income-expense ratio of .75%. In a podcast Brandon mentioned below 1% usually means property will not cashflow, but this one will. Is it still a good deal below 1% given that the Austin market that is appreciating so much?

Yes, in Austin, it is. That would be due to demand, younger professional crowds flocking there , city life and tech hub. Do not invest based on appreciation - that's a big mistake. It always depends on the market or neighborhood and extenuating factors that have NOTHING to do with appreciation.

If you offer me a $20,000 home with 2.5% return vs a $500k home with 0.7% return, I go with the 500k home every time in a place like Texas.

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LMAO at $50k! Girl, I'll keep it real, landscapers see clean cut white people and shoot for the stars. Here's a secret - for landscaping, calculate on a work per day basis and assume the rate for labor only is $200. For the guys operating heavy machinery - and this shouldn't be more than two days, it's going to be $300-400. Then add materials (which they get at contractor rating). I can get this yard cleaned up, graded for adequate drainage (don't bother with french drains), have pavers laid, a fireplace, mulch with plants etc for 4 figures easily and it looks a hell of a lot better than the bare minimum. Even in pricier areas.

Don't think of it as bare minimum, think of getting the right guy (based on reviews or pictures) and a team of 2 or 3, calculate the rate, then offer it to them. You are the boss here because you pay the money, end of.

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Yes, cheaping out is never the answer. You MIGHT get lucky, but you most likely WILL NOT or find a reformed gangster at your step trying to coax you into more and more work.

Some of your stories are unfortunate and bad, but none of them ABC13 horroresque.

Mine is too embarrassing to talk about in public. Just pitiful from a human standpoint, forget about the work. It kept snowballing into more absurdity and there were too many negatives to cutting him off or getting the cops involved because he was exactly the guy who would do something like a pitbull when backed into a corner - which in his manic states he always felt he was. The lesson was don't hire based on wanting to be nice or doing someone a favor, whether with contractors or tenants, reality will always kick your *** to the curb despite your "intentions".

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Originally posted by @EJ K.:

My wife and I live in our second property which was a 1500 square foot 2 bedroom (loft as well) and 1.5 bathroom.
I am graduating residency and moving and we are converting this into a second rental property. We got a contractor to add ceiling fans to each room (No prior electrical to ceiling), convert the loft to a bedroom (added a closet to make it formal), and redo our floor in living room (from carpet to vinyl) to prepare for rental.

We’re getting all of this for about 3 grand.

Based on the picture let me know what you think. He offered us extending the floor out to recreate a new loft and square footage. We pay materials and one guy 20 an hour and the other guy is a family friend/I pay him with medical care. Is it a worthwhile endeavor to call in a favor on a task like this? He also said I could turn that new area into a bathroom but that would be more costly but would make it 3 2.5 instead of 3 with a loft and 1.5.

Any info is appreciated. I don’t want to use him if it’s not worth it, as I will be asking him for other favors like finishing a 1600 square foot basement

The picture isn't enough to match to your words. I need a blueprint of the house and pictures of everything to give you accurate remodeling tips. But the rates you get in Illinois are phenomenal, anywhere else the $20/hr guy is absolute turd.

One thing you should definitely do is with the staircase, a change you can make for cheap is to sand and stain the handrail a darker color and paint the balusters white. It looks modern, trendy, increases value, etc.

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You have dealt with? How did they fool you into working with them? Were you able to take them off the job or did you push through?

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Originally posted by @Costin I.:

@John Collins - procedure and price varies wildly, but I can tell you there is more to foundation repairs than just the foundation. Here is what I collected as "warnings" or lessons (from various sources and some experienced myself) about foundation problems and/or repairs:

1. If you have brick on the exterior, you might have to do tuckpointing. $$$

2. If you have tiles inside, the tiles will crack. And if they have to drill holes for interior piers, you pretty much will have to replace the entire flooring. $$$$

3. You'll have drywall cracks, so you should factor in drywall repairs and repainting. $$$

4. If the doors were adjusted to a crooked foundation, you might need to readjust or even buy new doors. $$$

5. A hydrostatic plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$

6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$

7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$

8. If you are dealing with an addition built on 12" beams (or if the original foundation is old and not built to current standards), the repair company might not be able to push the piers down to refusal depth or psi due to the beam not taking the load, thus leveling it, but not guaranteeing it will not continue to move in the future, thus not providing warranty.

9. The owner may be required to provide a structural engineers evaluation prior to warranty work.

10. Read the fine print in the foundation repair contract: Damages to the property, interior and exterior as a result of the foundation movement are not covered, during and after works completion. This usually includes but is not limited to PLUMBING, flooring, landscape, utility lines and masonry. The foundation repair does not cover any repairs that may be needed to the home during and after works completion. And you'll have new cracks in unexpected places, old cracks that will not close, but instead enlarge. My suggestion is to add at least 25% to the cost of the foundation repair as mitigation to the problems that will come from the foundation repair.

11. The foundation repair company salespeople (and even owners, in some case) of structure companies are not engineers and though they may be right most of the time, there will be gaps in their assumptions. Unless it's a small job with an obvious solution, get an engineer ($250+) to look at it and sketch up a scope of work for a contractor to do.

12. Many foundation problems have water as a root cause - be that infiltration in a crawl space, drainage around the site, cracked sewer line or water line. Before solving the foundation you might want to get to the root cause of the foundation issue and resolve it, otherwise you might repair the foundation for nothing.

13. If you repair the foundation on only select places, don't be surprised if the other sides will suddenly start "working". If the house is stabilized on one side, you might get cracks in the other side soon after. In other words, if you do a foundation repair, it's better to get the whole house stabilized and the warranty for the whole house.

Appreciated the detailed response. I will have this checklist itemized.

On one of my first homes, there was clear settling that led to cracks inside the drywalla nd ceilings of the home and other signs of movement in the interior. It was due to being in a high rainfall area, water settling near the house and the backyard had a concrete slab sloping into the house.

I installed river rock all around the house, put up gutters (the original ones had been damaged and useless), had neat drainage avenue's for all of the gutters (with the white PVC20/40, not the black stuff), and most importantly removed the concrete slab in the back patio and installed a patio sloping away from the house. The neglected backyard was then graded to slope away into a different direction. There have been no issues since and I knew I was relieved when the inspector said it was just above ground water not able to get away from the house.

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All Forum Posts by: John Collins

John Collins has started 45 posts and replied 311 times.

Post: Property Management Agent Worth it?

Post: Thoughts on an Inspection Report?

Post: How Much to Invest in Landscaping for Rental Property?

Post: Austin Market- 2% rule

Post: Austin Market- 2% rule

Post: How Much to Invest in Landscaping for Rental Property?

Post: Biggest nightmare of a contractor / sub contractor

Post: Renovation question/ do or don’t

Post: Biggest nightmare of a contractor / sub contractor

Post: Has anyone ever gone through with a foundation fix?