All Forum Posts by: Joseph Cornwell

@Brian Garrett

Yes, there is always a solution. My biggest mistake so far was paying a draw without inspecting the work myself. 

@Brian Garrett

I would not necessarily call this advice as much as a warning of what to watch out for regarding my current experience with a GC. This person came highly recommended from two other investors who I know and trust. He gave me reasonable bids for the renovation of both units in a duplex I purchased two months ago.  I had seen his previous work and was satisfied. I drafted a contract and a scope of work based on the detailed bids he provided and he began working as scheduled. Quickly, there became issues where he would tell me numerous times dates and times he would be working on projects, and would not show. He would lie about work being completed. He would change the cost of things he had bid, and if I agreed a few days later it would go up again, etc. He was paid for a few projects that I was told were completed, only to find out later after a thorough inspections they were not. I have learned this is totally our responsibility as investors to double check any work that is alleged to be complete before payment of schedule draws. I also learned that even if you have a solid contract, even if you have penalties for missed deadlines, which he is way beyond, even if you do everything you know and have learned to do. There is very little control of contractors once you turn the property over to them. As it stands currently, I have paid out about 3000 dollars worth of work that has not been completed, and I have initiated a legal process to terminate the contract, and seek a return of my funds, or completion of the paid work.

Key takeaways so far: 

Do not use 1 GC unless you fully trust them with your livelihood. Instead I will do more of the work myself, or sub out work for individual projects, not a total rehab. This gives you more control if one contractor is horrible. 

NEVER pay out a penny for a draw that is not 100% completed to your satisfaction. As soon as you do, they will not return to complete work that was supposed to be finished. I was way to understanding, patient, and trusting. I will verify every single repair before I pay a draw. 

Even with great references, a great contract, and good practices, contractors are human beings and have all the good and bad qualities human beings are capable of. A contract is a piece of paper, if you are not willing or able to spend thousands in legal fees and wait 6-12 months for a resolution, they might as well be toilet paper. 

I hope you have much better luck than I have so far, but we live and we learn! I have not given up yet, I am currently hiring new contractors now to finish the other unit. I will persevere! 

@Christine Wallace

Thank you! It can be tough, I looked everyday for 18 months until I found something that had a lot of potential. The MLS is definitely difficult, I was fortunate to know that the seller was very motivated. It was originally listed for 120,000 and I was able to close at 89,000. I am also now dealing with about 40 years of deferred maintenance and updates all over the house.

I would be happy to share the GC's info, he was referred to me by a investor friend who already has a project lined up for him as soon as mine is completed, so it may be awhile until I can give out the information!

@Account Closed

There are a few local banks who will do cash out refi, typically any portfolio lender will have the ability if they like the numbers. Valley Central Bank, COPFU credit union if you can join, I have heard of even Huntington doing these loans. I have other investor friends who use Quickenloans, they will do a national search for a lender who wants your mortgage. I used american savings currently for my two personal mortgages, but they only allow conforming mortgages, so I will have to refinance elsewhere. 

Thank you to everyone for the feedback! It has already been a crazy roller coaster ride, one day everything is smooth sailing, the next day we run into a major issue that needs a remedy. I will persevere regardless of the road bumps in my path. I am very happy if I can motivate just one person, all of you on BP have been instrumental in my success so far, thank you!

Hello Biggerpockets!

I have discussed some of the details on my first project in other post, but I wanted to give an update on my first intentional investment property. A little background on me: I have always wanted to get into real estate investing since I was a teen. About 18 months ago I decided to fully commit to beginning my journey and quickly realized buy and hold would be my strategy. After dozens of offers that did not pan out, hundreds of deals analyzed, dozens of books, hundreds of podcast, investor meet ups, conversations, blogs, and countless hours of educating myself (including getting my Ohio RE license), I finally found a deal in my target area and it actually closed!!!

The deal:

I closed a few weeks ago on a duplex in Deer Park, Ohio, a suburb just outside of the east side Cincinnati, Ohio. 

Purchase price: $89,000 

Rehab Budget: $15,000 (probably will be $18,000 when completed)

ARV: 140,000+

Gross Monthly Rents: $850 for 2/1, $650 for 1/1. $1500 Total.

I pay for water and trash, should cash flow about $500 a month after expenses.

My strategy is to fully rehab both units, replace some damaged hardwood, refinish it all, upstairs bath and kitchen were totally gutted, and will be refinished and tiled. No carpet anywhere. Paint everything, and add decent fixtures to push rents to upper market.

I have already began marketing the property for rent, even with no interior photos yet I have had 25 or so people attempt to apply who are happy with the rents. My goal is to be fully renovated and rented by 4/1/17. We are about halfway through the rehab, I have a great GC doing most of the work and I am painting everything myself. (I could not justify paying a $1/sq ft for painting when I can do it myself rather easily, it would have added several thousands of dollars to my cost)

My long term goal is to do a cash out refinance in 24 months to pull out most of my capital and repeat the process. 

Here are some of the before and current photos, thanks for reading:

Follow the link for the entire photo album!

@Guy Azta

I really enjoy working with Technetitle, Inc in Milford, Ohio. I believe they offer discounted insurance if that is all you need. Good Luck!

@Guy Azta

I can tell you that 20k per unit is a very good price even near Evanston. I am not saying that makes it a good deal, but the purchase price for that small amount of units is very good. Obviously, the rent, expenses, tenants, location, manager, and other factors will determine the value of the deal. If it is part of a 1031 then timing is crucial, if you really want to utilize the 1031 you may not have many other options. How much is the tax incentives worth the risk or opportunity cost? Good luck with your deal!

@Ash Patel

It has been awhile since I saw this thread. I just wanted to add there is quite a bit of interest in parts of Madisonville currently. My opinion is the expansion and revitalization of Mariemont and Fairfax has helped expand into the surrounding neighborhoods of Madisonville and Columbia Township. However, when the properties are located in Cincinnati Public Schools it can be a negative for buyers and renters.  I do have clients looking to invest in these areas currently. It is definitely an example of a block by block neighborhood.