All Forum Posts by: Justin Puetz

Hey @Jake Huglen! That would be awesome! Do you do them on a pretty regular basis or more random than that? I'd love to get involved and meet up. Thanks in advance!

Justin

Hi everyone!

I'm curious, is anyone doing any physical meetups in the Rochester, MN area? I'm sure there are some virtual ones out there but that would seem pretty difficult to create any actual relationships with anyone. So I'm curious, if there aren't any current meetups going on, would anyone be interested in meeting up for coffee or grabbing a drink to network? Obviously, with everything going on I'm not sure what the stipulations/guidelines are currently (are masks required/is there a group size limit/etc.). So if anyone has any information or suggestions about what precautions to take, please let me know! At the end of the day, I just want to make things happen, so whatever it takes to get together in person works for me. I'm looking forward to meeting up!

Have a Super Sunday!

Justin Puetz - Puetz Construction, LLC (BC727818)

@John Lyszczyk - Thank you for this! I'm a small General Contractor up here in Minnesota and have definitely felt the price increases. It's hard to say how people are reacting to it because it doesn't seem to be affecting our project requests. I mean we're booking out next fall already. At some point, things will, in fact, become too expensive and we'll be the first to feel that, unfortunately. I can only pray for a correction here soon.

Have you (or anyone) noticed a jump for more premium products as a result? I'm adding on to my own home currently - we bought my wife's great-grandmothers house (who passed away back in 2011) at the beginning of 2020 and because it had to go through probate to be sold, we ended up finally closing on it in late September with a construction loan on it, effectively handcuffing us to these insane prices, while budgeting for the prices that were current in March of 2020. So as I look to buy framing lumber I've considered making the slight price jump to the LP WeatherLogic being that it's essentially the same price for OSB up here but definitely a better product. Not sure if the demand has hit it yet and will cause a run on it soon or if most people still are trying to save a few bucks anywhere they can. Just curious as to what you may be seeing at your level of the supply chain.

Again, thanks for this awesome post and have a great day!

Justin

As a contractor, this is incredibly useful to walk through with clients. Thank you for this!

As far as the subfloor, you are correct, it makes a huge difference for LVP. The best product will not do well over a poor subfloor. Your best bet is to either add another layer of subfloor (the thicker you can go the better but obviously this can cause problems for transition areas that you may not be adding subfloor to), or use either floor leveler or floor mud to help even out the floor. A simple string across the floor can show you the high and low spots to help identify which areas need to be adjusted. Hope that helps!

Have a great day!

Justin

We're in the middle of a full rehab just north of you in Minnesota and we had an updated panel (it wasn't quite a big enough panel for what we have planned for the home though) and knob and tube wiring throughout. For us to replace everything it was about $13,000 but that is with all the walls already being open and us pulling out the old wire. Unfortunately is all based on location and local supply and demand with trade work. Best of luck!

Justin

Investment Info:

Single-family residence fix & flip investment in Rochester.

Purchase price: $70,000
Cash invested: $192,900

This actually started as a client project for us. Through a series of unfortunate events, they chose to sell the property and remove one less stress from their lives. We stepped in and offered to take it over entirely. This project is a complete gut. We finished the basement and added one bedroom and bathroom to the home while utilizing the space more efficiently in the house. We heated the garage and refinished the front porch too. This project is still underway, stay tuned for more updates!

What made you interested in investing in this type of deal?

It started as a project that our client had us working on for them and then the opportunity arose for us to take it over. I love large rehabs like this, it allows us to maximize the home's potential and gives us more control over the final product (as long as the numbers allow for that).

How did you find this deal and how did you negotiate it?

We started as just the contractor for it and later became the investor on the deal. We discussed an interest rate that would go to our clients for continuing their financing on the project and I chose to give them a great rate from the start as a thank you for allowing us to take things over and hopefully help them recoup their initial investment.

How did you finance this deal?

Owner Financing. They used their cash to purchase the property and a bank loan for the rehab.

How did you add value to the deal?

We fully gutted the home, added three bedrooms and one bathroom to it. We also heated the garage and refinished the front porch.

What was the outcome?

To be determined. The purchase price was $70,000 with a $122,400 rehab bringing us to $192,400 invested. After financing and closing costs, we are set to make about $30,000.

Lessons learned? Challenges?

Opportunities to get in the game are everywhere. Just jump in and get after it. - I'll let you know the biggest challenge once it's sold, I'd hate to jinx myself this early in the rehab... haha

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

So far we have great professions working with us! I'll let you know more about it once the project is wrapped up.

Investment Info:

Single-family residence fix & flip investment in Rochester.

Purchase price: $70,000
Cash invested: $122,900

We had a client bring us this project in January of 2020. They found the house on the MLS and made a full price offer within the first day or two on the market. We started on the project in March of 2020. After not loving the layout (and having a designer friend in their network) they chose to pause the progress and evaluate their options for layouts and/or possible additions on the property, trying to maximize the potential of this deal. After a series of unfortunate events, that ate up nine months of time, the owners decided they wanted to cut their losses and sell the property as it sits (now fully gutted from our time there in March).

That's where I stepped in and threw out the idea of me taking it over completely and keeping them on as a private money investor funding the deal. The only way this worked was for them to keep the existing financing in place and for me to complete the project. This allowed them to wipe the stress of the rehab off of their minds and allowed them to collect a healthy interest rate to hopefully recoup some of their expenses lost during the failed design phase, while we collect the profit at the end.

We are currently close to finishing up the framing phase of the project and are hoping to have it ready to hit the market on the first of May 2021! Thanks for reading!

Have a great day!

Justin

What made you interested in investing in this type of deal?

It started as a project that our client had us working on for them and then the opportunity arose for us to take it over. I love large rehabs like this, it allows us to maximize the home's potential and gives us more control over the final product (as long as the numbers allow for that).

How did you find this deal and how did you negotiate it?

We started as just the contractor for it and later became the investor on the deal. We discussed an interest rate that would go to our clients for continuing their financing on the project and I chose to give them a great rate from the start as a thank you for allowing us to take things over and hopefully help them recoup their initial investment.

How did you finance this deal?

Owner Financing. They used their cash to purchase the property and a bank loan for the rehab.

How did you add value to the deal?

We fully gutted the home, added three bedrooms and one bathroom to it. We also heated the garage and refinished the front porch.

What was the outcome?

To be determined. Set to make about $30,000 after all expenses are paid.

Lessons learned? Challenges?

Opportunities to get in the game are everywhere. Just jump in and get after it. - I'll let you know the biggest challenge once it's sold, I'd hate to jinx myself this early in the rehab... haha

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

So far we have great professions working with us! I'll let you know more about it once the project is wrapped up.

@Brittany Tompkins - Absolutely! I’m definitely on board with this. That’s the unfortunate part of moving, my two biggest subs up here (electrical and plumbing) are great at communicating and keeping me in the loop. But I agree with the customer service side, especially prior to a relationship forming, if they aren’t showing you good customer service, they definitely won’t show it to the end client.

Thank you for this Brittany! Have a great day!

@Jay Chang - Thank you so much for this Jay! Construction management is something I definitely am wanting to learn more about. Especially because, in my mind, that’s the moment you decide to take on more risk, working with other people. So any way to mitigate that risk and leave yourself a little more protected from the start, is super helpful. I see you’re a developer too, that’s really cool! I would love someday to get in that game. Down the road of course, but if you don’t think about it now, whose to say it will ever even happen.

Anyways, thank you again Jay, have a great day!

@Tanya Rooney - Ha! Yes, in fact I was able to take some valuable advice from each response!

But thank you again, I’ve learned through other friends even outside of real estate, that are in charge of hiring, how they can do a quick background scan to see the person’s history and see if anything crazy comes about. The last thing you want is to get in bed with someone who clearly has unresolved issues (like that $80K). No drama needed here!

Thanks again Tanya!