All Forum Posts by: Ke Nan Wang

It's very rare anyone would recommend a good GC. Most people who actually recommends one is either affiliated or noobs themselves. Many good ones have an ego of Texas and want to charge an arm and leg. So you need to find a good contractor who's also reasonable priced.  

The veterans who are using a good one would like to keep it to themselves because usually the cheaper/good ones will not stay cheap much longer once the word get out and they become busy. The skillset of working as a remodeler doesn't convert to leading a construction company. The one who runs a company will always be more expensive than the one who's doing the work themselves. And let's be real, investors are all about hiring the cheapest one out there. 

Also the good contractors come and go, life changes and people turn. If you are serious about renovation, best way to do you due diligence and find the good on your own.

If you don't know where to start, start with google, then go visit renovation construction job sites. drive around town and take down contact information from contractor's vehicles you see on the road. 

Call them and setup an appointment. Interview them about the scope, get the price, ask for similar jobs they have done recently. Ask for a few references. I'm not crazy nazi on license as long as the scope of work does not require the license because I know unlicensed ones who are great and licensed ones who suck. But insurance and worker's comp is a must.  

Repeat this a few times and compare the ones who actually gave you the quote.  Make sure when you doing the comparison you are comparing apples to apples. Some may have a lower price but because he's skipping 10 steps in the process where the other person is doing it the right way. Cheap doesn't necessarily mean bad. There are lots of people willing to do the same work, same timeline, same quality for less money. If you need three quotes to compare, you need to call at least 10+ contractors, setup 6+ appointments and maybe get solid three. Just like cold calling, it's a number's game. 

Many people complain about can't find good contractors is like people complain about can't find good real estate deals. There are good contractors, just do the work and you will find them. A lot of people call two phone numbers with no answers and gave up. 

Thank you for the great post but unfortunately it's most likely not gonna do what you want it to do. 

This is not just in real estate, this is in every thing education. It's a market where people can't stop paying money to buy, and it's a business model for the gurus to make money. Think about the business model of an overpaid useless college degree. The system actually convinced people that's what they HAVE to do to do well. 

It's part of the free economy and capitalism. If there is a demand, there will be supply and people making money out of it. If they can put together a presentation/program to convert people, that takes time/effort/knowledge too. Even though I don't like the business model, I still admire the hustling. That's why I give out my opinions all day long for free :) I like Alex Hormozi's model, share the secret and sell the implementation. I can give you the blueprint all day long, but if you can't or doesn't want to implement my blueprint, you still have to hire me to do the work. 

The best way to learn is by doing. When starting out, it should be 10% learn and 90% do. But most people is the other way around. The process should be learn a little to know the first step and maybe the next few, then go do, do, do, do, do, then reflect upon what should be keep doing, what should be stop doing, and what else should be tried, go study a little more on related subject, then do do do do do rinse and repeat. When one become more and more proficient, that's when the studying takes more over doing. One must accept the fact that there will be mistakes, there will be cost paid, but in the long run, as long as one doesn't quit, and try to improve on the process every day, one will get better. 

There is no short cut in building and retaining wealth. Money made quickly will also get lost quickly.  

While this might not be the cure you're looking for, I'm sure you will find many pieces of advice from others that address your question.

I'm just going to share my thoughts here because I don't think it's emphasized enough, and mostly I've had to learn this through experience:

Investors are on the lookout for deals. If you find a screaming good deal, you won't be short of buyers. The real estate (RE) coaching industry tends to train agents to work their clients but often neglects what it takes to become a standout agent. Obviously, one needs to have both the competence and clients to be successful, but I rarely hear any coaching program teaching agents how to be effective. Anyone can push paperwork, follow the law, and abide by the code of ethics—that's the easy part. The true craft lies in knowing the market inside out, having a Rolodex of connections (wholesalers) to source deals, or going out there, boots on the ground, cold calling property owners to find deals yourself. This is what matters to an investor: finding a deal with substantial potential profit. If they talk themselves out of it, the deal likely isn't good enough. Sure, you might learn some manipulative tactics and trick someone into buying something in the heat of the moment. Assuming they pass the inspection period and close on the deal, if the investor ends up with a bad deal and suffers buyer's remorse, do you think they'll recommend you to others? This is the main skill a RE agent needs to work with investors. On the other end, if the RE agent is working in retail market, then deal finding skill is a bit less important than follow protocol, ethics, communication, attentions to details, and being resourceful to solve problems. 

Pretty much like everyone else has mentioned, property management is a hard job. Of course, people love to save the 8-10% management fee when everything goes right, but when things go wrong, having an effective property manager can save the owner a lot of money and headaches. New property owners should treat the property management (PM) fee as insurance, not as a disposable expense they would rather save unless the property owner is willing to develop the necessary skills through learning and practicing to manage property and tenants EFFECTIVELY.

There are many steps to take before resorting to the nuclear option. It all starts from the very beginning; the way a landlord communicates with the tenants sets the tone for the relationship. People have many bills to pay, and at the end of the day, if the bill is higher than the income, they are going to pay whoever pushes them the hardest. I do not want my rent to be at the bottom of their priority list.

Over years of dealing with tenants and practicing human relationship and communication/negotiation skills, I've learned that there are many ways to be fair without being disrespectful, to be respectful but firm, and to make tenants feel the pressure. Even if all else fails and you have to go through eviction, there should be no sob story that can make you feel guilty because you have done everything possible to treat them fairly.

The moral of the story is, if property owners do not want to put in the effort to get good at landlording, they should hire an effective property manager to do the work. If they still want to roll the dice, then they must accept the risk and pay the right people to handle the eviction properly.

You can go to your local REI events and connect with some real credible flippers and see if there are opportunities for you to lend your money as hard money loans. For the right player, in the right deal, I found this as an attractive alternative. The risk is high if you don't know what you are doing. But if you do, you can mitigate the risk to almost nothing and everyone wins.

A typical hard money structure is 6-9 month term, 2-3% origination, 12% annual interest paid monthly interest only and full payback at the exit.  

It would be hard to do if you just start making connection now because trust takes time to build. I haven't done any hard money lending until I met my wholesaler/flipper, got to know him and his family, saw his past operations, done other smaller deals with him, for over 3 years... before I started lending my money into his operation. Everything is done above board, mortgage, promissory note, insurance, title lien through an attorney and the deal has to be amazing, like acquisition at around 30-35% ARV where as-is value is 65-70% ARV, my loan amount is 50% ARV for acquisition and majority of the renovation, I do my due diligence too with my RE agent and general contractor experience, so worst case I take the property back and sell it as is and still breakeven if not making some extra money.

I think this is a good middle ground between high yield saving's account and full real estate investment operation.

Real estate agent license is very easy to get, that's why everyone knows someone who has it. I won't hurt to try it out and get one. It costed me about $1500 to start (course fee, exam fee, then after I got my license, brokerage and MLS fees). You do one deal a year and you get your money back.

You will eventually figure this out if you decided to go this way but just some insight for you from someone who's years in the business:

1. It's always beneficial as a RE investor to know what's going on behind the curtain and understand the rules of the RE game. How and what your agents are thinking about? What they care? What are the general RE laws, contractor laws? If you know this, you are less dependent on your agent even if you do end up having a RE agent represent you in a deal for one reason or another.  

2. If your goal is to make money and doing business involving real estate, you don't need a license. I know tons of wholesalers who do real estate and makes great money and they aren't licensed. Some were licensed in one state and they moved to another state started wholesaling and didn't bother to get their license in that state. The reason you use you license as a career is if you enjoy brokering transactions for customers: thinking in terms of marketing yourself to get clients, listing appoints, showings, writing contracts, negotiating terms, babysitting customers and guide them through the process. If that's what you enjoy doing, then this is a career for you and you can keep your license active and doing this for the long haul. 

3. If you become a licensed agent, then it's difficult to become a wholesaler unless you don't care about ethics. There is a conflict of interest with regard to who you represent. If you take a look at how to become a successful wholesaler and how to become a successful RE agent, the skills set are very similar in terms of marketing and sales. A wholesaler needs to have a better understanding of improvement cost and ARV and usually require to have a broader connection with people. However, a wholesaler takes on higher risk and makes a lot more money per deal on average than a real estate agent.

Have you tried an attorney who's specialized in 1031 exchange services? This is a specialty and less and less attorneys are doing it therefore the only ones who are doing it are the attorneys who specialized in this. My 1031 exchange attorney answers my questions all day long. They are busy and it may take a day or two but they will always get back to me with my questions. 

Hi Christopher,

Those are great questions. I personally own and operate both LTR and STR successfully in my area, and hopefully, I can provide some insights for you. These are my honest opinions about the two:

My definition of STR success is based on both reviews on platforms, private feedback from guests, and my financial bottom line. I'm confidently speaking based on my conversations with STR hosts around me, whether they are STR PMs in my area, my wife who worked as a PM for another STR PM company in the past and saw what's behind the curtain, investors who own STRs in my area, and STR arbitrage tenants who are renting my LTRs. I'm operating at the 90+ percentile among all Airbnb hosts, both in terms of customer satisfaction and profit.

My insights on STR vs LTR:

For a quick estimate, you can take 50% of your gross rent income (nightly rate x days x occupancy rate + additional service fee you'd like to charge) to get your net profit. You can compare that to your estimated LTR net profit. Usually, if you only use a third-party cleaner and self-manage the rest, you should do slightly better or break even compared to LTR if you are in an okay STR but a strong LTR area. You will do worse than LTR if you let other people manage your STR.

If you are in a strong STR/weak LTR area (seasonal touristy area), then STR will win no matter how you manage it. This is where you can see STR making 3x LTR income. If you are in a strong STR/Strong LTR area (an area that's both popular touristy and experiencing population growth), STR should still do better than LTR. This is where you see STR making 2x LTR income.

Now let's talk about the operations:

LTR, almost anyone can do it. What you are providing is room space and room configurations. You can have white wall paint, outdated but functional kitchen/appliances. As long as you make things safe and functional, price it right, and screen your tenant right, you put the tenants in and don't hear from them again other than collecting rent every month and renewing the lease or finding another tenant when the lease comes due.

STR, you are in it for the hospitality business (assuming you want to run a successful one). I know hosts who treat their STR like they would with their LTR and they get bad results and eventually go back to LTR. You run it like a hotel business. From exterior curb appeal to interior finishes and decors, everything needs the vacation touch. You have to furnish the place (budget should be $2k per bedroom, counting the kitchen/living room as well). You have to stock the property with towels, sheets, coffee, toilet paper, cleaning supplies, and maintain the property stocked at all times. Pest control and lawn services that are optional landlord's responsibilities in LTR, now they are the host's responsibilities. You can leverage VA, technology, and systems to automate and help with lots of your work, but in the beginning, you are going to handle communication with the guests by yourself. You want your guests to feel welcoming so there will always be a human touch to things around the property that will separate your property from others that are managed by PMs who care less. You are the only person who can decide whether that extra money is worth the extra headache. Keep in mind there is value in learning the business too. When I started my first STR, I went into it with a mindset that as long as I'm breaking even compared to LTR, I'm happy. What I gained from the experience was the knowledge and skills to manage STRs. And now I'm here talking about it :). Now when I make a decision whether to STR or LTR, I have personal experience and data and don't need to rely on listening to other people's stories.

Two bonuses for STRs and LTRs don't have: STRs give hosts more control over the properties, and owners have more flexibility with using the properties for personal use, which LTRs don't.

STRs have their wear and tears, but in general, the condition of the property is usually well maintained above standard. This means that as long as you fulfill your hosting obligations, you can sell the property in its tip-top shape at any time. This rarely occurs in LTR. Usually, when an owner wants to sell an LTR on the market for top dollars, a light rehab is required if not a full rehab. Often when doing the rehab to exit a rental property, you notice you didn't make any money over the last year or two. Of course, as we all know, the cashflow allows you to keep the asset, and hopefully your main gain is in its appreciation.

Here are the insights from someone who personally owns and manages both LTR and STR, and I hope they are helpful for you to make a decision.

I think Pace is a genuinely good person. I met him in person and attended several of his workshops at BPCON23. Not a single time, he mentioned his paid programs in the workshop, he knew he didn't need to. Based on what he has, I think he's by far the most grounded person I met with his status. His teaching also resonates with me the most based on my experience in the real estate world. Only thing I don't like about his practice is that he doesn't elaborate on the risk as much as he should. He doesn't talk about what if the borrower doesn't pay the lender back, what are the lender's recourses. Maybe he did in certain videos as a Q&A format but I don't think the content on the risk is enough. He makes it sound so easy and can be misleading to people who aren't experience in the RE world and some serious financial damage can be done if one's not careful and exercise industry good practices in RE transactions. 

I'm not part of his paid programs. I have joined his free Facebook group where I see people posting deals and partnership opportunities in that group around the country. I'm sure if you have a deal and needs funds, you won't be in short of people wanting to partner up with you. That's all I can say based on my experience. I have never done a deal with his subto students nor gators. 

There are certain things you can get values from his sphere right away without needing to pay and you can judge it yourself whether you want the "upgrade."

In his youtube, he offered his "wholesale contract" "assignment contract" and "Joint Venture Contract" for the public to use for free. He claimed he had his attorney constantly update the contract and can be used on 50 states with all the proper disclosures. If you are a wholesaler or looking for a JV contract, you can download his and see if they add values to your practice. I'm not a wholesaler so I've never gone to checkout these contracts myself. I am thinking about go dig up his JV contract and see if I can use it for my future JV deals.

He also said he has a full "subto" contract, if I recall correctly, that contract is over 20 pages and that's drafted, reviewed, and updated by his attorney to be used in 50 states. He would never give this contract out for free but if you want to see one without joining his paid group to get it, you can find a subto deal, post on his facebook group and do a deal with his subto student. When the student brings the contract to the table, then you can see and thus have the contract.  

If you are skeptical about Pace, simply grab his free stuff and see if they add value to your practice. In the end, you have to decide whether it's worth it or not to pay and join his mentorship program. One can tell you it's all worth it to them, but everyone's situation is different, so you still need to take a leap of faith to join. And after you joining, you are the person who has to do the work to make deals happen. It's like driving a car from where you are now to your next destination (your life goal). Pace will give you the direction, the fuel and the map, the community would be the road and infrastructure, but your effort is pushing the paddle and run the engine that's gonna push the car. You can have the clearest direction and the best road condition, if you don't power the car forward, you are not going anywhere. I think this is the case with most of the paid mentoring program and master mind out there. 

@Glen Wiley If the tenant is asking for it, if it makes sense to you financially, you could provide the appliances and raise the rent. Just think in terms of tenant's alternative. How much would cost them to either go to laundry mat or buy a used pair? Is the way you are charging them make sense to them compared to their alternatives. 

Technically you are "renting" the appliance to the tenant but the wording makes a difference.