All Forum Posts by: Kevyn Miyata

State laws typically limit how much a Contractor can require up front.

There are always start up costs for contractors. In CA Public Works, they typically allow 1-3% mobilization costs.

Depends on how large of a project you're doing and what the contractor is to provide, like portable restrooms or storage containers. There are some overhead costs that the contractor has already sunk into your job like providing the estimate and material lists. 

Also, part of the contractor's profit is derived from the material mark up. If you're buying the material, their labor just got more expensive. And the contractor's prices are usually much cheaper than what you can get it for. I'd bet in most areas that even with their mark up, the materials are cheaper than what you're paying. Plus if any of the materials are damaged, wrong, or of low quality you're going to be the one who has to deal with returns or exchanges. 

I once did a repipe and the customer wanted me to use their copper pipe, which sat under their house for a few years. The copper pipe was pitted and flaking. I never had a leak before this project. This project was on time and material. So my price per hour went up and the customer was charged the extra hour of my crew and I to fix the leak. So he saved $100 to only pay an extra $300. 

How do you account for the fluctuations in value? Their value is still tied to the dollar or whichever currency is prevalent in your location. 

For example, today you accept one bitcoin for one month's rent on a LTR. Before rent is due next month, the value of bitcoin decreases. Are you now expecting 0.8 bitcoin for rent? Or would you still be expecting 1 bitcoin? Your lease would have to indicate the current value of bitcoin and as of which date and time. And what if the value drops 20% 10 minutes after it is transferred to you? 

Seems way too volatile for me. The dollar is pretty stable and for practicality purposes it fluctuates against other currencies, which most people aren't directly affected by. The only way I see for this to work is if you regularly traded currency and were profiting enough to make it worth your time. And if that were me, I'd separate it from my rental business and its money. 

Siding like that doesn't typically just go bad and start crumbling. It is not "fragile" or generally friable so abatement isn't as expensive per square/linear foot as asbestos insulation or even popcorn ceiling abatement. 

 As Bob mentioned, yes it is your responsibility. You should be able to verify the validity of a contractor's license on your State Contractor License Board's website. And yes, you should ask for a certificate of insurance that shows you are listed as additional insured. It shouldn't cost anything extra for that. I'd want a waiver of subrogation, which may cost as much as a few hundred dollars. 

They can't force you to buy their property. They can reject your offer if you have inspection or appraisal contingencies. More so if you're competing against offers without contingencies. 

If you don't know what you're looking at, seeing the property won't change anything. Although some agents won't put an offer in if they haven't seen the property. 

A licensed contractor would typically have liability insurance, where an unlicensed one would not. You should be named additional insured on their insurance certificates - general liability, auto, and workers comp. Their insurance company/companies should be licensed in the state the work is in. 

In CA, contractors need a bond for their license, which you could go after to recover damages. The threat of losing their license is a good tool to ensure your work is completed and done so to the area's industry standards.

The last thing you would want is for your friend to hire someone, who proceeds to get hurt and causes a fire. The worker could sue your friend and you. Without insurance(which he couldn't get or the work wouldn't fall under the policy and would negate said policy) you'd be liable for the worker's injuries and the damages to your flip. If you have a contract with your friend, you might get back whatever the max is in small claims court. Otherwise you're likely SOL. You have no recourse with an unlicensed contractor. (assuming your flip isn't just a maintenance job)

I am not a lawyer. This is my opinion based on my experience managing construction projects and contracts. 

 

Ditto what @Anthony Ward said.

Look into doing a cash out refi then use the funds to pay for the repairs. Then at that point you can decide to rent if the numbers still work or sell. 

What is the SF of the ceilings and floors? Backing into the breakdown without the square footage & existing conditions below the existing flooring and extent of misc patching - $8-10K for the asbestos abatement. $4-6K ceiling patch & paint. $4-6k for flooring demo, offhaul and new. $1-2K misc patch and paint.