All Forum Posts by: Kyle McCorkel

Thanks everyone for the responses. I decided to take a stance that I will fix anything that was newly installed by my contractors that was not done correctly, and offer a credit for everything else.

So for this one, there was a loose deck railing and loose toilet that I said my guys would fix. Everything else I offered a $2000 credit. We will see what happens; if they back out I’m just going to make the same exact offer to the next buyer (at same purchase price).

@Mike Dymski

@Theresa Harris

Thanks for the perspectives, I agree but glad to hear others echo my sentiment.

I’m flipping two houses right now. The first one had a higher price point and I had to wait about 6 weeks until I had an offer which I accepted. That buyer had an inspection and asked for every little thing (I think it was 12 different items, totaling $1200) to be repaired, would not accept a credit. I performed those repairs because I felt I had little choice with them being my only offer. That buyer ended up backing out at the last minute, but that is a different story entirely.

When I listed my second flip, it was completely different. There were three competing offers with escalation clauses and I ended up getting it under contract for well over list price. The buyer got an inspection, and asked for about 15 things (some minor, but some more substantial) to be fixed. Radon mitigation was one, install bathroom fan, re-grade around house, repair cracks in driveway, etc.

I feel like since there was so much competition for this one I have a significant amount more leverage. I personally hate being at buyers beck and call on these insignificant inspection repairs and feel like they should fix it themselves after they buy it. I’d rather just give them a $2000 credit and move on. Does anybody have a policy or preferred method for this? Since there was so much competition I feel like I could offer a credit and imply that if they don’t like it I’ll just find another buyer.

 I'll be honest, I'm not sure! It looked good, and was cost effective, which was good enough for me! All I know is it was some kind of special epoxy paint.  It was sprayed on and the guys had to wear masks, gloves, etc.

I completed 4 single family BRRRR's last year, and this year I was ready to take the next step to complete a multifamily BRRRR. This deal was listed on the MLS but was not on my radar until @Travis Wylie texted me the listing.  It IMMEDIATELY got my attention and I was under contract about 24 hours later.  It was listed for $100k and I got it for $85k cash.

The property was a probate property.  It was originally a 3 unit (I converted it back to a 3 unit) and had been in the family since 1946 (and they hadn't done much updating at all!).  It's huge - over 3,000 sq. ft. and each unit is 2 bed, 1 bath, plus there's 2 garage bays.  It's in a fantastic location in arguably one of the hottest rental markets in the Harrisburg, PA area.

I was able to close in cash with some HELOC's and cash leftover from my 2018 BRRRR's. Then I was able to raise the rehab funds using a secured time note from a commercial lender, private loans from friends/family, and a business LOC.

I re-did my analysis on this property literally about 20 times while renovations were ongoing. I ended up putting in A LOT more in renovations than anticipated, but the ARV ended up coming in much higher which compensated for it. I also ended up getting much higher rent than anticipated. This place is going to cash flow like crazy!

Renovations included the following:

•Previously one electrical meter and panel box, installed 4 new meters and 4 new panel boxes, complete rewire of entire building
•New outlets, switches, and light fixtures
•Repaired foundation
•Split gas into 3 meters
•Brand new ductwork, furnaces, and Central AC for Units A & B
•New gutters & downspouts
•Roof, flashing repaired
•Trees around house removed
•Entire exterior painted
•30 windows replaced

•2 new water heaters
•Replaced about 75% of plumbing
•Cleaned out garages, installed divider, and installed new garage doors
•All 3 units:
• New floor & paint, drywall repair
• New kitchen cabinets, counters, appliances
• New toilet, shower/tub, vanity

Purchase price: $85,000

Renovations: $175,000

All-in, including closing & holding costs: $270k

Appraised at $306,000

80% LTV cash out refi (cash back after fees): $236k

So I'm left with about $34k in the deal.  I was able to rent out the units for 1100 (including 1 garage bay), 1000, and 900.  Plus one garage still needs to be rented.  So, gross rents will be over $3,000/month.

After paying PITI, maintenance, management, utilities, and Cap Ex/vacancy allowance I'm cash flowing about $500/month.

This deal was about as big as I could handle - I ALMOST bit off more than I could chew - but I got through it, made a ton of mistakes and learned a ton! I scared a few contractors away, and had to fire another one, but the ones who made it through ended up proving they can handle a big, (relatively) complex project.  We had electrical, HVAC, painters, garage door specialists, and general laborers/handymen on the project, and some days they were all there at once.

The biggest two things I learned were how to better estimate rehabs (this will be an ongoing education) and also how to better estimate ARV on a 2-4 unit property.

Pics below!

What are the numbers? Since you are doing the work yourself, how much time will it consume? What will be your hourly rate?

Can someone outline what I can put in my forum signature at different membership levels?

For example, I'm currently a "Pro", and I have my website in my signature.  Can I still put my website in my signature if I downgrade to "Plus" for "Free"?

Do I have other options if I were able to upgrade to Premium?

I can't find these answers anywhere.  Thanks in advance for the help.

I've been ramping up marketing significantly over the past few months and now I'm starting to directly compete with some of the major wholesalers and flippers in the Central PA market.

I keep getting feedback from sellers that I'm just way off from the offers made by some of these other investors.  By so much, that I feel like I must be missing something.

A few examples:

1. Pre-foreclosure property, judgement balance of $155K, ARV was $220k (best case). The place needed at least $60k in rehab. Seller said he had an offer from another investor at $160K.

2. Probate property on about 2 acres of land. Nice 2200 sq. ft. home, but needed completely updated, including a brand new forced air HVAC system. My rehab estimate was $120K, ARV was $300K best case. My offer would have been in the $75K-$80K range. I walked through at the same time as a local wholesale/flipper, and his offer was $170K.

So, how are investors making money paying these kind of prices? Are they wholetailing? Maybe for example #2, they planned to subdivide the land? Once I figure in rehab AND holding/closing costs (including interest/points), I just can't understand how people are making any kind of money while paying this much for property.  These aren't newbie investors, these are major outfits.  Are they wholesaling to newbie investors (making it an even worse deal for them)?

What am I missing here?

@Joseph Cacchiani

With only 20% equity, you don’t have any really good options. I’d say sell, but then half your equity goes to realtor commission and closing costs.

@Joe T.

This is such a great topic. I went through this on my first few BRRRRs.

First of all, I’m not surprised that 4/5 were basically indifferent. Most of the really well established guys are booked months in advance and can charge top dollar based on quality and/or reputation. Also most of them work exclusively with homeowners who pay 2x (or more!) than investors. So you’ve automatically taken a back seat.

Also I’m not surprised that no one is giving you a firm price. A lot of GCs will feel you out for your budget in order to try and make as much as possible. It’s the same thing a good real estate investor does when trying to get a good deal! Always try to make the other guy make the first offer.

So, how to find a great GC. I believe two things: 1. Envision yourself in 2-3 years and what your team looks like. Ideally you have one or two awesome GCs that you always work with. What does that relationship look like? To me, it’s someone you trust, similar mindset, high integrity, responsive, good attitude, gets job done on time, high quality, etc

2. Now flip it around: what kind of person would that perfect GC want to work with? Responsive, decisive, understanding (but not a pushover) respectful, pays on time.

Too many investors look at contractors as a commodity...something that can be easily replaced. I think you have to look for long term relationships.

Finally, to answer your question. If it was me, I’d choose young and hungry any day of the week. They will get the job started much faster, they are juggling less projects (you might be his only project!) and therefore you can command more attention. They will be more responsive with text messages and phone calls. They are more teachable/moldable - you can have them tailor their product (quality, payment schedule, work schedule) to suit your needs. Most importantly, these types of guys will be better suited to grow WITH you.

Is there a chance it doesn’t work out? Sure. But you won’t find an already established contractor who is going to do 50 projects with you over the next 10 years. But there is a young, ambitious contractor out there who will.