All Forum Posts by: Diane Menke

Scott,

I never meant to suggest you were doing anything illegal in your business model. I'm really sorry if that came accross.

If you hire a GC or any sub, the price is the price. They make a mistake they take the hit not you. So its a nice way to make scheduling problems their problem. In fact you can attach a deadline to the contract after which you can collect damages.

In our area we DO have builders, developers and remodelers who DO break the law in hiring their practices. They will skip permits and build all kinds of things that are not to code or are even very dangerous.

I have read dozens of BP posters who call themselves investors but who really only get paid at sale of property for their investment dollars. They don't get paid to do the work they do, or for the materials they buy for that project or other job costs they encounter.

Seems to me Scott that you do have a construction wing to your current investment business. I don't know your volume. Doesn't matter really. But you might want to reach out to local remodeler professional networks like NARI or Remodelers Advantage to see about what their standard accounting and business models are.

In this way you can run your remodel company as a separate entity from the realty firm or other businesses you have going on. I know of 2 investors who did this and made huge improvements on their earnings afterwards.

Might be similar for the realty end of your biz? A biz peer network? I don't know anything about this end.

All the best to you. You certainly are wearing many hats.

Diane Menke

Reading J Scotts reply, it sounds like he is acting as GC.

So he will carry errors and omissions insurance, liability, workers comp, business auto ins....he will perhaps have an office worker answering phones, and a CPA, a lawyer. Its his butt if the company/project loses money or builds the wrong project or even the right project in the wrong location.

We have remodelers in our biz peer group who will wear many hats and be paid for only one. They will conduct sales, marketing, legal, accounting, office management, etc. But only be paid to do carpentry.

Make sure for every hat you wear, you get paid. If you are painting or doing carpentry, doing project management, sales....GCing your project....you should be getting paid for all of that. Those are job costs and costs of business. If you do not carry or cost them, your profit numbers are fiction and short term.

Make sure you are making enough to cover the cost of your team, even if its still just you. Eventually when your investments grow you will actually have to pay that pro you hand your hats off to.

Cheers folks.
Diane Menke

There are pre mixed, pre colored latex based "stuccos" on the market. They come in 5 gallon pails. You scoop it out and trowel it on. We did this to a CMU wall on my patio = looks great. Comes in a variety of sand sizes = grit. We went with a fairly smooth one.

Go to a masonry supply center with this description to buy it.

Diane Menke
MyersConstructsInc

We have similar low end vinyl replacement windows as what you describe. These are AOK for check rentals and cheap flips and most of the time much more energy efficient than original wooden windows.

On a nicer house you want a nicer window. Any major name will have several lines to choose from be they vinyl, fiberglass, wood, clad etc. We use a lot of Marvin and Weathershield windows.

Some folks like Pella but we find their product is not so good in an older home or historic home where window style is very important to home value.

You should be able to find a local supplier of what ever line you choose, who also does installs. Remember the install includes any prep of the frame and usually trim work needs to be done inside and out.

Gage your selections carefully. Where we work windows must often be OK'd by historic bureau in the permitting process.

Best
Diane Menke

I have 3 off the top of my head -

Realtor #1 in Florida - A house in my parents neighborhood stood empty and we thought to buy it as a rental. I told realtor price was too high to cash flow. Realtor explained to us for 20 minutes how a property does not need to cash flow. It was couched in the "little lady let me tell you a few things" approach I love so much. We did not buy.

Realtor #2 when I was shopping for a home at a good price - "Aren't you excited! I'm excited! This is such an exciting house for you!" Not if its not the right price and looking like its going to appreciated nicely its not.

Realtor #3 (a newbie realtor) After I spent a while explaining what kind of investment properties I was interested in, kept sending me MLS's of SFH for 1st time buyers - not investing in. I pointed the problem out and she suggested prices were AMAZING so just buy buy buy!

Diane Menke

Has anyone dealt with a Section 8 Sales Voucher?

I have a house I am happy to rent or to sell. Someone looked at it today to buy it, suggesting a Section 8 Sales Voucher. I have never heard of this, though I have heard of Section 8 rental vouchers.

I am happy to sell the house in a particular price range. Seems to me the buyer should come in with an offer.

In this case we have an idividual who is clueless about making an offer, what she can afford etc. So I don't want to waist my time.

I'm thinking she should go to her finanical counselor and put a deal together - an offer. Am I off base?

Thanks Folks
Diane Menke

You say - "I have been asked to be a part of an existing business starting up operations in a new market."

I'm still thinking about what the other folks said, but your first sentence struck me.

An existing RE business starting up in a new market and a new decade, sounds like a new RE business to me.

Why would you want to run a new business with the vague problems of an old business you have no control over weighing on YOUR results?

I would set it up and run it as such - new and completely separate from business #1.

Example - Biz #1 can make a start up loan to biz #2 for a set time period, then pay back with interest. In this way biz #1 can make the $ corrections you refer to, biz #2 gets started, and both remain separate. If they run well and cleanly, they both make money and no "shell game".

Diane Menke

We use Duron's "shell white" flat on the walls and ceilings since most of our rentals are low end. The nicer houses get ceiling white on the ceilings. We use "shell white" semi gloss on the woodwork. For exterior front door we use Essex Green. The front doors in our houses get beat up from bicycles.

Like Mike we use the same paint in all our houses. This way we can always touch up or 'share' materials among the houses and its never a memory problem for me.

Recently I have taken to leaving a small paint touch up kit and a gal of paint in all the rental houses, since the tenants are supposed to give the house back like they found it minus reasonable wear and tear. They have taken the hint and done some touch up prior to leaving the house - a big help to me.

Diane Menke

Tiara,

Its not the amount of money you spend on a rehab that is causes the horrors.

Its when you spend too much relative to what you can get out of the property that causes the horrors.

When I say "spend" I mean money and time too. If you can sell a house in good sturdy shape in a few weeks, don't spend 12 months "making it perfect". This extra time holding the property costs money too, in missed opportunities for example as well as carrying costs.

We do many remodels for folks who spend 200K putting in a kitchen, powder room, and HVCA. These folks bought their less than perfect houses at a great price, and the renos make sense given current values.

When we do spec flips, we usually aim for sturdy long lasting upgrades with a little bling here and there, or nice ROI potential in the sales price, to make the house stand out from the others on the market.

We have a lot of experience working on older houses. The money making upgrades are kitchens, at least 1 nice bathroom, AC, modern windows, and paint.

Best
Diane Menke

All my renters ask me at the showing how efficient the house is. They ask with questions like "what are the gas bills?" and similar, since all my tenants pay their own utilities.

I point out the water saving toilets, efficient radiators and row house configuration, the energy efficient windows and light bulbs. I show then the digital thermostat they can program.

Worst gas bill last winter was about $200 for a 2200 sf house.

Yep its worth it. Green is a selling point for us, even in a 100 year old house.

Diane Menke