All Forum Posts by: Matthew Banks

I'm not trying to buy the lowest quality material, but to ensure I get the best price on material I buy.

-stone, masonry, framing, drywall, nails, sheathing, cladding, roofing

-wall & floor tile

-windows

-doors
-fixtures

-finishes (counters, cabinets, trim, paint, etc.)

So far, it feels like we're paying retail for everything, apart from the 5% discount at Lowes etc. Do I need to hit a certain volume to be able to negotiate better prices?

"I can't justify paying someone labor, because it will cost more to pay them than what our holding costs are. So that math equation didn't work out. At what point did you decide to scale up?"

-Our last project was a BRRRR, where my brother and I did a substantial amount of the labor on a very intensive rehab/restoration. I hired two outside contractors to help us. You probably want to test the waters by bringing on a contractor to do 1 or 2 specific tasks. We get quotes for painting and, given the amount of time that it would require, it made sense to hire someone else to paint the entire interior and exterior. It would not have been worth our time. We also hired a contractor to install tile flooring and a new concrete entrance. For me it came down to evaluating the time to do the job vs the bids from a couple of contractors.

I think you should start small in order to get some experience working with contractors, getting bids, and weighing whether to do a job in-house or sub out.

Your specific project is unique, so only you can compare those options and determine the best way to go. 

In general, people grossly over-hype 'flipping' and make it seem so easy to do. It is easy to show a before and after photo, and ignore all the analysis, estimating, bidding and management that is required. It is hard work to identify a property that will be profitable as a flip. And if you are lucky to have an operation in place, and a consistent ability to source leads, then you will be far more competitive than a beginner or part-timer who has little to no experience in either, and difficulty finding contractors willing to take small jobs with someone they don't know.

If I had tax losses that would offset gains from a sale, I would strongly consider selling. If I know that I'll find good deals, and that more good deals are likely coming, I'd want a lot of dry powder. The only reason to hold a property would be unusually high cash flow and/or appreciation vs buying something else. Another way of looking at it is the trade-off between long-term cash flows and short-term gains from a flip. How does the present value of cash flows compare with the short-term gain from a flip?

I'm in a similar place at the moment, debating whether to focus more on Flips vs BRRRRs. Having low cost capital for acquisition is a HUGE competitive advantage in a high interest rate environment. In that position, I'd be able to make some deals pencil that competitors using HML won't be able to touch. Any competitive advantage is one I'd want to leverage!

Start now by talking to people and networking. Get a sense for the market and different opportunities around you. Get a feel for what interests you. See if there might be ways you can help others, because you enjoy doing things others don't want to do or have time for. Make it an enjoyable process and don't put pressure on yourself. I'd really do this first, before reading books or learning a skillset.

Congrats, Joseph, that's a big success! Best of luck. Where is the property?

do they provide owner-occupied and non-owner occupied lending?

do they lend for mixed-use? is there minimum % that must be residential or commercial or retail?

We use Zillow's application service. It does identity, credit and background checks. You'll want to set criteria (FICO score, income, guarantor) so that you've a consistent method to approve tenants. And be sure to respect Fair Housing laws at the federal, state and local level. This is something you could automate and delegate too.

Hi, we're a small BRRR operation primarily buying distressed properties to renovate and hold in NY state, but also open to flips.

I've been struggling to understand how to appropriately/legally/safely hire independent contractors to assist us. I want to protect us from a worker's comp suit/claim and other potential hazards if there is an accident.

If we hire someone as 1099, to do short-term tasks over a few days/weeks, and pay them based on hours/days worked rather than a fixed price, do we need to pay worker's comp? We'd require them to provide all tools/equip. It seems hard to believe we'd have to pay worker's comp if we're just hiring someone to assist for a few days/weeks or even a month or two, but would that be the case if they are assisting us directly with a task, or taking daily direction from us for hourly/daily compensation vs fixed price?

Are there things we can do to avoid the need for worker's comp, such as limiting hours to <30/week?

NY has a Scaffolding law but it does not apply to 1-2 family properties, as I understand.

Do we also need some form of general liability insurance as well to protect us for reasons beyond an injured worker?

Thanks

Would love advice on how to organize all the documents involved in a flip, what tools/software you recommend, how you organize physical files:

design docs & drawings

survey and floor plans 

materials lists & purchase order

estimates ,contracts & invoices

receipts & expenses

contractor contact info/rolodex

legal docs

Thanks!!!

Steve, you can likely overcome the work requirement because of your current role and experience. There is a worksheet that lets you determine if you've performed enough agent services to qualify.