All Forum Posts by: Matthew Johnson

Hello BP,

New to real estate and loving it! If I could get a reliable contractor I think I could be great at this BRRRR stuff.

Looking for some tips.  

I’m wondering what my expectations should be for a contractor to finish a job. I’m well aware the the answer depends on 1000 factors but I’ll give a very brief description of the fist rehab I just completed and the one I’m doing.

1st job - 1800 sq feet sfh block house. Repipe/replumb, Kitchen cabinets/counter, new interior doors, nothing structural.

current job - 2300 sq feet replace all windows ~20, sand and stain wood floors, reside detached garage, partial repipe, rewrire, interior/exterior paint, new kitchen countertop.

I’m certain that my current contractor is taking too long but I’m not sure what is realistic to expect?

I felt like I got a great off market deal but literally finding any licensed contractor to do work in my market feels near impossible right now. The contractor I have does marginal work at best, but gets things to pass inspection somehow. I think he will probably end up taking 1 year to finish my current project - I can't even get him to start. Would you fire him and hope to find someone affordable? Ive called 20-25 people and so far only 1 lead which would take 3 weeks to get a bid back from. I'm also worried any other bids will come in too expensive to make the numbers work. My purchase price was 92k and ARV ~250k. If someone comes in over 100k it's not going to work for me. This guy will be about 80 and the job done poorly in a year plus I'll have to manage the **** out of the guy. The risk of firing him is I'm stuck with a property I can't rehab and also I need to figure out how to get my fairly large deposit back from him (shouldn't have sent that I know)

Thanks for the help!!

@Jon Schwartz

Thanks for your feedback. Makes sense that there probably aren’t too many Florida specific things to worry about. 

I’d be interested in checking out your contact. I know that tax can get pretty complicated in the real estate world, but even with that perspective - my situation is pretty complex. 

While the cost of a really good cpa might not be justified with just this one property, it’ll be the framework for the rest I plan to acquire. 

Hello BP,

I am a new real estate investor living in CA with a property in FL. I have a ton of things going on, and I need to talk with a really good real estate CPA. 

Do you recommend I find one in California or Florida? I’ll be filing in CA. Not sure if it would be more beneficial to have someone in FL with more knowledge of Florida real estate, or someone in CA who knows CA tax better. 

@Marc Winter

Thanks, Marc.

Trusting my gut is all I needed to hear - changed contractors. 

Regarding the change in overhead, he didn’t mention that he changed it. I just happened to notice when comparing everything to the previous bid. He mentioned that he changed a few line items, but didn’t mention that he increased overhead. 

I feel way more comfortable with the more expensive contractor in this case. I have a feeling there would have been a lot of hidden costs with the cheaper one. 

@Frank Hinck

Thanks for the response!

In talking with the permitting department, it sounds like permits are technically required for the scope of the project since the cosmetic work is about 20k (excluding plumbing/electrical). I think I need a permit for the fire alarms as well. It sounds like in practice it’s not too uncommon to only permit the major items though. 

That being said, I guess my main concern is that my contractor is very against pulling any permits himself. It sounds like it would be normal for him to file a permit for the scope of the work, and the subcontractors would pull their own while noting that they’re on the GC’s project. The GC doesn’t want to pull permits for the scope of the work (only like $300 in permitting). I’m wondering if he’s trying not to take responsibility for the project in some way. He also seemed to suggest it would be cheaper to not get plumbing permit which made me uneasy (wouldn’t consider that). 

Finally, the initial bid he gave me had 11% overhead which he changed to 15% after I chose him. 

In all I guess I’m thinking this guy is highly questionable. 

Hello BP!

I’m a new investor working on my first deal and need to do a little bit of rehab. The bigger items on my list include some plumbing, electrical, and replacing kitchen cabinets/sink. 

I have bids from two general contractors right now. The one I’m leaning towards said that the electrician and plumber would pull permits on their own and theres no need for permits on the rest of the renovation (pretty minor stuff other than kitchen cabinets). Should I be worried that the GC wouldn’t be pulling any permits himself? I‘m very worried about my liability and having work done that’s not properly permitted, and less worried about saving a few bucks. I double checked and his license is valid until 8/30/20. He stated that he had a policy that covers up to $300k but I don’t know any details other than that. 

I could be wrong about this but if I understood correctly, the other contractor was going to pull a permit for the entire renovation. He has a $2mm policy. 

What do I need to be doing to make sure I’m covered as much as possible liability wise here? What should I be asking about the contractors insurance, and what insurance should I take out on my own separately?

This is in Florida, btw.

Thanks for the help!
Matt