All Forum Posts by: Matthew Shaw

Welcome to Austin! I've been here for about 8 months and I am loving it. Always open to chew the fat and meet another investor.

I've dealt with home warranties in my contracting business as well as in my personal homes (given as part of my purchase by the seller). Home warranties are not worth the paper they are written on. They always try to get out of paying for repairs, charge nearly the same as a service call would cost you out of pocket as a deductible, and rarely compensate fairly to the contractors, leading to sub par craftsmanship. I would avoid at all costs.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $498,000
Cash invested: $80,000
Sale price: $725,000

House Hack. Did major upgrades to lot and remodeled 1 bathroom. 1st 2 years only cost me $200/month to live in house due to roommates rent.

What made you interested in investing in this type of deal?

It was my first home purchase and I needed to have roommates to afford the mortgage. I didnt know I was. house hacking at the time.

How did you find this deal and how did you negotiate it?

MLS. Originally lost the deal to another buyer. When they feel through, I got the property at $3k below ask due to repairs deemed necessary by inspector.

How did you finance this deal?

Traditional financing with federal tax credit. Borrowed part of down payment from hard money lender. Lender was paid out upon sale.

How did you add value to the deal?

100% remodel of lot. New front and rear yards, as well as outdoor kitchen and patio, RV parking and storage. Personally installed tankless water heater, water softener and high efficiency HVAC system.

What was the outcome?

Sold at a $250k profit after hard money lender was paid out

Lessons learned? Challenges?

I would have loved to have held this property and rented it out, but all the calculators pointed at only $125 of cashflow per month. Market was high, so I decided to sell. It is hard to live with roommates when you own the house, but all the things I noticed as issues with the home (wood floors scratched, kitchen granite stained, etc.) never even came up in the sale. I had 11 offers and sold for $30k over ask.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

If you are selling in the OC area, you have to use Edie Israel as your listing agent. Her team was amazing, they got me way over ask, and every vendor they recommended was incredible and passionate about their career.

There are a lot of variables that go into it, but $7k for just a furnace replacement seems way out of line. A top of the line furnace only replacement in the expensive market of So Cal would run between $4k to $5k. I'd get a few more quotes.

It sounded to me that the coil that was plugged was the outdoor coil. This is not protected by a filter. If it was the indoor coil, it would be even stranger that the circuit breaker tripped. 

@Zoe Lee Its hard to say what a handyman would charge. Rates can change dramatically based on if they carry any insurance, have employees, etc. The task you are asking them to perform is very basic, commonly given to apprentice techs straight out of trade school. Pretty much anyone could do it. That being said, my companies labor rate is based on my overhead, not how much the guy I send out to you is getting paid. Unfortunately, costs for insurance, workers comp, licensing, etc. gets passed down to the consumer. If it didn't, none of us would be in business.  

It is very reasonable to think the coil could have gotten plugged that quickly. I have seen commercial coils in the middle of the city get plugged in 3 months just due to heavy spider activity (their webs). 

Was the installing contractor the one you had out for the service? $500 for a repair due to a dirty coil seems steep and I can't figure out why an electrician would need to be involved. I would have thought they would have given you a labor warranty with a new install, so maybe the dirty coil claim was to cover a deficiency in their installation that they would have had to eat as a warranty. I don't want to put down my fellow tradesmen, but not all of us are trustworthy.

Tuneups are typically a foot in the door for our industry. This keeps our techs busy in the slower months and almost guarantees a customer when a system fails, because you usually call the company that does your tuneup. 

The most important thing to guarantee longevity in HVAC systems is good heat transfer. Clean filters inside and a clean coil outside guarantee this. If possible, find a good handyman to change the filter and rinse the coil. Maybe throw him a few more bucks to do a quick walkthrough of the property for you as well. 

You can also negotiate with the HVAC contractor. Ask what they would charge just to change the filter and rinse the coil.

@Jim Goebel

I agree with you completely, there are a ton of unethical HVAC contractors out there. Believe me, I could tell you story after story of little old ladies being told they need a new system when all they needed is a $100 part. A lot of this has to do with companies offering their techs commissions on sales.

But, I do have a problem when clients start telling me how much I should charge. You don’t know what my overhead is, so don’t tell me what the price should be. Yes, you can buy the part on Amazon for $25. Yes, you can watch YouTube on how to replace it. And yes, if you skip one step of that YouTube video, you can get seriously hurt or killed. Part of what you pay for is my experience and expertise. There is a reason why you called me out to tell you what’s wrong in the first place.

To the OP and the BP community, if you get 3 quotes and they are all in the same ballpark, it means 1 of 2 things. Either that is a fair price for the work or you found your contractors from similar resources. If you called the 3 companies that run radio and TV ads, chances are they are all going to be overcharging you. Running ads like that is not cheap.

Best way to find a good contractor? Ask for referrals from people you trust. Most people would only recommend a contractor if they are confident that they will deliver a quality product and experience, no matter what the price might be.

There are positives and negatives to each direction. Biggest reason for PTACs is that they can be easily replaced when they fail. Basically any decent maintenance person should be able to do it. Negative is that they are louder and do not have a high end look. Also not terribly efficient.

There are many options for ductless equipment, it does not have to be a 1:1 or 2:1 indoor unit to outdoor unit ratio. Most new commercial buildings in CA are using multi split systems to meet the new energy requirements. Positives are the huge efficiency levels they can reach. Biggest negative is that when they break down, they are very expensive to fix, due to the technology. Also they have a high cost of entry. If you are thinking multi mini split, look for systems like this:https://lghvac.com/commercial/...

That is just one option, but almost every major manufacturer has an offering now.

There are so many factors that go into providing proposals for this type of work. I always suggest getting 3 quotes and going with the one you feel most comfortable with. Since you are planning on holding this property, I'd make sure you go with someone reputable. And due to liability, make sure you get the project permitted. Yelp/Google/ETC can be good ways to verify the quality of the contractor you pick. Just be sure to read the good reviews, bad reviews and filtered reviews. 

@Jim Goebel

Pretty bold to say that someone would net $3 to $4k in profit. Anyone who's owned a service business will tell you that if we sell a job for $10k and the equipment costs $3k, we don't walk away with $7k. Besides the equipment listed, there are a ton of other things that go into installing systems like this. Electrical, Plumbing, Specialty tools, dry nitrogen, additional refrigerant to yield proper heat removal. And assuming the OP wants to use a legitimate company that will back the install with a warranty and be responsive should a problem arise, add in licensing fees, workers comp, insurance, etc.