All Forum Posts by: Mike F.

Looking forward to your report back on how that goes. 

I went through something similar to this long ago, didn't have the benefit back then of the internet and a place like this to get feedback. Holy cow did I waste a lot of time and energy and thankfully they didn't accept my initial offer. Similar type of property, a German old couple who I think were more savvy then they let on, the place on the surface had all this interesting wood work and history that they kept emphasizing, while trying to ignore and deflect all the problems underneath. Looking back I ended up offer them too much on my initial offer, I would have lost my *** on the rehab work, they counter and I ended up bailing, dodged a bullet on that one.

You've got someone on the outskirts of socially acceptable behavior, she might have merit for it (hiding from a harassing boyfriend), she might just be anti-social, she might be hiding a meth lab.

Regardless, I would want to stand in front of her and talk to her and get a feeling for her situation. You're the landlord, just do whatever you have to do legally to announce entry to her apartment for inspection and go from there. I'd recommend the least amount of lead time from posting to entry that you can.

As long as you're just using this as a learning experience there is really not much to critique with what you are doing.  If you're serious about buying this, I would walk the units only with the owner, you need to be able to talk to him in the place, take his temperature to see what he is thinking and use every minute to knock down his expectations. Walking the place and looking at all the work is going to be 100% more effective than just presenting an offer on paper to a guy who thinks he has a diamond when in reality it's pretty much a turd. I'd move things along very quickly on this one, not waste too much time other than figuring out how negotiable he is on this thing before wasting much more time on it. You're going to need to be buying this think at a steep discount from retail to make it worth your while, there will be a never ending supply of hidden repairs you will discover on this thing long after you rehab it and have it rented.

This is what I was referring to in regard to providing a savings to the contractor, in that volume isn't a valuable commodity by itself, when you combine it with things that scott listed you are now creating something of value to the contractor to be able to offer you something in return.

One thing you might not be considering Davon is the value of cashflow to a contractor versus volume, one thing to explore is that many contractors are always robbing peter to pay paul and aren't big picture people, you will probably be amazed to find how often the payment schedule can change things in your favor dramatically. I can't tell you the amount of motivation I've witnessed from almost every trade when it comes to the gold standard for them of being able to be paid weekly, a check every Friday is sometimes the most valuable thing you can trade with in your negotiations. Being an investor you see things bigger picture so to you and me it doesn't really matter much if we are writing a check this Friday or one next Wed for the work, but you'll be shocked how important this subject can be with certain tradesman.

 Well you aren't going to see a 40% difference if you're still on that kick. You're way over-pricing the benefits of what you believe you are offering. Let's say for instance just for grins that 40% is all profit, he isn't going to give up 100% or 50% or probably 40% of it just because you have some steady work. Your steady work is probably worth 5-10% off at the most, 10% is likely a stretch. Keep in mind likely anyone you're considering for doing this isn't sitting around in their underwear every day watching Oprah, they are already working, your work is just another job, if it's not your project it will be someone else's. You need to begin formulating what really is the advantage of an amount of work, because just the work won't be enough, there has to be a savings to the contractor such as less time spent wasted chasing bids he won't get, things like that, you need to actually save this contractor real money to see a discount, volume is really not going to do it, and I can't stress enough promises of volume are worth even less.

Then there is the issue of timing, you're an investor so you're going to be always pressing for right now, any contractor worth a damn is always busy but I'm guessing you're probably going to figure that your 'volume' is going to also mean the contractor should respect your authoratay and be ready to jump when you have the next one. I think that alone is going to be yet another shocker for you when you find out your volume doesn't move you up in the schedule. As long as your 'volume' doesn't mean he's 100% busy with your projects only, you're always going to be just another client in the schedule. 

You really should be getting the idea that nobody is going to give you a discount on work based on your promises, you find anybody gullible enough to take you up on your promises and you're probably going to be the one who doesn't want that guy back after you get into your first flip with them. Guys with the horsepower to actually perform have seen guys like you and heard guys like you for years and years and 99.9% of them are all talk. 

If you end up actually being the real deal as much as you might not like it, you should get into the mindset of what you're being told over and over again here is going to be true, and that you will actually need to prove yourself before you see any contractors willing to give you a break. As strange as it might seem to you, you are going to need to prove yourself to them, not the other way around.

My advice would be to forget all about any discounts on volume until you actually have a track record of volume with the same people, then that's something to come back around to and start looking at. Right now I think your real problem is you're just not talking to enough tradesman yet to really get a good idea of where your savings are on your project you're considering. Just in this thread you've gotten more ideas that you have from the actual people you are looking at hiring, that's backwards yet again.

The statement "I need the number to come down to around 6k." is wrong in so many ways I don't even know where to start. 

The only time you would 'need' this number to be 6K is if the cost of the work actually is 6K. If everyone is telling you it's 10K you got your number wrong, it's not up to your contractor to work for free so you can make a profit. Your desires and spreadsheets numbers don't dictate the cost of the work, the cost of the work dictates your spreadsheet numbers. Somewhere you got this backwards.

Real contractors / plumbers / electricians - have heard that line a million times. "bend over on this one and I'll make it up for you on the next one." 

Problem is investors shoot themselves in the foot because they never make it up on the next one so tradesman when they hear stuff like that, if they've been around at all just laugh at you.

A real solution is to actually flip X amount of houses with the same tradesman, prove yourself to him, after the 3rd one then discuss a discount for volume and then you'll actually see your costs go down. But no tradesman can pay his rent or put food on the table based on promises.

If a train left station A at 9:30 traveling west bound at 30 mph... and another train left station B at 9:45 traveling east bound....

Um... the guy who started this 6 days ago hasn't answered a single question on this thread. I'd just post your questions in the forum in stead of here.

And there is an alternative that is still collecting all the rent on time without having to evict your tenant. 

You can have it both ways, we've had it both ways forever. 

It's not one or the other, it's not demand your tenant abides by the lease and you have to evict them, by far it's the opposite. 

Tenants who are set up right from the start typically remain that way through out their lease and cause you fewer head aches. Tenants who you are scared to make them abide by the lease in regard to paying rent on time tend to slip on other things also. Makes sense too, if they've got a landlord who is scared to make them pay on time because they are scared of all you listed they've got little incentive to abide by the rest of the lease either.

 You are stereotyping 'opportunity costs' as being only financial