All Forum Posts by: Andy Thompson

@Account Closed A construction company i used to work for got hit. Their email got spoofed and the scammer had been emailing clients saying that our payment process changed and they should now wire scheduled payments to the new (scammer's) account. Normally, we're on site at the customers home to receive a check by hand. A client had told the project manager "hey I got the email to wire payment, no problem, I'll be sure to send the $50k on time." But luckily we jumped on it, informed our other clients, and noone lost any money.

@Ben Feder a lawyer friend (contract lawyer at a big firm downtown) told me that an LLC really only provides true protection after a couple layers of business entities. He said some people in a longer term strategy have each property be its own LLC, then a few property LLC's be held by another LLC. Then you own all the top tier LLC's, which only exist to own/manage the lower LLC. In other words, company A owns companies 1-5, company B owns companies 6-10, etc. Its a bit of detail to keep it all sorted and manage the 1031 when you start selling them all, but hopefully youre hiring a good lawyer to help navigate the profits. Consider how most national businesses are owned by other businesses (olive garden is owned by darden, etc).

Denver contractor here - multiply your 2012 numbers by 1.25 and you'll be in the ballpark. Why not call your old flipping contractor and ask how their rates have adjusted? If you wouldn't have your flip contractor work on your home, then your spreadsheet is useless for renovation anyway and you would just be comparing apples to oranges. A lot will depend on your approach to the remodel... Are you going to GC it yourself with Craigslist's itinerant labor? That'll be a different cost than hiring a design/build contractor who has work comp for his or her employees.

If managing your own rental (no PM), change your voice mail message to add "if this is an emergency, such as X or Y conditions, please call ##.  Non-emergencies will be managed when I return."  X or Y conditions can be threats to life or health like heat going out or gas leak.  Non-emergencies include: A/C issues, rent payment questions, etc.  The ## should be someone with whom you've left your list of emergency numbers: contractor, insurance agent, etc.  If I'm managing your property in your absence, I would expect some compensation for my getting involved. Your voice mail system might have a separate "vacation message" which you can have stored auxiliary to your main message, simply select it any time you go on vacation.

Personally, I would prefer not to give my contractor's number to a renter.  After I return, I would not want the renter calling the contractor directly.  Two scenarios: 1- The renter wants a repair done, so they call the contractor.  Happy contractor comes out and repairs.  Renter refuses to pay because they think it's the Landlord's responsibility.  Suddenly, we're in conflict resolution mode.  2- Renter calls me, I call contractor.  Renter isn't happy with repair, so they call contractor directly.  Contractor gets yelled at by renter, who happens to think that yelling at people is the best way to get what you want.  Again, my relationship with the contractor has become stressed.  These are scenarios I have run into with my subcontractors & clients, and I've learned from it.  (It's not just about trying to avoid a sub stealing work from me.)

@James Stevens That cheat sheet looks like a great jumping off point.  Folks should keep in mind that labor rates around the country vary as wildly as the real estate market does.

I found an article from 2010 by Maciek Rupar, who is Director of technical services for the National Roofing Contractor's Association (NRCA). The article is titled Myth Busting:

It's not a highly technical notice, but in case the title alone cured your insomnia, I'll sum it up:

• - The advertised benefits of elastomeric roof coatings (shingle paint) are largely anecdotal and have not been investigated in controlled lab environments
• - There are no ASTM standards for field applied roof coatings.
• - Application directions require a clean dry roof.  NRCA do not recommend using a pressure washer because it may damage shingles.
• - Asphalt Roofing Manufacturer's Association "strongly advises caution when considering the application of any type of field applied coating over installed asphalt shingles," due to possible shingle curling/warping and possible vapor barrier may cause premature failure of roof decking.
• - Some shingle manufacturer's specifically state that coating will void the warranty.  Others are likely to say that their more vague language suggests the same is true.  Recommendation is to contact the particular manufacturer directly.
• - Local codes may specifically prohibit the application of shingle paint (e.g. 2007 Florida Building Code 1521.18.1)

In summary, the claimed benefits of the products are unsubstantiated, while the potential risks are very real.

Also, since Maciek Rupar graduated from the prestigious University of Illinois in Urbana-Champaign, he's must be a really really smart person and I'm inclined to take him at his word.  Hail to the Orange.  That is all.

If you have a 2 bedroom house, that's 2 bedrooms whether the house is big or small.  It would have to be a rather unique situation for you to add another bedroom.  If you're thinking about finishing a room in a basement, say goodbye to your $15k hypothetical equity.  Keep in mind that you have to make sure that you're offering your potential buyers (the investor) a good deal.

So let's work backwards.  You're talking about marketing this property to other investors as a possible rental. Suppose retail indeed is $125k and rent is $900 for this 2/1.  Buying retail is a far cry off our 1% rule.  1% rule suggests that the investor should be looking to acquire this place at no more than 100x the rental income, or $90,000.  Maybe the house needs some moderate repairs, let's say $5k to get it rent ready.  Discount that from the price, now an Investor wants it at $85,000.  Of course, you're looking to take a cut while wholesaling, let's say $4,000 for fun, you would need to have a contract for $81,000.  Make sure that you're offering your potential buyers (the investor) a good deal.

Step one is securing accurate numbers. Rent, ARV (After rehab value), cost of repairs. Then you can calculate the amount you want to offer in contract. While working on the contract negotiations, you should be simultaneously searching for potential buyers.

Suppose your accurate numbers say you'd need to have a contract for $70,000.  Yikes, doesn't that seem pretty low?  Well, it depends on the needs of the seller.  Does he need to pay off an outstanding $100k mortgage?  Then walk away, it doesn't suit your criteria.  ...But Maybe ask about his other properties before you leave.  Does he primarily want to liquidate this free/clear property?  Offer him a quick close at $50,000 (leaving room for negotiations).  Does he have 4 similar properties, and doesn't want the headache of listing all of them?  Offer contracts on each of them, getting him a much more substantial sum without all the hassle.

Your profile says you're a student, and your family doesn't own any homes yet.  Where are you living now?  Finances aside, could you move into this place and rent out the other room?  If you're renting, it makes as much sense for you to stop paying someone else's mortgage and start building your own equity post haste.

Maybe, while finding out this guy's needs, you discover that he's not necessarily trying to liquidate immediately.  Maybe he owns it free and clear, and is waiting for the right deal to come along.  Would he be willing to Owner Finance the property with a balloon payment in 3 years?  By then, you'd be 2 years out of college with verifiable income in order to qualify for your own mortgage through a bank, and buy him out of the property.

couple other notes:
-If you're wholesaling, you don't need people to help finance the deal.
-asbestos, like lead-based paint, is not a concern unless you disturb it during renovation.  Although it might be a concern for the person you're wholesaling to.
-If you're calling their realtor, chances are good that this is already not the opportunity for you.  Realtor is likely to push for max dollar from conventional (bank) financed buyer or may seek out passive investors who have 25% down for a turnkey property.

I mostly typed this wall of text because I'm relatively new as well, and the brainstorming feels good to me.  Hopefully this will help spark some others' thoughts.  Regardless, I recommend not letting the excitement of a deal overwhelm the rationality necessary to close a profitable deal.  Your priority is not acquiring this property, your priority is acquiring any profitable property.  If it's not profitable, simply walk away.

I hope you were able to find Joe and return his vegetable drawer.

Thanks all!  So do you guys know if anyone on BP specializes in purchasing properties in at Denver auctions?  It seems like there is a lot of great info coming from folks who've looked into it and decided it may not fit their strategy, but I'm also curious to hear from folks who choose to swim in those waters.

@Micki M. - Thanks for the perspective.  Do you have any resources for the strict requirements of purchasing during pre-foreclosure Colorado?  My google-fu came up short in finding the specific difficulty to which you allude.

That info came directly from Denver's office of clerk and recorder, as did info regarding the bank's bid. I actually have a copy of the Bank's itemized bid in front of me. Am I wrong to think that the bank would bid an amount that puts the property into their REO portfolio clear of lien encumbrances?

I realize that Zillow's valuations are not considered reliable, but they do pull some property info directly from public records.  For instance: this property last sold in 1988 for $13,000.  (Pretty sure that was in Buffalo Bill's heyday.)

I also realize that some newbie threads get tiring with the same ol' questions.  I guess what I'm asking is how do I do further title/lien investigation?  ...or does it just come down to paying someone else to do that?