All Forum Posts by: Roy S.

I think you guys are missing the question. Cashflowboy intends to pay if he has a contracter come out (though he did use the word "eventually", and I think he should pay when he gets the report). I think his real question is

"Should I pay a contracter $50 (or whatever) to give me an estimate of repairs on a property I probably won't end up buying anyway."

If he looks at 25 houses before getting an offer accepted, that's $1250 - a lot of money for someone just starting out.

And I would say yes. Based on your other thread, you have little to no idea what it costs to rehab. You'll need to know this number so you know how much to offer. You'll also need a good number so when you offer it to your buyers, it'll be a good number - give bad numbers and they'll stop returning your calls and you'll get a bad rep overall.

But make sure you learn how the numbers come about. After a few, you should be able to come up with a number yourself. You shouldn't need a contractor for 25 houses before you can estimate the repairs yourself. Then you can make an offer, and only bring out the contractor to houses that you get under contract.

Good luck!

BTW, I think a better way to go would be to find a mentor you could take to lunch/dinner once a week instead. He/she could help you with a lot more than just estimating repair costs. Of course, finding one is easier said than done....

I've never de-winterized a house, but I imagine it goes something like this:

- call water company and have them turn on the water. Probably a good idea to make sure the water main inside the house is turned off first :)
- close all faucets
- remove the aerator from each faucet. Done so any small pieces of dirt/rock/solder doesn't get caught.
- turn water back on, slowly, so the pressure doesn't bang into stuff.
- wait while the hot water heater and toilets fill
- turn on hot water heater
- open a faucet. It'll spit air for a couple of seconds, then water will appear. Replace aerator. Close faucet and go to next one.
- flush toilets to get water back in bowl.
- remove various signs that say house is winterized

If you have water heating (eg radiators), then you need to do something with them. Not sure what, but it involves bleeding the air.

If you have an irrigation system, you'll have to take care of that as well.

Not sure what to do with a fridge with an icemaker.

Not sure what to do with a dishwasher.

Not sure what to do with a water softner/purifier.

If I missed anything, hopefully somebody will be along soon to let me know :)

Aaron - thanks for the feedback. But I think there's a difference between realism & precision. 5 different GCs looking at the same house will come up with 5 different numbers. For example, a new furnace might be $1800, $2700, $2900, $3100, $4500. I don't see a problem with using a ballpark of $3000. I do see a problem with using $1800, even if it comes straight from a GC. And I do see a problem with using $3000 for *every* house - I vary the number according to size & number of levels.

Now I do know a wholesaler who walks thru a house and says it's a $10,000 or $30,000 or $50,000 repair job -- that's taking it too far :)

3.8 mil + 300K = 4.1 mil
Using the 1% rule, you would need about $41,000/month
Add 10% for the property management company, that's $45,100/month.
With 162 units, that's $278/unit rent.

*If* he had the money to fix it up and get it fully rented, he may be able to make a go of it. But then if fishes were wishes...

I would try asking around at the local REIA and/or calling other apt owners in the area, and try to find a partner with a solution/cash for fixes, or someone to do the equivalent of a "subject-to" deal.

Good luck!

Don't you find GCs tend to be too detail oriented? I look for ballpark figures, eg paint interior = $2000, new furnace = $3000, etc. I don't want to have to measure rooms or balance heat flow calculations, etc.

Note to OP: don't use these numbers, as they vary city to city, and with size of house.

Go to a REIA meeting and ask the people there what they use. It's a good idea to ask who they use as well, otherwise you might not get the same price.

Take a buyer/wholesaler out for dinner (that you pay for), and pick their brain.

If it's someone I've never used before, I'd want to be there every day just to see what's going on. If it's someone I know and trust, I'd want to be there as little as possible.

It's better to catch things earlier rather than later. For example, if the paint that looked so good in the store is ugly on the wall, you want to know that before they put carpet in.

If it's "mostly cosmetic with some plumbing issues" I don't think it will be taking that long anyway. So getting out there often hopefully won't be the pain you think it is.

Congrats on your first fix & flip.

Short term: rehab
Long term: rentals

The $100-$300 cash flow/month won't match the $25,000 from a flip - not until years have passed. (Substitute your own numbers in there) But it's not just cashflow, rentals give you appreciation (well...not in the current market, but usually), and also give you tax advantages. And of course the rentals bring in the money year after year after year after year....

I agree with those who say use rehabbing to fund your rentals. Use the tax advantages from rentals to lower how much tax you need to pay from all that rehab money :) But be careful not to overextend yourself with the rentals - you don't want to lose everything just cause one thing goes seriously wrong.

But the real secret is to build your business into an actual business. Where you can hire others to do all the work for you, and you reap the benefits of 5, 10, 20 or more people (as they reap the benefits of steady employment). Then even if you stick with just wholesaling/rehabbing, you can make it big.

Good luck!

Thanks Robert, that did indeed answer my question.

Alas, it wasn't the answer I wanted. I've got about 30 vacant addresses, and was hoping the 30-1 meant I most likely had a deal in there somewhere.

Please excuse my ignorance, but what do people mean when they say "lead"?

For example, I've been driving around looking for vacant properties. Is each house I find a lead? Or is it not a lead until the owner responds to a marketing letter?

Likewise, in the preforeclosure market, is an address a lead, or is it not until the homeowner responds?

Thanks.