All Forum Posts by: Michael Woodward

Treat them really good. Pay everyone on time. Call to check on them periodically. Drop in at their office or the jobsite with a box of donuts & coffee (...or send someone on your behalf if you're out of state). Play golf or go fishing with them (....also hard to do remotely).

They should be motivated enough just by doing business with you but these extra things can make you a friend in their eyes.

@Matt Morgan , I agree with the other comments that what you're contemplating is nearly impossible. The problem is that you're facing all of the normal challenges of hiring new contractors (that you can meet and shake hands with) ......as well as the additional challenges that come with working remotely. When I started building new houses in 2004, it took me a full year to find a good group of subcontractors that did good quality work and stayed on schedule. Contractors for the most part all look and sound the same when you get their quote but you won't know how they're going to treat YOU until the job is under way. Ultimately, you won't know (for sure) who is good and who isn't until you're knee-deep in the project.

If you decide to move forward, my suggestion is that you call as many contractors, subcontractors, Realtors, and property managers in the area as you can and ask each of them to refer someone in a complimentary trade. In other words, if you need a good drywall installer, call some local painters and ask them who they like to follow on a project. Ask Realtors who they use to get their repairs done. Follow that process and look for names that show up more than once.......but DON'T just pick the first name that comes up or you might as well just roll the dice.

Finding someone to manage your project is a whole layer of challenges in itself. I would probably look for a real estate brokerage that also does property management. They will likely have good contractor contacts and will be motivated to help if they know they will be able to make money with the buy/sell/rent transactions.

If you're going to work in that particular market for a long time, it's probably worth the effort to find the right crew but if you're only going to do a few projects, I wouldn't do it.

@Chris H. , I used to build new houses in FL and the preferred construction down there is block. I don't know how prevalent they are in the rest of the country but I renovated and resold one in TN this year with no issues. There are pluses and minuses about them but if it's built well (and the price is right), I wouldn't hesitate to buy it.

@Steven Hamilton II , Thanks for all your input. I really appreciate it. It sounds like I need a new accountant.

@Tyler Jenkins , Sorry for hijacking your thread. As a follow-up to my original reply, I've flipped many houses and built several spec houses but, personally, I like flipping houses......especially the way the market is right now. I was building spec houses from 2004 to 2008 and just barely got the last one sold before the bottom fell out of the market. There's a lot of fear in the market right now that a new bubble might be forming so I want to keep my investments as short as possible. I've developed a very specific set of criteria for buying flip projects that repeatedly produces turnaround times of 60 to 90 days..... instead of 8 to 10 months that the new houses were taking. I'm sure there are many strategies that would bring you success but for me, I'm staying as close to the emergency exit as I can until I see more stability in the market.

Wow.... that's hard to nail down to a single thing because there are so many things that, if done wrong, can result in the collapse of the entire business.

I guess I would have to say the single most dangerous pitfall would be failing to create a comprehensive business plan/model that provides a solution for everything that will need to be done..... as well as anticipate market changes which require adjustments to your business model.

There's a famous military General (I think it was General Patton) that was credited with being a military genius because he gave immediate and specific commands for every scenario the battlefield threw at him. There was no hesitation. He credited his success purely to planning. Almost nothing ever happened that he had not already though of and made a specific planned response.

If you "attack" your real estate career without a bullet-proof plan, your chances of survival are very small. I think that's why the business start-up failure rate is so incredibly high.

@Steven Hamilton II , Thanks for your reply. My accountant's justification for his suggestion was that I work 40+ hours per week at a regular W-2 job and my activity in the real estate business is really just limited to due diligence. Are you sure that wouldn't qualify as investment income? Where do they draw the line?

I agree with the idea proposed by @Bryan Hancock . I've been thinking for a while about creating a website for my local area that would organize (and publish) the local investor "supply and demand". In other words, it would be a virtual swap-meet where everyone that's involved with anything to do with the local real estate investing industry could post their "wares". I imagine it to look like kind of like a spreadsheet with a wholesaler's column, buyer's column, lender's column, contractors column, etc. that shows exactly what each person has to offer and exactly what they need (supply and demand). Not only would that provide a way to make direct contact with people you want/need to talk to but it would also reveal where the gaps were in the local market. If there's a ton of buyers and very few wholesalers, then people could divert some of their attention to wholesaling (find a need - fill a need) and vice-versa. It would paint a clear picture of the local market that would help everyone make better decisions. I think this could be done on a much larger scale inside BP.....perhaps an extension of the current Marketplace.

I work a full-time engineering job and flip an average of one house every two months (hope to be up to two houses/month next year).........and have a family that I like to spend time with......... so believe me when I tell you that time is very valuable to me! One of the reasons I haven't participated in local reia groups very much is because they're so disorganized and inefficient. I understand that person to person networking is important but it also takes a tremendous amount of time. That's why I'm systematizing everything in my business. I want it to run that way but I also don't have a choice because I have so little time. I think a website like this would really improve my efficiency.....and build a stronger local market.

@Michael Quarles ,I generally hate to voice my disagreement with people's ideas but when the outcome of a discussion will impact my life (or business), I feel the need to speak up. Following your bullets.....

1) I don't see a reason to raise the price/cost for the Pro account. If $14/month works with @Joshua Dorkin , then let it be. How would raising the price improve things for the group???

2) I don't think there should be a minimum number of posts required for anyone. I think the result would be the temptation for people to start posting a lot of very short, worthless (spam) posts just to keep their account in good standing which would really water-down the value of the content.

3) Most replies that people post are done with tact and a true desire to help but I've seen several posts lately that were just degrading and served no purpose other than to make someone look stupid. What's the purpose of giving a thumbs-down vote? It's really easy to just ignore something you don't like so I don't see a reason to publish how much you dislike what someone's saying. Part of the glue that holds this kind of community together is that it's a non-threatening environment.

4) A shopping cart to draw funds from Pro members?!? Are you a stake-holder in BP? .....Josh owes you money and you're trying to collect, right? I'm kidding.....sort-of. I support BP because it brings value to me but I would like to pay as little as possible to do that. I think Josh's purpose for this thread was to find ways to make the Pro area better for everyone, not to brainstorm ideas to further monetize the site. I'll support a reduction of the cost..... :)

Michael, It's not my intention to offend you so please take my comments a purely opinion. I have nothing against you and hope your business thrives.

@Tyler Jenkins , What you're describing is very similar to the way I started. I used someone else's cash to flip properties and put everything in my name to keep things simple. My accountant told me that if were going to be actively working on the houses, I would be better off forming an LLC for tax and insurance purposes. Since I have a full-time job though, and don't do any of the work myself, he said that I should just treat my real estate flips like passive investments (I forget which IRS form he said it was). Eventually, I'll quit my job and form the LLC. He also advised having an "Umbrella" insurance policy on myself for protection....which I have.

My plan going forward is similar to yours as well in that I want to use my flip cash to eventually start buying investments to hold. It's a strategy that many investors use. I'm holding off on buying rental properties though until I see what the effect is going to be from the big investment companies that are pouring into the rental market....better safe than sorry in my opinion. Flips are quick...get in...get out....with minimal risk (if done correctly) so I'm sticking to that for now.

Hope this helps. Good luck!

@Jeff Hunt , Sounds like you jumped in with both feet. Congrats on taking the plunge.

I agree with @JOAN DICKIE that you probably don't need granite in the kitchen at that price point. I've bought and sold houses above $300k that didn't have granite. It's definitely a plus if it works with the budget but you might want to consider diverting the money to replacing the cabinets instead of painting them and then install a nice granite look-alike laminate top (black granite w/gloss finish looks almost like the real thing). It's really hard to make painted cabinets look as good as new ones (in my opinion).....kitchens sell houses.....

Don't forget to put some cushion in your budget. Surprises always happen.

That's a very aggressive time frame for the amount of work you're doing. I hope you have lots of good helpers.

Let the education begin! Good luck!!

@Justin Small , Location is very important for most situations but there are exceptions. Houses obviously sell in literally EVERY location or they wouldn't be there (unless they're experiencing a serious exodus.....like Detroit.....@Joshua Dorkin 's favorite investment area.....not...... :) but you have to be very careful how you proceed. Your decision of whether or not to buy would depend completely on the evaluation numbers and your exit strategy. Some neighborhoods sell very slow at ANY price because they're so undesirable (especially areas that only drug dealers want to live in). Biggerpockets is the best place anywhere in my opinion to gain knowledge in real estate but your project will have to be evaluated by someone local that has experience and knowledge about the area your project is located. See if you can find an experienced Realtor or another investor in your area that will help you evaluate it.

Good luck!