All Forum Posts by: Nathaniel J Mott

I'm an aspiring investor so take all of this with a grain of salt, but here are my notes from J Scotts "The Book on Flipping Houses" regarding forms that you should get a contractor to sign. I think you can get them to sign a W-9 or a 1099 but he only mentions a W-9 in the book and I'm not sure which situation calls for one vs the other.

1. W-9. IRS form used to collect information about contractor to issue tax forms. Without it, you risk not getting in contact with contractor at end of year and have no proof of independent contractor relationship. May have to pay his payroll taxes! Fill out prior to handing contractor his first check.
2. Independent contractor agreement. Contractual relationship between you and the contractor. Contains details of project at hand. Says you don’t have employer/ employee relationship. Important on both legal and tax perspective. Lists: tasks to be performed. Compensation terms. Terms around who provides tools, materials, etc. Penalties for missing deadlines. Insurance obligations. Descriptions of how to change orders are done.
3. Scope of work. This may be part of ^. The more specific the SOW, the more likely the contractor will live up to expectations. If you have to go to court the judge will want to see SOW.
4. Payment schedule. May be part of independent contractor agreement as well. Clearly defined milestones contractor must head to get paid and how much. Possible milestones: 10% paid when contract is signed. 20% after first day of work is successfully completed. 30% paid after first half of work is completed. 30% paid after substantial completion of project. 10% paid two weeks after substantial completion of project. .. After completing multiple projects with contractor, make a payment schedule simpler.
5. Insurance and indemnification agreement. Used to prove that contractor provides a reasonable amount of insurance. Both liability and workers comp for himself and any subcontractors/employees/agents. Contractor can’t sue you for any actions he or his crew might take. Many people won’t use this, but one lawsuit will possibly wipe out your business and savings.
6. Lien waiver. Contractor signs at end of job saying he has been paid everything due to them. Make sure to obtain lien waiver before final payment is given, especially if you have bad relationship with contractor.
7. Other documents. Proof of license proof of insurance, proof of Workmen’s Comp. insurance, references.
   

I want to purchase my first property and house hack. I would like to do a mid level rehab on a house that I'll probably have to find off market. The Raleigh area is getting expensive but it I have a family member that will help me buy a house with cash, then I can refinance it after it's up to a lenders standards and pay back what I've borrowed plus some interest. A duplex would be ideal, but it's looking like I'll have to settle for a SFH. I've been driving for dollars and built a list of about 50 prospective homes that look distressed. I have to research some of them still. After I build a list of 50-100 absentee property owners I'll begin mailing out hand written letters.

@Luis Serrano

Any response to Dewanna’s allegations?

Also - I’m new to RE. Some people on here have claimed wholesalers are breaking the law by brokering without a license. Is there a legal/correct way to wholesale?

Congrats that $32.5k discount on the property is awesome! I'm new here and trying to learn how to analyze deals. I know the 70% rule is just a quick way to check if the property MIGHT be a good deal, but based on your conservative ARV estimate I would have come up with a purchase price of $17,500... Can you tell me how you analyzed this deal?

Purchase Price = (ARV*.70) - Rehab costs

Purchase Price = (125,000*.70) - 70,000 = 17,500

Math is not my strong suite. If anyone could recommend a workbook or some resource to help me hone my real estate math skills I'd very much appreciate it. Sorry to hijack the thread!

Bitcoin was designed to only have a certain amount in circulation. Scarcity gives it its value.

@Marissa Turrubiates

As someone who’s interested in learning about real estate I would be interested in this offer. It would be nice to have some direction. Even though this is a new company, they may be able to show you the process. If you’re making good commission after a few months and feel like you’re still learning stick with it, if not you can leave and do your own thing with more knowledge under your belt.

I'd like to buy a house to house hack in the near future.  If there's enough land I was considering building another dwelling as a short term rental. Does anyone know about how much it would cost to tie water/sewer/electricity to an accessory dwelling unit a few hundred feet away from the primary residence, or would this vary heavily depending on the situation?

Has anyone built a permitted ADU on one of their properties? About how much did the whole thing cost? Was it worth it?

I think with the market being so hot right now despite such high unemployment and uncertainty I'll air on the side of caution. Thanks for the help! 

@Jonathan Steiger Thanks that makes sense! I have some of my own funds for the rehab, but am still interested in how I could pull out more rehab money from the refinance in that hypothetical scenario.

@Carlos Paz I would be living in the property. I'd like to house hack, maybe live in a trailer outside the house and rent the whole place out.

I'm not sure if buying an off-market deal is smart for a first time home owner but it doesn't seem like there are many good investment properties on the MLS in Raleigh.

My grandpa offered to be my private money lender if I were to find a good wholesale deal. I live in the Raleigh NC area and it seems to be a rehabbers market. Nothing on the MLS fulfills the 1% rule, but I think it's possible if I find something off market.

Would it be possible to rehab something and refinance to a FHA loan, or would it have to be refinanced to a conventional loan?