All Forum Posts by: Account Closed

Thanks for asking @Phillip Pape. I just closed on the sale on Wednesday to a very happy homeowner. 

I ended up, somewhat unexpectedly, in doing a hybrid approach to the above. My desire was to have a GC really QB. What we found was that, at least on this first deal, was that we didn't have enough familiarity with each other yet for him to be able to just take off and run as I had envisioned.  So I ended up being VERY involved with many aspects of the project and it took WAY longer than either of us anticipated. The final numbers will show a loss to be sure but I'm chalking it up to education. 

So particular to this thread and topic, I think the lesson learned is that whichever route you choose, being super clear (probably in writing) about your expectations and then following through with inspection is the key.

My GC has incredible character and apart from him looking out for both of our interests sometimes, I'd probably have lost double on this deal. But apparently those sorts are rare gems and with either route, the burden falls to the investor manage expectations and deliverables. 

Welcome Alston! You've come to a good place to get started. There is a lot to learn but BP if full of experienced folk. I'd also suggest looking for a local REIA. You'll usually meet other investors who know your specific market and can accelerate your education. Good luck in your new endeavor.

AJ, I'm working on my first flip as well and I'm wresting with the same question.  I have project management experience from the IT world and some stellar subs in the rolodex but I'm going GC on this first one for 2 reasons. 

1. It's my first one. I don't know what I don't know. So for this first one, I am paying the GC to know everything I don't. I'm going to be confident I have the right GC when I find one that is willing to answer a LOT of questions. I'm looking at the extra money spent on the GC as an educational expense.

2. I like things that scale. I have a TON of life responsibilities outside my real estate adventures and so if I were to manage all the subs myself, it would severely limit my speed and volume. I couldn't do more than 1 at a time and the other areas (leads, networking, learning, etc. would all fall by the way side).  For the GC, this is their job and so they can specialize in what they do best while I pick the things they cannot do. 

Long term, I may go the way of a Project Manager that can handle those types of items for me; again, whatever I choose has to scale.  Hope that helps.

Congrats Michael.

Thank's for the response Mike.  He's looking for options and actually asking me for the proposal but I think you've captured it well.  In his mind, I would pay his mortgage monthly and whatever is left is for me as either profit or to cover repairs. This is his 2nd tour away and the last time he left it to a PM who fleeced him with illegitimate repair costs ergo his interest in leaving it this time with a more trusted person.

I did consider the PM route but that's an area I know zip about so I was going to get someone to do that for me. Can you sublet PM to another PM?

A friend of mine is leaving the country for 2-5 years. He has a little 3/1 with considerable equity. He's considered selling but he doesn't trust himself with all all that money cashed out. Knowing that I am getting into Real Estate, he asked me if I would be interested in "borrowing" the property from him while he was gone.

So I'd imagine this would be a lease arrangement. Rents are around $1400 in the area and he only needs about $600 to cover his existing mortgage. 

1. Does anyone see any obvious red flags? 

2. How would you factor in holding money back for repairs & capital improvement? 

The "normal" rule of thumb for those categories seem to be about 50% which would make this deal not profitable but that somewhat assumes you will have the house a long time and everything eventually needs stuff. Knowing that it is in great condition right now and I will only have it for a short time (max 5 years), the risk of major ticket items (roof, etc.) are very, very low. 

Thanks all.