All Forum Posts by: Richard Rolle

One thing that's not clear in your question.  Are you bidding a portion of the job, one trade, or a whole renovation?

If you are using a GC to do the whole project, get a breakdown of time and materials for each trade.  eg, electrical and plumbing, rough AND finish cost.  Drywall and paint, finish work etc.  That way you can review your material cost and know exactly what your getting.  It can be frustrating to find out you paid $5k for electrician and then find out that didn't include light fixtures in the bathroom.  Can you buy tile for $2.50 sq ft but the contractor is charging $5?  Good to review and save costs using various materials.  Some contractors will put in an order and have you pay when they go to pick it up.  That is always a nice medium.  Its usually fair and customary to give them a small mark up as they are picking it up or getting you a contractor discount.

If a GC is doing the whole job, make sure you get releases from all his subs before you pay out.  If the GC  doesn't pay, say the electrician, its your house that will get the lien and you pay twice.  

Make sure you are clear on change orders.  If it is something that should have been obvious to a pro, that's on you, not me!  There will always be the unexpected, but I'm not paying extra for something a pro should have foreseen in his initial bid. 

If you can get timeline guarantees in your contract, you are a good man!  Do it!

Aaron,

You say you have no money, which I presume means no cash, but how is your credit?

There are lots of ways to get into the game without your own cash and I'd be glad to share some ideas with you.

Start with making some connections.  Most important, investors that have money looking for deals.  I'm sure you've heard of wholesaling?  I think thats a tough gig.  In this market, in this area, finding a wholesale deal that you can mark up and still have enough meat on the bone to pass to an investor is rare, but can be done.

I recommend a variation to this. Start a relationship with a hard money lending company and start relationships with investors to partner with you. You can find flips to buy with hard money. Your investors cover the renovation costs and split the profits on the sale. You can also do buy and holds for rentals if you have investors that can refinance after renovation. (see BRRR)

I want to caution you on a couple things to make sure you have in line.  I believe this is "make or break" stuff on your deals.

1. Make sure your numbers are on point.  Its easy to find the sales range of houses in the area. For example, I can almost guarantee a 3/2 in Tacoma area is gonna sell for $245-$265K (YMMV based on sq ft, premium areas such as North Tacoma etc.) that's the easy part.  The magic happens with the timelines and budget.  Remember its gonna cost you ~9% closing costs, reno budget and holding costs. Subtract this from the sales price and you have your potential profit.  Make sure there is cushion, especially for your early deals.  Make sure you work with a Realtor that understands investing, not just opening doors.  Your agent can be your best asset in making sure you buy right and sell fast for most $, as well as connecting you to the right resources to complete your project.

2. Contractors.  Who is gonna do the work?  This is huge as it impacts timelines AND a bad contractor can greatly impact your costs and quality of final product.  If you are swinging the hammer yourself, do you have the skill set to do a professional job or will it look like DIY?

3. Permits and inspections. If you are just updating, you are usually gtg, but if you are doing things that will add square footage, make sure you pull permits. Helps greatly when you list as your claimed description will match county records and our friends at the VA and FHA will be much more likely to approve your buyers loan upon appraisal.

4. Exit strategy.  Have multiple ways to finish the deal.  Can you wholesale the property for a quick profit?  Can you flip it?  Can you buy and hold it?  If you depend on only one of these, you really can find yourself in a bind.

After a couple of solid deals, you should have a nice war chest to expand your options.

Hope this helps!

deleted repost

Something to think about. As a Realtor, I post all my listings on Craigslist. The reason is for international buyers. Investors in China, India etc have access to CL and the market they are looking for already sorted for them. 

If seller is not using a Realtor or offering buyer agent commission, are you paying the realtor a flat fee for writing up the offer?

I'll come at this question from a different perspective. Buy and Hold vs. Flip for most comes down to this- money and credit. I initially came into real estate investing with the idea of building a large rental portfolio. I picked up a few houses and got into the rehab process when low and behold, no one wants to do commercial loans on rental properties. Sure, I could apply for a private mortgage, but my business model was LLC based. And I got into investing full time, so technically no job. Had to flip to unlock my cash.

Flipping, you can always get money.  Private money, hard money (a type of private money).  It's based on the deal, not your credit. For the most part, find a deal, rehab, sell (or wholesale), repeat.  Once you've made enough, buy your rental.

Buy and Hold.  Simply put, you need credit.  You also need a pretty turn key property to get mortgages.

Then there is the hybrid system we use with many of our investors. Buy a rehab property with hard money, rehab, then get a regular loan. This system allows the most flexibility and puts investors into cash flowing property's for about 10% or less if my ARV and rehab estimates are on. (and yes, they are! lol)

For me, easy math.  $100K now or $100k/$800=125 months to get the same money.  

I want mine now thank you!  

If you are really interested in holding the property for appreciation, perhaps reduce some cash flow and take out a HELOC or do a cash out refi.

An owner may impose a reasonable late fee for each month an occupant does not pay rent when due. A late fee of twenty dollars or twenty percent of the monthly rental amount, whichever is greater, for each late rental payment shall be deemed reasonable, and shall not constitute a penalty.

RCW 19.150.150: Late fees. - Access Washington

What stands out for me is the line "first and only" remodel.  I will presume you are keeping the house long-term, maybe your forever home?  If that is the case, I recommend keeping your style more "classic". Timeless  vs. trendy is where I'm going.  Will it look good in 20 years vs. oh, they did this in 2017?  

I flip houses, so I do whats hot, cause buyers want on trend, new and clean. They love DIY Channel.  I've done remodels that look great today, but I know if I went back five years from now, I might be shaking my head.  Think full mosaic glass back splashes in the early 2000's that look over the top to me now or tile counter tops with the dirty grout lines.  Great ideas then, not so great now.

IMO the most important things are those you cannot easily change.  Like the base of most bathrooms, the tile.  Things to consider are tile size (timeless 8x8, 12x12, 16x16, subway, vs trendy 6x24, large plank tiles, etc.) textures (trendy fabric look) and colors.  With a great "base" you can always refresh your look with new fixtures, handles/knobs on cabinets, etc.  You can dramatically change a bathroom by going from brushed nickel to oil rubbed bronze or like the picture in your example, gold to any other finish easily later on.

Some ideas I personally have done and love:

Heated floors.  Nothing better than getting out of bed and walking on a warm floor in the bathroom.  Tip- install a spare thermostat sensor.  If it the primary goes out, you are already wired to keep your system running for years.  Only a few dollars now, save hundreds/thousands later if it goes out.

Add an outlet by the commode.  Allows upgrade to bidet toilet seats later.  They will change your life! (see Toto or Brondell)  Also make sure you use "comfort height" (17") toilets. 

Install 3/4 or 1" water supply lines to the shower.  If you ever want to upgrade or change to high flow shower heads or add a shower panel later, you'll be glad you have all the water pressure you can handle available.

Age-proof your bathroom.  If you don't really love to take baths, use the space for a large walk in shower. No curbs if possible. Will make it wheelchair accessible and prevent issues in retirement.  

Install automatic moisture sensing fans or a switch that turns them on when moisture is present.  Prevent any mold/moisture issues if everyone isn't great at turning them on before a shower.  Also choose the low sone fans.  Worth the investment.   

If you have a large vanity, install an outlet behind a bottom drawer.  Allows the ladys to plug in hair dyers, irons etc and leave them in the draw instead of pulling them out and leaving them on the counter.  Clean and convenient.  

Hope this gives you some ideas.

No reason not to have pics of the inside.  I can see limiting showings of the actual units until you are mutual on a sale.  Easy to put inspection contingency in.  Landlord tenant laws etc make it a pain, so I wouldn't want to deal with anything but a serious buyer.  

But no inside pics at all makes it seem shady....

@Chris Mason

Interesting take I hadn't really considered.  A different take on "follow the money"

Big-time against the ruling and am glad I'm not in Seattle.  I don't really understand the area after living here all my life.  We want to encourage homelessness, drug use, illegal immigration.  All are welcome, park your ragged RV in front of my house, shoot up in a monitored clinic, pitch a tent wherever, hell, start a drug cartel, its all ok.  But then we complain about crime and cut police and not let them enforce the laws.  We want to build trains when automated driving technology is ramping up and will be common before the end of the decade. Scream we need more affordable housing, but make laws and delay permits that limit entrepreneurship that could bring those needed units online........