All Forum Posts by: Kyle Smith

I'm extremely torn on which general contractor to use and would appreciate any experienced investor's feedback on my situation!

Situation = converting a SFH into an up/down duplex. The basement needs a full renovation in order to make it a livable space. The renovation will include: kitchenette (framing, cabinets, countertops, appliances), LVP ~1,000 sqft, sound insulation in ceiling, 2 egress windows, install a up/down washer dryer, replace 5 vinyl windows.

I understand pulling permits would cost more and take more time. I have received advice from different investors that you can do this renovation without pulling permits and others say it's smarter to pull permits since this is going to be a new living space - if some one where to get injured / die I would be liable if I did not pull permits whereas if I pull permits I would be off the hook for a liability.

I've narrowed my GC options to two:

One contractor is insured but not licensed. 

One contractor is insured and licensed and wants to pull permits. This option will easily be 7K+ more than the other GC.

My current thinking is it's a better idea to go the permit pulling route since this is a brand new living space despite the cost being higher and it taking a little longer.

I plan to cash out refi this property once the renovation is done and use that capital as a down payment for another rental in the greater Denver area.

Please share any advice / experience you may have had in your investing journey! I've had a terrible experience with a different GC on this property (stole money) which has hurt my confidence and really rattled my decision making ability. Thanks in advance for your time and feedback on this!

Thanks Daniel! That feedback is encouraging. This has been my first experience with my tenants not getting along.

I can do better setting expectations like it's quite hours after 9pm - good idea.

My recent disputes have been two male/female tenants not getting along at all (2 weeks into the new male tenant lease). They both get under one another's skin, already have been in arguments with each other. They had a large argument this morning which made me realize I need to do something about this. They just don't seem compatible which is hard to figure out during screening until they actually live together. 

My pre-screening: credit check, job reference check, past landlord check, income verification.

This is my first real issue with tenants not getting along.

I'm encountering issues with male/female tenants getting along in my single family house. I'm house hacking and renting room-by-room to increase monthly cash flow. Recently, my male and female tenants in one property are not getting along and I need to address this.

I think if I rent my room-by-room properties out to one gender less tenant issues will occur.

Have you experienced this in your business? Is this good thinking?

It's challenging to know if tenants will get along even after they meet each other before signing a lease. I want less head aches in this business, not more, so seeking advice!

Please share your feedback and thoughts. Thank you!!!

Hey Cody, good questions, I like where your head is at. Here's my advice:

It comes down to the interest rate on your consumer debt. If it's above 5% I'd focus on paying the consumer debt off. If it's lower than 5% than you can get better returns investing your money in appreciating, cash flowing assets over the long term.

When adjust for inflation, real estate prices are flat. So you only gain on appreciation if you have a loan on the property. This is why house hacking with 3.5% and/or 5% down is so appealing.

I could pay off my student loan and car loan in cash right now, but I won't do it because the interest rates are below 4%. I'd rather stay liquid and invest my money.

Thank you all for your replies - very helpful and makes total sense. I do have sewer line insurance so a portion of the repair cost will be covered but I'll be going out of pocket. This experience is reminding me how important we all need healthy reserves and a strong financial runway to make it in this business long term.

A duplex that I own is getting the entire sewer line replaced as the original line has failed. My question is will this increase the value of the property or is this going to be considered a sunk cost to just keep the property running?

My thought is tenants expect the sewer line to work. I'm not increasing the quality of life for my tenants but can't find any good information online in terms of the property value going up or remaining flat after the work is done.

Thanks for your feedback!

@Mindy Jensen Interesting how appreciation isn't correlated with cash-on-cash on the average. I'm focused on generating cash flow from my portfolio for financial freedom. I fear Colorado isn't the best market for that so seeking feedback from the community to level up my business.

Thanks you @Jon Crosby @Kenneth Garrett and @Enrique Huerta for your responses. Extremely valuable gentlemen.

Truthfully this was my first investment property and I didn't understand how expensive CAPEX can be. Looking back I should have negotiated a lower price point - lesson learned!

Interesting idea with the $600 home warranty. It sounds like a good money move if the rental property is looking risky from a CAPEX perspective in the first year.

My solution - I hope the furnace continues running for the remainder of this winter giving me another 8 months to save additional capital for the eventual replacement. I did find a contractor that offers a 1 year no interest loan which I will most likely leverage that opportunity stretching the repayment bills out over 12 months (helps improve all cash flow).

I appreciate your energy and time.

I purchased a duplex at slightly below market rate 2 years ago in a strong Northern Colorado market.

Over the course of 2 years, I'm in the process of replacing the entire HVAC system. This is costing me thousands and thousands of CAP-EX expenses.

Should I have negotiated more strongly when I purchased the property?

Would you pay cash for the replacement costs?
Finance through a no interest loan?
Can hard money ever help in this scenario?

I know CAP-EX can be a silent killer when investing long distance, but can it still kill an investor when they buy locally?

Seeking tactical ideas and strategies on how to approach capital expenditures. Thanks!!  

Across 2020 my goals are:

> solidify my duplex with consistent monthly cash flow and remote billing to my tenants
> onboard 2 new renters in my current owner occupancy home so I can live with extremely low monthly mortgage costs.
> save additional capital from my marketing executive job to add a bathroom in the basement at my recently acquired single family hope. My plan with this property is to move out and rent this property out room by room to increase monthly cash flow

> engage more in the BiggerPockets forums building valuable relationships with real estate professionals