All Forum Posts by: Christopher B.

Hey BP, I'm currently working on a project that is quite unique and I don't expect to be involved (hopefully not) in such a project again so wanted to share. It has been filled with surprises, challenges, and riddles so maybe this will help you from making some of my mistakes. We purchased a 1920 Farmhouse but opened the walls and found an 1823 log cabin instead.

The project is not a for profit venture as I am doing the remodel for a close friend (lucky girl) but we'll dip our toe into the financial analysis of it at some point as I know there are curious minds like mine out there. The project is a few months in so I'll try to catch you up without being too long-winded, bear with me.

A little backstory first to help understand some of the madness that has ensued. Last year my close friend decided to buy a house and being the awesome guy I am I offered to help her, for free. Our goal was to find a house that needed a little TLC, I'd manage the rehab and she would get a nicer house with some free equity. Well eventually she found what I affectionately call the "FarmCabin." Initially it seemed like a great deal, the house was located in one of the more prestigious communities in our city with upper six and seven figure homes in the area, within walking distance to the lake, and had running trails and a yacht club around the corner to name just a few of the local amenities. The house was busted up pretty bad but had lots of potential and I am always overly optimistic about busted up houses!

Check-out a few pictures (unfortunately all my initial before pictures got deleted somehow, these are after a little demo)

 I agree and this is what I do now. When I first started I was naive in thinking that contractors would be excited to hear that i have multiple projects and thus want to work with me. Not so much it turns out. 

When I meet a contractor now I just focus on the project at hand. I don't hide that I'm an investor and sometimes they ask if I have other projects and I typically do but I don't attempt to use them as a bargaining chip. There's no perfect system though.

Richard, I think you're spot on. 

john the local Knoxville reia has really gained a following the past couple years. It's a for profit meet-up that costs $50/meeting. Some find it invaluable and other investors don't attend, different stroke for different folks I suppose. I would recommend attending it at least once though to see if it's right for you. There are some active investors there and Victor is quite experienced and knowledgeable. If you're looking to gain some local traction and knowledge there is worse ways to spend $500 (annual membership). Good luck. 

The <$50k market in Knoxville is primarily located in East and South Knoxville areas and will likely be section 8 properties. There is mixed reviews on section 8, I know of people who own hundreds of them and others that wouldn't own 1. Different strokes for different folks.  

 How real is our debt? We owe ourselves. We don't operate ok the gold standard anymore. If we need money we print it. We could dissolve our "debt" tomorrow. I find so funny people think we owe China or anyone else money. They buy treasury bonds and get interest which we'll continue to pay as long as we have an economy and print our own money. I don't forsee that changing anytime soon. 

That book is about getting the average American worker to save money and put a very small amount of their annual income, 10%, into an investment vehicle so they can retire when they're 65 and not have to live off SS. The books vehicle of choice is the stock market. It's not bad advice as the avg. America doesn't save squat, doesn't understand money, loans, credit card interest, and can't even balance a checkbook much less understand investments. So for that type of person the book is a revelation and they should buy an index fund that tracks the sp500. However, if you go look at the truly wealthy in this country you'll see an overwhelming majority have their wealth tied to real estate. 

There's a famous Ray Kroc story I really like, he met with some grad students (I think it was an Ivy league school) and he asked them, "what business am I in?" Their response was, "hamburgers!". His response, "wrong, I'm in real estate."

Barbara, jscott beat me to the punch. He lays it out pretty well though, more concie as well.

 We may pay less by project/hour but we provide consistent work. And the biggest challenge a contractor faces is getting consistent work. I also do my best to make their work as easy and simple as possible when they're on my job site because I truly respect their time and want them to make money off me, the faster they get the job done the more they make on the project. I provide detailed SOW's, have their materials delivered as much as possible, work to be thorough on my SOW so we can have little to no change orders and sometimes don't make change orders that I want just to keep them on schedule. I also use detailed drawings, lists, etc to make things clear so they can work efficiently even if I'm not around. 

It's my goal to be very easy to work with because most customers are not. Have you ever worked as contractor for a retail customer? I'm doing a rehab for a friend right now and she is not bad. She's mot doing anything I wouldn't do as a customer and is concious to my time and efforts as she knows I'm doing her a favor. It's still very difficult, time intensive, and sometime frustrating. It's just the nature of it and she's not bad, most customers are much worse to deal with. This is big trade-off, imo, for contractors that work with investors. 

The @ doesn't work on my phone..

Jscott, I completely agree with your points and have that kind of relationship with many contractors. It was my plumbers taking Me to lunch, not the opposite. My regulars get consistent work from me, I refer them often, pay them on time, and don't beat them down on price like many investors. They really like me. 

However, not all contractors "get it" because like you said most aren't good businessmen. Really most business people aren't very good at business, the failure statistics don't lie. Ive found through experience that some contractors have a negative view of investors. I think many investors are cheap, want to cut corners, beat the contractors down on price, try to add to the SOW without adding to the cost, and can be slow to pay. So if this has been their experience or what they've heard from other contractors they can hesitant, and I would be too. So if that has been their experience and they meet an investor who tries to hang that carrot out there they're going to be hesitant if not fully resistant to it. Again just my experience. 

I've simply changed how I approach contractors and how I propose things to them, that's really what I was suggesting to the OP. A good contractor doesn't have to work with us, they can find other opportunities. A smart contractor sees the advantages that you listed in working with us, we don't need to oversell that to them. 

I agree with Rick, I know people around here that buy them for $5k and rent them for $700. Now that's cash flow! I'd also be curious on financing of such an old mobile home. 

Payton provided some good info. Knoxville is a nice place to live so welcome. Feel to reach out about local investing our the if you need/want any Knoxville community info.