All Forum Posts by: Sean H.

Edwin,

the properties are definitely located in a lower income area. The current owner has stated that it is a bit more management intensive, however that is why I am going to hire a property manager to hopefully keep their finger on it. i am too far from this property to manage it as intensely as it would need, so you are correct. i am hopeful that with careful screening i will be able to keep management problems to a minimum.

William,

the numbers have been provided by the seller and verified by myself.

Property is listed for $44,000. 5 units, 2 / 1. 4 units currently rented, (430x3, 400x1).

the 5th unit needs slight rehab. it needs a kitchen sink, kitchen cabinets, some areas painted, 2 interior doors, laminate flooring replaced in bathroom, new toilet, new bathroom vanity, new shower door. roof repair. total costs estimated around 5k.

once all 5 units are rented, the annual income, less 8.3% vacancy, will be: $19140

annual expenses are as follows:

insurance: $804
taxes: $1620
utilities: $3420
PM: $2000
allotment for maintence/repairs: $1200

mortgage: $284 per month, $3404 / year

annual cash flow: $5,692. ($474 / month)

everything looks good, what am I missing??

J Scott,

Already on the newsletter list and happy to keep motivating you. i had no problem buying your biz plans because i know that i am a huge waste on your bandwith :) Whatever became of the website REMM you were hoping to put out in july?

back on topic..

It seems like you have an awesome system set up as far as materialss are concerned. i imagine that using a system like this it would be very easy to run down your list and see what each item costs and get a very accurate estimate about rehab costs. This is definitely something that i want to establish.

It seems that most contractors are able to get very big discounts on the items they buy, wouldn't it make sense to have a list of what you want and see if they can get it cheaper? that way you are basically guaranteed the best price.

Robert,

I have found J Scott's blog already and it is indeed awesome. He shares everything there is to share about his rehab business. I also purchased his business plans for flipping and multi-unit properties, probably the best $15 you could spend if you're trying to jump start a real estate business.

Bryan,

you mentioned that you generally use the same materials for every rehab that you do. How do you keep this data organized? Do you personally purchase the materials or do you just give a list to your contractor? Out of curiosity, how many rehab deals have you done?

Thanks guys!

Thanks for the responses guys.

I was under the impression that most rehabbers who rehabbed a lot have a system developed so that it would be easy to estimate costs.

Edwin, you do not use the same materials in all of the houses you have rehabbed? Rehabbing the hundreds you said had to of been a daunting task that would have been easier with a materials list, don't you think?

Marc, I was thinking of doing the same thing regarding low, middle, and upper class rehabs. It seems like a good way to keep everything moving smoothly based on the type of property. I will have to check out that book, Flip. Thanks for the recommendation!

As my partners and I begin to find some great rehab deals, it has become apparent that we need to begin to develop a system to accurately and easily complete our rehabs.

I am thinking we need to develop a system that has a listing of every piece of hardware that we would use on the entire rehab broken down by room. For example, all the flooring choices we would use in the house would be written down and used over and over again, in every rehab. that way any time we needed to replace a floor, we would know our material and labor costs.

I know other rehabbers use similar systems and in no way is this a unique idea. My question is are any of you willing to share that materials list you use or at least the steps you went through to build it and why you chose certain materials over others?

I'll take the bait.

If I were in your situation, being 23, I would take the buy out, be happy with the doubling of my profit and look for other investment vehicles to keep the ball rolling.

I know that you are mainly in real estate to pass the time between your trips and build an inheritance for the next generation, and despite being very successful, you do not want to pursue it full-time, hence the reason you retired at age 29. My guess is that you will be content with building a couple of houses a year until it is built out in 3-5 years.

Being politically vocal, my guess is that you are getting ready for inflation. There are two schools of thought on inflation that appear here on BP, one that says real estate tracks inflation and to have leveraged real estate at "normal" prices will protect you in times of inflation. However, you've also mentioned that you buy gold, ETFs, etc to hedge against inflation. It's a tricky path to walk with pluses on both sides of the fence.

Adrian, any response?

A big problem with education are the teachers themselves.

A lot of teacher's are sub par educators, however, once they get tenure, the union will basically prevent that they never get fired, no matter how awful they are. Do a simple Google search for "Rubber rooms" if you want a rude awakening.

A large problem is that there is no way to evaluate a teacher's effectiveness. If you want to stir your teacher friends up, ask them how they feel about Obama's education reform package. Basically it tests kids, and if kids do not maintain or improve their test scores over a certain point, the teacher can be fired or the school can get sanctions against it. See what your teacher friends have to say and undoubtedly it will be met with protest. then ask them for a method to determine a teacher's effectiveness and most will have nothing to say.

If education were privatized and school taxes eliminated, teacher's effectiveness could be greatly increased through the use of incentives for education standards to be met. I understand that most people would be against this, but it would definitely be a way to use market forces to ensure an increase in education.