All Forum Posts by: Shawn Parsh

Twannisha,

If you are just changing out a sink then I would use a qualified handyman. I always hire the specific contractors I need for each task. In my case it saves me a lot of money. It all depends what your comfortable with. I've been rehabbing properties for over twenty years so I don't need a general contractor to oversee the project for me.

David, 

I personally would not want to invest in a property where the buyer comes with the deal. What would be your plan for the property? If your plan is to flip it than you wouldn't want to wait a year to be able to do so and if your plan is to rehab and rent you wouldn't want it rented for a below market price. Plus how/when would you be able to rehab the property? Would you have to wait until the current owner moves out...in a year...if they actually leave as agreed? 

Daniel,

  I think you  need to get with a qualified realtor, and by qualified I mean knows your market well and has proven their skill, to have them tell you what the after repair value is going to be. If you show them the property and tell them what you plan to do with it they should be able to advise you on what they think it will sell for and how long it will sit on the market. You can also pick their brain on what repairs should be done and what features need to be added to up the value. 

  The two comps you list are those the prices they sold for or the price they started at? With a 50,000 difference your property may be a deal worth doing, but you need to know the numbers. I love to invest in small rural markets. It is easy to get to know the market and easier to get the word out that you buy houses. Plus when you do good work word will spread quickly. 

Once you know the likely realistic price you will be able to sell it for then you just need to run the numbers to see if the profit potential is worth it to you. To increase the profit margin you may also want to consider hiring out some of the work to speed up the time it takes you to complete the project. I can do most of the work myself as well, but I find I make more money in the long run if I focus on finding and negotiating the deals not doing the labor that I can hire out. 

I always try to have at least two outs for the properties I buy. In your case once you rehab this potential property what would it rent for? Would it be enough to cover your holding cost and provide a monthly cash flow? If so that reduces the risk as well. If for whatever reason you cannot sell you could rent for a time. 

I flipped a house last year in a small town that I purchased for 55,000 that I put about 42,000 into in rehab. It took me about 6 weeks to complete the rehab and get it under contract. I cleared about 58,000 on that property. I would have did the same deal if I was only going to clear 40,000. It all depends on what you're comfortable with. I have another property on the market now that I bought for 65,000 in a rural area that I put 42,000 and some change into the rehab. It's listed for more than 200 right now so will see how that one turns out. 

Rolan,

I would agree that paying 40% seems excessive given the fact that you and your wife are taking the most risk. I would come up with an amount of money that you pay the project manager for their work through out the project. I would also add a bonus at the end that is directly tied to the profit on the property, maybe 5% or so. I would just explain the thought process to your project manager and have a direct conversation. 

Depending on your relationship with the person and the trust level you could always offer to let the project manager put cash into future deals to increase their percent of the profit. If they put up half of the required cash to do the deal it would be a different conversation where their profit at the end would be justifiably higher. 

Having said all of that I will finish by saying finding qualified trustworthy people to help build your business is very important. If this project manager fits that description than I would try to come to an agreement that you both can live with. From my view point there are a lot of people in our society that want a paycheck, but a lot less that want a job. The better team you can build the more successful you will be. 

Personally I think I would look at one of the Universities that have a design program. I'm not sure which ones are in your area, but you likely could find someone that has skills in their Junior or Senior year. That way I could likely get the work done for less and hopefully build a long term partnership with someone that is looking to get their foot in the design world. Having said that, I have never hired a designer for any of my properties so maybe others with experience will chime in. My wife always tells me what looks good and I'm smart enough not to argue. I can't cook and I like to eat. 

Elie,

I would recommend telling everyone you interact with that you are looking for properties that the owner may sell that are not listed. You should also tell them what type of properties you are looking for. I have always found I get the best deals from word of mouth. I pay a 1,000 dollar finders fee for any property I buy that wasn't listed that someone told me about. You pay that fee enough times you will have a team of people always looking for properties for you that you only have to pay when they get results. I'm not saying don't do the mailers, but maybe add that to your efforts if you do not already. 

Jason,

I think the fees will vary depending on where you are investing, what contractor your asking, the time of year, and the relationship you have built with them. 

Jonathan,

  From my perspective I would say no. I would want to separate the liability from my brokerage business and my real estate flipping business. If you do not already have a qualified real estate attorney and an asset protection attorney I would add them to your team. It may be the same person if they have the given experience and knowledge. In addition, I would discuss what your thinking and what your attorneys advise with your CPA to make sure you have a complete picture of everything involved and how it will effect your bottom line. 

Nick,

Thanks for the information. It is always nice to get a refresher and another perspective. 

Ron

I think it is always good to add professionals to your team. If you have a gap in a needed skill you should find someone qualified to fill it. I like your plan to tie the effectiveness of the designer to the bottom line.