All Forum Posts by: Chris Christianson

Sounds to me like another "investor" who doesn't know what he's doing and is trying to protect his margin at the expense of the people doing the work. You might want to check in with Donald Trump. He's been mostly successful at hosing the working man for decades. 

Another possible idea, how about working with your contractor. Talk about the issues they've faced and try to come up with a mutually fair resolution. Just because you hired a contractor who hasn't yet been hosed by a client for not knowing how to do change orders doesn't give you the right to knowingly rip them off.

As for the lien waiver, I don't give them out until the final payment has cleared my account. Then I hand deliver them with a thank you. I don't know why so many "investors" insist on treating contractors as the enemy.

@Selena Walsh, congratulations on the purchase of your second property. @Bruce Runn is primarily correct in his suggestion. Insulation and vapor barriers do not draw any moisture out but they trap the moisture that is inevitably going to be there in. Pretty much all cellars (meaning a basement that is more than half way below grade) have moisture issues. You can mitigate these issues with landscaping and gutters but you will never eliminate them. What I do in basements is make sure that the moisture has a way to dry. You have to leave some space between the foundation wall and your interior finish, and make sure there is a way for air to circulate in that space. Fiberglass batt insulation is never advised. Foam boards or closed cell spray foam are all we use. Think about it, you are going to get moisture penetration so do you want to block it from escaping with a piece of plastic and then put a nice paper backed sponge in between to hold that water around your wood framing?

Hopefully you took a lot of pictures. Depending on the municipality, you can sometimes pay a double permit fee and show them pictures that all the work was done to code. Most places will still make you hire an electrician to look over and verify the electrical is up to code and it's not easy finding anyone that want's to put their neck on the line for something like this.

Pretty good warning here for those doing work without permits. It seems to make sense at times but there are many ways it can come back to bite you. Cities all over are starting to tighten up on this stuff. Minnesota is looking into a law that says you have to be a licensed contractor to flip a home. This is due to a couple idiots that did some seriously sub par work and sold to a guy that wasn't going to take it. Reading the code books rarely gives you all the info you need. Fortunately you did some pretty basic stuff so hopefully it works out for you. Minimum one outlet on every wall space and one for every 12 feet of wall protected by an AFCI breaker and an means of egress.

Best of luck!

@Chris Fargo, the 3900 block of Lyndale N is without question a D area. Aldrich Ave is one block west of Lyndale. I live on the 3400 block of Aldrich Ave South. Very different neighborhood but for a few years after we bought our house we kept getting calls from friends asking if we were alright since there was a shooting in our neighborhood. It always turned out to be the North side. Amongst the worst areas of North in my opinion. I also lived right by the Grain Belt Brewery in NE for 5 years.  I can't imagine leaving Uptown for anywhere in the Cities but if I did, I'd live in NE without hesitation. 

I've lived in Minneapolis for over 30 years. I've never once rented an apartment that had a garage. Bought our house in uptown 11 years ago with a single car garage and it's full of tools so I still don't park in a garage. Off street parking is a must in most areas, not all, but Northeast is so hot I wouldn't worry about it at all. Good luck with the duplex.

Welcome to BP @Gilbert Akpan. In my opinion you'll get some of your best information right here on BP. There are a few REI groups in the Twin Cities but my favorite has been Twin Cities Real Estate Investors (TCREI). They have a monthly meeting at Grumpy's in Roseville. Next one is June 13th. It's hosted by @Sean Blomquist of Pine Financial but they don't beat you over the head with self promotion.

I have a scenario I'd like to toss out there for the SDIRA experts on the IRS definition of "benefit". 

My girlfriend of 17 years and I were looking over some of her investment vehicles the other day. She has been corporate her whole life so has a 401k, 403b, IRA's and a few cd's out there. One of the CD's was maturing and she was wondering what to do next. I take a look at her papers and she's making less than 1% on this CD. Her IRA which is invested in mutual funds is returning under 4%. Simultaneously, I'm borrowing money at 8-12% to do real estate deals. Get's me thinking the obvious.

So the plan is to convert her IRA to a SDIRA and she then can loan me the money I need at, say 10%. I write off that 10% as a business expense and dump it into her IRA at a significant increase in yield for her. Since we're not married, I'm not a disqualified person.

Anybody see anything I might be missing?

I insured our 1892 rental in St Paul with no issues at all pertaining to the age. I had it insured through State Farm. Cost me about $80/month.

Certainly interesting seeing this topic hashed out from both sides of the table. We all come from different areas of the country as well and there are different issues in each area. I'm planning on expanding into the Florida market and I hope I can talk some guys from Minnesota to head down there with me. I know getting people to show up down there is a bit tougher. 

I'm going to assume that @Jacqueline Peterson, you've experienced some bad apples and have hardened your approach because of it. Sadly, I have experienced them as well which is why I also require a detailed contract now. Once bitten, twice shy.

Again, this agreement has to be a two way street for me. If you tell me your not paying a dime until work is 100% complete meaning, I alone will carry 100% of the risk on the job. I'm paying for materials, subs and labor, then when I'm 100% done, you'll pay me 90% of what you owe me as incentive to make me work harder? I'll thank you for your time, wish you luck on your project and walk away. What you're telling me is that you don't think I'm a professional and you plan to treat me like a unruly teenager through the project. Never have needed a job so bad that I'd take that. 

For the contractors out there, you too need to make sure that your contracts are as air tight as possible. We get screwed by unscrupulous customers as frequently as customers get screwed by dishonest or unqualified contractors. I learned all this the hard way. You start out with a small project that grows into a larger project, which takes more time and costs more money. Then the customer doesn't want to pay you any more for all the extra work you did AND is upset because you didn't keep the original schedule. Here are my rules of thumb:

- ALWAYS (thanks for the emphasis @Jacqueline Peterson) have a written contract and make sure the scope of work is clear and concise in that contract. For the record, by clear and concise I mean CLEAR AND CONCISE!  Any ambiguity will prevent you from drawing up accurate change orders and can easily lead to disputes. As unfair as it is, you will usually lose those disputes.

- On that note: Do not agree to or perform ANY additional work, outside the original scope of work without a detailed and signed change order. Make sure that change order includes any additional time that this work is going to take and how that alters the original completion date. If you fail to do this, you WILL get short changed in the end.

- Alway bill for those additional costs on the subsequent progress billing.  Do not wait till the last bill to get paid for these add-ons. This for one, dissuades the client from making tons of frivolous changes during the project and prevents that look of shock when you deliver your final bill. They will always have forgotten to sum up the total of all those changes they made and again, you'll be the one left holding the bag.  And it will be an empty bag.

- Always, get something, as small as it might be, up front. Customers who are unwilling to show you that amount of respect on the front side are disproportionately the ones that will beat you up on the back side as well.  You're better off moving on.

And that's my two and a half cents.

BOTH parties here are trying to run a business.  I would not take a job for a person unwilling (or possibly, unable) to pay a reasonable deposit.  For me, it depends on the job.  I've never asked for 75% but if it's a small job like a standard bathroom or a roof, I usually ask for 50% down to put them on the schedule and the remainder when the job's complete.  If it's a larger job like a whole house, I prefer going 30/30/30/10 but there are lots of ways to make it fair.  I had a dirtbag realtor stiff me for $12k on a $32k job once so holding a large percentage to the end will never happen again.  Of course, I have a much better contract now also.  That said, my client is also taking a risk so it's only fair that we spread it out between us a bit.