All Forum Posts by: Josh Sterling

I agree about providing the materials, however you have to draw the line somewhere because there is no way you will be able to account for every screw, nail, drywall mud, copper fitting, etc. in a house.

I would also be interested to find out how others are structuring their deals with contractors.

And I usually pay in thirds. 1/3 up front, 1/3 in the middle and 1/3 upon completion.

I recently started using a contractor after doing several rehabs myself. I already had a set list of materials I had been using and a good relationship with the commercial sales desk at lowes, so I set up an agreement with a contractor to provide building materials and labor only. I defined building materials as anything which cannot be seen on a complete project (subfloor, hardie bacter, mortar, drywall, screws etc.) After a lot of advice from bigger pockets (thanks JScott) I put together a spreadsheet of all my finish materials and item numbers/prices for each (cabinets, sinks, countertops, doors, faucets, etc.) all the way down to outlets, light switches and smoke detectors. I can now put together an order for a complete project (5-7k) in about an hour.
I'm sure we will end up with a few discrepancies on what are/are not building materials on the first couple jobs because it is impossible to define every item that goes into every house, but I secretly plan on a $500 contingency for those items alone.
This has allowed me to control exactly what goes into our properties and actually makes estimating the rehab costs much easier because I don't have to worry about the 100+ trips to lowes that I was making, especially as the project neared completion.

As for as negotiating with the contractor: I had several come out to look over a house that I had just closed on. It was pretty standard for what we normally do. Complete remodel. I had a detailed scope of work typed up and I had a price in mind for labor/building materials. Each one of them asked me my budget. I explained how I would buy all the finish materials and told them my budget for labor/building materials was $xxx.
A couple of them never even responded with a bid (I guess my numbers were pretty tight) but the one I really liked from the beginning negotiated the scope of work with me to meet my budget, and we were able to come to an agreement and start the job. I am currently about to begin my 4th rehab with this contractor, each time I walk through the house by myself and develop a scope of work. Then I come up with a budget target and tell the contractor what I want to spend. If he doesn't agree to the scope of work for a given price we negotiate both scope and price until we are satisfied.

Sorry for the typos. I posted this from my iPad and bigger pockets is giving me an error message when I try to edit.

I've still got a long way to go, but I would love to give up my day job and be full time into real estate. Currently I would need to make $150k a year in real estate to match my near term earning potential at my job (plus medical and retirement with a pension).
As far as our real estate goes, we have 9 sfr's and a duplex for a total of 11 units. They will gross about $110k a year and have profit of maybe $45k a year after all expenses (many of them are owned free & clear). So, keeping with those same numbers I would need to either have 35-40 units with the same numbers (actually more because we would have to finance them).

I guess my point is that I would like to hear what the transition was like for some of you that were able to go full time into real estate.

-We're you strictly buy and hold, flipper, other strategies?
-We're you able to build your real estate business up to match your old W-2 income or did you have to live a more frugal lifestyle?
-Did you eventually end up growing your real estate business bigger than it could have been had you tried to work 9-5 and do real estate on the side?
-Do you miss the stability of a job?

I've been thinking a lot about this lately. I know that the people who really make it big had to go full time at some point. Just wondering what that point was for some of you and what that transition felt like.

Thank you for the responses.

A rule I have been trying to follow in negotiating is to always make the last offer. But full disclosure...I have lost more than a couple deals over a small amount. Either way, I always come out happier when they accept my offer as opposed to me accepting theirs.

I agree. As long as you know it will eventually close. Dont sweat the small stuff.

About a month ago Mitch Stephen had a really good post about financial freedom. I ended up buying and reading his book, which I enjoyed. I believe he said he needed $3500/month from investment income to be able to quit his job, which he aquired in about a year.

I'm probably at the point already that I make enough from real estate to quit my job, by Mitch's definition. But I feel like I'm no where near actually being able to call it quits and go full time in real estate. Maybe its because we have been growing our business so fast and buying mostly cash so we haven't felt the income.

Anyway, I was wondering what the point was when you knew you could go full time into real estate?
Did your real estate career excell once you left the job behind?

Jimmy Buffett once said "My occupational hazard being my occupations just not around"
I agree.

With all the Multi-Family/Apartment talk lately I've been thinking more about it. From the start we have wanted to get into apartments, but have yet to find a building where the cashflow can compare with SFR in our area.

I thought the reason was that MF buildings were held by investors and they were not willing to come down in price, or not getting forclosed on because they had cashflow, but I'm starting to think I'm just not looking in the right places.
Driving around, I have noticed that there are alot of 6-20 unit apartment buildings. Some of these have to be bank owned? right?
Where can I find MF listings other than the MLS or loopnet?

Where did you find your first MF deal?

If you have 500k in a property you will need rents of $7,500/month (preferably $10,000) to even make it cashflow. Can you rent each unit for $1500+ per month?