All Forum Posts by: JOE SNEAD

I think having a buyer on the hook is a good thing. A non refundable deposit with a contract that you will complete the rehab giving them certain selections only. Can you give your buyer options. say pick one of three paint color schemes for the interior, pick a kitchen scheme what color cabinets and counter tops.

I think you can present the buyers with choices which will give them the feel they are getting a custom home and what they want. While all along you still have control of everything thats going into the project.

The other option is to increase your price point to make it worth the extra time and questions they are going to have. See if they jump on it.

find a realtor and find out if you could sell it right now and make a quick profit.

the realtor could also tell you top dollar what the house could bring after ou fix it.

DO you have an estimated cost to fix it up and what are your rehab plans? paint, new carpet, new laminate hard wood like flooring? new appliances?

One great piece of advice i was given was to just read the tax code. It may be boring and not apply to many things but as you go into business you will recall some of the things you read and didnt understand at the time.

Dont be lazy and just tell yourself your accountant will take care of everything. just as a realtor, a wholeseler, contractor will lie, let you down or give you incorrect advice so will an accountant. Ultimately you are responsible no matter if your accountant makes a mistake.

Knowledge is power and just as you will invest time in other areas of real estate this is a worthwhile investment of your time.

Another tip is that succesful business people do their taxes at the begining of the year not after the year is over.
projecting and forecasting your taxes for 2013 should start at the end of 2012. this wil help you understand where your tax liablitly is and you and your acountant can stratigize in the front end of the year to minimize your taxes based on some realistic yearly goals.

finding good cabinets will take some work. There are better prices and quality on cabinets than the big box stores. look in your area for cabinets most of which will just be shops that are nothing more than distributers of manufacturers from tennesee or from china.

distributers tend to offer the same qaulity as the big box stores where they give you an all wood front. then the sides of cabinets are MDF and no back panels. they typically have cheap plastic for the interior slides and hardware. cheaper made cabints typically need reinforcement to hold a granite counter top.

I would also search for millworkers. if you have time and can sketch up your layout of what you want you can get very high end all true 3/4" wood cabinets for less than you would pay for the cheap versions from a big box store. Some custom cabinet makers are very expensive. This better quality would last much longer and hold up in a rental much more so than a set of mdf cabinets.

Now if you are really smart and have the time to really get your measurments down and layouts put into CAD you can save huge amounts finding a a company with a cnc machine to cut the pieces for you. then hire a cabinet installer to put it all together.

Granite prices are very affordable. tpypically granite installers deal with the public in cities. they charge huge markups on the granite they buy and then install. search for actual granite yards. these places dont advertise and typically dont deal with the public. if you can find them and go direct you can save thousands on granite. the only trick is you need to know how to use a tape measure and understand how many slabs you need to complete your kicthen. then contact the granite install companies and get a price per sqft for them to pick up your slab from the yard, come to your house and template, cut the slab, and install it. this will cost around $18 sqft for them to install and your granite will cost whatever style and number of slabs you choose.

Put your plan together for the new kithcen then take your time finding and gathering prices. just be warned all cabinets are not equal

USING PER SQFT cost will do nothing but get you into trouble. I wouldnt trust those numbers. Would you trust a realtor to tell you what the rehab costs will be or a wholeseller telling you the house is a good buy based on their sqft cost to fix it is. if you went with a realtor or wholesellers estimates youd probably be out of business pretty quick.

You really need to invest the time to breakdown and get hard cost on indivdual projects. invest the time and learn how you get to a per sqft cost. its important to know whats included and not included in those numbers.

for instance your hardwood floor number is in line for re finishing an exisitng hard wood floor. but not to furnish and install a new hardwood floor which can depend on many factors. a good solid 3/4 "true hardwood you can find around 5/ sq ft. But what kind of flooring are you attaching it to? is it a concrete slab or a raised wood subfloor? if its a concrete slab is your hard wood a glue down or a nail down? if its nail down you will need to furnish and install a plywood subfloor shooting it down in the concrete to have a proper subfloor to attach your wood flooring to. this is just one example where the price per sq ft to do this type of finish can realistically cost you 8-12 per sqft which is a huge expense over a 1500 sq ft house where you only budgeted 2.50/sqft.

invest the time and save yourself from losing money when you do a rehab. when you buy a house at the right price is when you make money on it. part of that is knowing not guessing what the rehab will cost. you dont want to buy into a bad deal.

go through the exercise and then tweak your numbers after you complete a rehab and you will get a feel for what your numbers will look like and be better able to quicly estimate costs and analyze deals faster.

welcome. my advice is find a rehabber that has experience or you could partner with for a few deals until you gain more experience while keeping you out of major trouble.

here is an old post that may be of interest to you
http://www.biggerpockets.com/forums/48/topics/72801

Keep this in mind. you are rehabbing it to make money not for your taste or style which is probably why you and most people go over budget. No single item will ever push you over budget its just when you decide on a 100 different items and each time you go with the more expensive item you quicky can be a 20k over budget

Define, define define a scope of work . Be very detailed about what work needs to be completed. the more you can define what work needs to be done on paper the better off you will be. You can not just have ideas in your head and tell a contractor you want it to look like whatever. If you leave anything to interpetation then you will be disapointed 9 times out of ten. For example if you told me you wanted a pair of shoes and i the contractor came back with a pair of payless brown velcro shoes i suspect you may not be happy. You then would specifically tell me what kind of shoes you wanted. 1 pair of 4" high heel shoes that had to be black and size 7 maybe a certain designer name brand that you expect.

Go from room to room and write down everything that needs to be done. Then thing about the basics if you want a light here is there electrical there now or would electric need to be re routed to make your idea work. Make a running list for each room. then break down your list into categories such as electrical items, plumbing items, painting etc. Define what materials you need to complete your project. if its say drywall how many sq ft are needed? how many sqft of paint. quantites of material need to be defined. define if you will supply them or will the contractor.

ask questions when you dont understand. and even if you dont understand fully get a contractor to explain how many men and how many hours will it take to complete a specific job. if you have that basic info you can do some quick estimating. this simple estimating is great trick to feel if a labor only task is priced fairly.

example: it will take 3 of my guys 4 days to do what you are asking.

3menx8hoursx4daysx$50 per hour=$4800

So if you get an estimate of 12,000 you can quickly see your not in the same ball park and the estimate is high.

Spend time learning some of the basic trades such as plumbing electrical, carpentry. many things in residential construction are not hard to learn but spend some time learning those basics.

The more detailed you are, the better you define a scope of work, and the more organized you are the better your contractor will feel he can work with you and make money. if you are lazy and or dont want to deal with it because you dont know it, then your prices will be higher because they know there will be many changes that dont allow them to complete a task and move on. these kind of people waste a contractors time and it ends up costing them money on this job but costs them more money by preventing them from moving on to the next project where they can make money.

good luck

AARON - Im also curious why this wouldnt work? A realtor is going ot take you to show properties. A good one also may visit properties before showing them to a client. This way the realtor could do it on his schedule. Also listings typically dont have many photos. If the realtor is going there how hard is it to take many photos and email them. I think this would work having an out of state client, and to be there eyes for them. The client would then be able to see the pics which are worth a thousand words.

But then again i dont think the vast majority of realtors are really worth anything. Getting a realtors license is only a step above getting a notary public license. 10 - 15 years ago the only thing they had was access to the mls and data that nobody else did. Now anyone with 5 min to spare, half a brain, and the internet can get all of this info that a realtor can provide. I find myself just asking for the key code so i can view properties on my own time and leave them out of doing nothing more than opening a door for me.

I have met very few realtors that are really good and there value comes form a vast knoweldge of a market or area as well as really good contacts or access to potential deals before they hit the market. these people are very hard to find.

its easy to make it your primary residence. and nobody is going to question how you split your time between two places you own. And as owner occupant you cant rent or sell the proprty for one year.

However if you aren't a cash buyer and plan to finance the home as well as have a mortgage on your current home, you will need to be very clear to your bank which is your primary residence. Banks are usually very cut and dry that if a home isnt your primary residence then its an investment property. The LTV has to be under 70% typically on an investent property. Id be more concerned about getting things straight with your lenders and not committing mortgage fraud.

Again picking your primary residence is easy but when there are multiple mortgages involved that may be the trickiest part depending on your finances and current equity in your present home.

well you certainly dont want to over do the rehab. but perhaps you could do the common areas with new molding and leave the bedrooms as is. Although i think you will end up doing the entire house depending pon the floor plan. The big box store sells these moldings that come come pre primed and are a breeze to paint and not that hard to install.

What would be really interesting to see is how much a 500 dollar investment brings you to your home. You have a great way to test this out seeing as how the exact same house without the architectural features just sold.

keep us posted if you do decide to invest in the detail work and if so how much more did it net you at the sale.

I say go for it if you have the money to invest. my guess is that 500 to a thousand dollars isn't going to make or break your profit on the house.

why not put together a simple checklist that you want your realtor to be your eyes for. ask your realtor to take a lot of photos for your review.

I think if you do your intial homework and dont just throw blind offers at everything but pick a select few that work on paper first this would be a good solution saving you as well as your realtor time.