All Forum Posts by: Todd Whiddon

@Donald Boone We are spoiled in most parts of Metro-Atlanta with pretty good soil to build on. Go ahead and check with some soil engineers in Houston to see if there are any general concerns with the soils in the neighborhoods you are looking to invest in. This variable can make or break a 2nd Story addition or New Construction project / budget.

We have built some new construction in Alabama that required Post-Tensioned slabs, something we had never heard of before, and an added expense we had not initially budgeted for.

TIME > MONEY THE DUE DILIGENCE GAMBLE

You can ALWAYS go out and CREATE more money. Not so easy to go out and create more TIME.

I approach due diligence MUCH differently now than when I first started investing.

Then, I had made no mistakes."At least not in Real Estate" Now, I have made LOTS of mistakes. LOTS of REALLY REALLY RIDICULOUSLY expensive mistakes.

Then, I made offers on LOTS of properties I really wasn’t sure if I was going to buy or not. Now, I ONLY make offers on properties that I REALLY REALLY want, and have done some preliminary recon on.

Then, I “trusted” real estate agents for comps and contractors for repair bids. Now, I still “trust” them, but I have enough experience and resources to call Bull %$^#*$ when needed.

Then, I would invest the LEAST amount possible to gather information and DEFINITELY wouldn’t spend a DIME on ANYTHING that I wouldn’t need unless I closed on the property. Now, I push FULL STEAM AHEAD as soon as I get a property under contract. Using the Due Diligence and any other time I can negotiate in before closing as “FREE RENT” to get as MUCH of my preliminary work done as possible so I can start the project ASAP after closing.

Part of my Full Steam Ahead approach is to have my architects come in right off the bat and do a preliminary AS-IS floor plan so we can get start the “Ideating” about designs and get more accurate bids and takeoffs from subcontractors. There are few things more frustrating AND EXPENSIVE than wanting to start a job, and having to wait MONTHS AFTER closing to get designs, engineering, and bids completed!

Bigger Version Here

I still use due diligence to gather my final GO / NO GO for launch information, because there are many things that without a proper survey and chat with the friendly folks at the county office I wouldn't otherwise know.

Next up, we’ll look at our Due Diligence checklist for the things we look for and VERIFY during DD for every property as well as our specific concerns with this one.

ADVANCED TECHNIQUE DUAL PHASE WHY\HOW NEGOTIATIONS

The deal looked like a SLAM DUNK. It had the location. It had the upside. It had the backyard. All I had to do was accept the sellers 230k “off market” price.

The only problem was, I knew the “WHY”. Sellers have a story. All you have to do is ask. Sometimes you have to ask multiple times in various ways. But if you can find out the answer to, “So WHY are you selling?”, your negotiating POWER increases SIGNIFICANTLY, because then you can ask yourself the most PROFITABLE question you can ever ask yourself, “HOW?”

At first it was ALL about price. 230k TAKE it or LEAVE it. Sure, we could have just played the numbers game and submitted a lower offer, justified it with the condition of their house and the fact that we are paying cash and could close FAST. But all of those things would have worked AGAINST us...

So when we asked WHY the sellers are selling, turns out the sellers absolutely LOVE this home and DON’T want to move! BUT..

Now comes the HOW part. HOW do we CONNECT with the seller? HOW do we HELP them achieve THEIR goals? If you can answer these questions on a consistent basis , you can make some money on a consistent basis.

Instead of pointing out all the little stuff “WRONG” with their home, we CAST A VISION for the great possibilities of what their home could become. Remember, sellers know more crappy stuff about their house than you do, and usually don’t want to be reminded of it. By "visioncasting" our ideas about the place, the sellers felt an emotional connection and excitement about selling their place to US.

Instead of pushing the fact that we could close FAST, we proposed either renting the house back to them for a period of time or setting up the closing date for 60-90 days in the future. Our flexibility was IDEAL for their situation AND it was ideal for ours. The extra time would allow them to conduct their house search without the FEAR of having to do it from a Motel 6, and it allowed us to get some of our planning and design work completed before the clock started ticking on the interest payments to our investors.

The ensuing negotiations split into two phases. The purchase price and terms took about a day to hammer out. We had a “deal” at 225k, 21 day due diligence, close in 30 days. The rent back portion of the negotiations took over TWO WEEKS! We went back and forth over rental amount, they were at 1k/month we were at 2. We wanted an escalating rent schedule to behoove them to move, they wanted consistency incase it took longer than expected to find their new place. We ended up at 2k per month with no escalation.  

We did better than we initially thought on the acquisition AND the sellers ended up with a better situation than they initially thought they would have selling, all because we asked WHY? and HOW?.

Next up the “Over”Due Diligence...

Hey @Liviu P. !  Welcome to ATL / BP!

Backstory of “THE Backyard”

Besides spending time with my kids and sipping fruity umbrella drinks in exotic locales, few things I enjoy more than getting a call from someone in our ever expanding network of Real Estate Agents and Wholesalers to DROP what I’m doing to go check out a killer deal!

We have been on a BIG acquisitions push lately and have also been working hard on expanding our investor network. This call could help with both. 

I had been hearing stories about the Legendary International Real Estate Man of Mystery @Cal C.  for years, this property was on his side of town and it was time to make the connection.

I gave Cal the address and we met the agent at the property. I wasn’t totally sold on the deal when I pulled up, although it was close to some other projects we are working on and in the same SUPER DESIRABLE High School district, it is in a slightly less desirable elementary school system, “but still a GREAT elementary school by Intown Atlanta standards” It didn’t really matter what the house was like since we originally planned on demoing it and building 100% new construction on the lot, so as I walked through the house I just kinda poked my head from room to room not really paying attention until….

SOLD!!!

WOW!! As soon as I saw the backyard I broke the #3 Rule of Real Estate and INSTANTLY became emotionally attached to the deal. I HAD to have it.

Time to make the Offer….

@Rick Baggenstoss AWESOME! Hopefully you can chime in with some good perspective along the way!

@Karen Margrave feel free to steal away!  My hope with the Q&A Open Houses is to not only LEARN from some folks with experience on similar projects, but also to provide an opportunity to people who may be on the fence about rehabs or are looking to LEVEL UP from just cosmetic rehabs a chance to SEE and EXPERIENCE a working jobsite through various stages of completion, and ask questions about WHY we are doing the things we are doing. 

Some people just need to read sites like BP or J's 123flip.com , "both of which gave me confidence and inspired me to do what I do now" to give them all the ammo they need to get out and make things happen. Others need to SMELL a port-o-john and SEE someone actually doing what they want to do to take the NEXT step!

Intro…

Keeping with the spirit of @J Scott 's  “Diary of a New Construction Project” where we jumped into a HUGE project that we never really had done before, “Tear a house down and build a new one back”. This adventure will document our first foray into “Pop Tops” or RIPPING the roof off a structure and building a second story addition in its place!

While everyone involved in this project has a fair amount of rehab and general construction experience, this is the first time any of us has “raised the roof”, so if anyone with more experience sees us about to make a mistake feel free to chime in! Otherwise this post will detail EVERYTHING involved with the acquisition, permitting, zoning, planning, construction, and sale of a MAJOR addition renovation.

Also, along with this thread on BP, I’m going to host a few “Q&A Open Houses” at the project. “Before, During, and After rehab”, so any readers in the Atlanta area that want a behind the scenes look at how a project like this takes shape, shoot me a PM and I’ll send you the deets.

We’re about 2 weeks out from demo, which should give us enough time to catch up on planning and permitting so that the thread will be “Real Time” when the roof comes off!

P.S… Since Real Estate is ALL about the numbers, here's the QUICKMATH on the project. Purchase 225k Rehab 175k-ish ARV 525k-ish We'll dive into the numbers more on some later posts….

We include as few "amenities"  as possible  "no fridge, no warranty, ect", when we first list, letting our design and renovation speak for themselves and leaving the rest for negotiation. 

If we have been on the market for a while and/or the buyer is a hard barganer, we first offer home warranty "probably benefits us more than them", extra appliances,  etc. 

Same goes with inspection request items, if we are fresh on the market and get a quick offer, we will only repair safety items or super legit stuff we may have missed on our renovation, if we have been sitting on the market awhile and the buyer wants the electrical panel labeled... We break out the label machine and label that panel like no panel has ever labeled before! 

Hey @Linda Harris! Happy to help with some Atlanta contractor referrals, shoot me a PM with your details.