All Forum Posts by: Thomas Harr

Hi and thanks to whoever reads/responds to this forum!

I am looking to bid on a HUD home.

Is it true that if you bid over on a HUD home with an FHA loan, you must bring the difference to closing?

I am looking for my first owner occupied property, but am weighing options between FHA and conventional.

Also, its a 4-unit so from what I understand is Fannie Mae only allows 25% or 75% LTV on 3-4 unit properties (was praying for the 5% down conventional first time home buyer)

All insight is helpful!

@Robert Ellis it’s Whitehall area near Hartley!

Hi BP readers, I just closed on a small 3/1 here in Columbus, Ohio this week and wanted to share a quick story about how just being genuine and friendly can help you as an investor and businessman! I bought from a distressed landlord, who is an older man (ex-army). I picked this one up from an absentee owner list and direct mail. After reading Anson Youngs book and just dealing with more and more people in real estate I have learned to not jump right into the home but learn about the people and their lives (it makes the process much more fun). We had agreed on a price and my father is my partner. My dad was struggling health wise at the time, and had a small stroke as I was supposed to get the contract out and start the closing process. But because I built that rapport up front, he let me extend the dates back. That was just the beginning of what I now think is going to be a great friendship. I had to creative finance the place, bring in a family friend to fund the deal and get the ball rolling. I was starting my demo yesterday and the man came by because he saw my truck, he met my father and exchanged stories for about an hour and talked about some of the good food around the block. He swung by again today and brought me doughnuts. Who does that? I am 24 years old and he is mid 50s to 60s, but we have a great friendship starting, all because I offered to help him out and LISTENED to his needs. Hope whoever reads enjoys! Tom Harr

@Robert Ellis yep we do these all the time. Reach out and we can work something out!

Hi BP readers,

My name is Tom Harr and I live in Columbus, OH. I wanted to write a quick post about my experience owning a home inspection company and investing in real estate while doing so!

Clearing the air:

Home inspectors are not out to kill your deal. I have heard that stigma many, many times. We are a hired, third party, unbiased overview of the home/building. We are to give the buyer a fully comprehensive report about everything in the home (most people focus on the bad). From listening to about 250 or so podcasts, most investors see home inspectors as the bad guy and someone who is out to get them! While where I am from, there are many poor inspectors, but just as you would a tenant, you should vet who you hire before you do so. 

With that being said, we have a family owned company (me and my dad) and have been in the industry for about 20 years. We have inspected many, many homes for investors and there are good reasons to do an inspection clause. Why?

1. You get an unbiased opinion.

2. You can use that information to go back in your request for remedy and potentially get things fixed. 

3. Many times people will let emotion cloud their judgement. We let you know the good, bad, and ugly of the home. Cut and dry.

4. They are an integral part of a team (until you have looked and worked on hundreds of homes). Once we work with an investor more than 1 or 2 times, they will definitely get our discount because we know they will bring plenty of business. Win-Win. 

Being an investor as well, I understand that it is all about the money, whether it is the repair budget, or cash flow spreadsheet. When I go to look at a home for my personal portfolio, I can easily spot big ticket items that many beginner/intermediate investors may not. For example, asbestos on ductwork, knob and tube wiring, and foundation issues. THESE ISSUES, IF LOOKED OVER WILL KILL YOUR BUDGET.

Am I trying to brag that I can spot these issues, no. Will it help me bargain with off market deals that come across my desk? Absolutely. Many of these distressed owners do not know what these issues look like and with that knowledge you can make a decent deal a great one. 

We work with these lenders such as lima one and large banks and I get to see hundreds of thousands of SOW worksheets and see what areas of town have crazy renovations going on, which is awesome. Tip for those of you using lenders that use third party inspectors: create a relationship with that inspector, send him exactly what you're looking for in your draw, and we will make it a priority to help you out. It sounds pretty basic, but we have people calling us all the time wondering why they didn't get their $20k for things that were not complete. 

I would love to answer any questions as far as home inspections go or how to prepare for them. Just give me a shout.

Pro tip - If you are a flipper or a person looking to sell your place..... Get a pre-listing inspection. It will save you thousands of dollars and potential ruined deals. We will tell you exactly what a buyer's inspector will do, but you will have the knowledge before hand and can take care of it. 

If you want to check out my site I will drop it down below! Thanks to all who take the time to read.

Tom Harr

@Robert Ellis we see a lot of investors spec building - especially in Arlington and around children’s. It’s pretty awesome to see these new massive homes going in, where 100 year homes surround them. People are making massive returns on these!

@Angela Yan thanks for reading! We didn’t stage because we were already behind time and beyond budget so that was one thing we thought would be good to cut out. I think looking forward we may have made a mistake but that’s the beauty of your first deal!

@Andrew P. Been on the market 28 days. Good traffic, just waiting on the right family. But yes it was about $3k a month holding

Hi anyone who takes the time to read this,

My name is Tom and I wanted to talk about my first deal and what the huge take-aways that I learned.

A little bit about myself before I start. I am 23 years old in the Columbus, OH market. My full-time job is my father and I's business, home inspections and real estate inspection services (I would love to post about that another time). We work with many of the BP sponsors as subcontractors, the big one doing draws for Lima One Capital. So, I get to see the progress and the 100s of rehabs going on in Columbus and the SOW work. Once again, great for another post. 

My first full deal was an REO ($427,500 purchase price) and the contractor I had met during work had given us a quote for roughly $100-$120k for reno, with an ARV of $750-800k. So obviously this was something that we jumped in on and were tired of waiting on the sidelines for. I will backtrack and say my uncle is my partner (money mostly) and I am to deal with the day-to-day operations.

We then purchase the property and find out that this contractors quote was for labor only, and not for materials (first quick lesson which we learned quickly). So this bumped our project of 5 bathroom and 7 bedrooms from a $100k renovation to essentially $200k in our heads. To anyone reading this and crunching the numbers... it still made massive sense to us and we were still very optimistic.

The next big lesson learned: MAKE YOUR SOW AS DETAILED AS POSSIBLE. I will stress this to anyone I meet from now on. I saw SOW's every day for my job, whether it was a new build or a flip and thought "how hard could this be to make?" Needless to say, out of the 28-30 week project, my contractor would always find something not in the SOW to charge for. I am even thinking of going as specific as down to the screw next time to show the contractor we mean business.

Third: We are in one of the most affluent neighborhoods in Columbus.. Bexley, OH. I have grown up in my Columbus and everyone knows the area for being very rich. The one other thing that comes with the area is snobbiness. We pulled our comps from one street over and did a detailed analysis (Price per SQ FT and detailed comp work). One street over there were 3200 SQ Ft homes going for $850-900k+ so we were salivating! We modestly priced in $800k ARV (but we both really were thinking $850k). We have the property listed currently at $800k, but we put all of our finishes at the 1 million dollar price point. What I mean is, we put all marble bathrooms in, Sub-Zero and Wolf paneled appliances, which costed an absolute fortune. When we then came to vet who we would use for a realtor and they all came in below (or at $800k). So the shrinking margin began! Expensive materials and labor and a price point at which we did not anticipate. What we learned: Talk to the areas most knowledgeable agent and pick his brain about the value of the finished product (ARV).

Where we are today - The property is listed at $800k, and we are all in about $680k. This sounds amazing and all until you really start to dig in. 6-7% realtor fees.... $50k out the window immediately. Then a (hopeful) profit of $60k..... until taxes! so the best possible outcome is $40k, then split between my partner and I. 

Is it worth the 8-10 months? Absolutely. Am I upset that I spent some of my weekends and late nights on this huge first project for a margin that has shrunk? Sure. 

But what this did was teach me what a podcast or a book can't do, and that is deal with contractors and set me up for massive success here in the future.

Last lesson and maybe the most important I learned: Pay only upon completion.

We set up the draws to be every Friday. I would go in, inspect what the progress had made and take a percentage of the baseline SOW number allocated to that activity. For example, they would demo the bathroom - Guest bathroom gets paid %10 or so that friday. 

DO NOT DO THIS. For many reasons. For a period of time, the contractor got used to his steady check coming in every week. He got comfortable, and was getting some things done. But what he was doing is completing things about 80% and hopping to the next line item until that was 80% and so on. So the retain-age number on each item was low and finishing needed done. This is where thick skin (which I had to learn over the 8 months) and hold money even through the begging and the story telling. It is not my job to pay my contractors payroll, it is his job to complete and my job to pay for completion! Massive difference, and if it weren't for my partner, I would not have learned this. 

There are many other lessons that I learned, but that may make the post too lengthy.

What I am doing from here, is while we have our capital tied up in the project until it sells, I am making my own direct mail database (mostly from driving for dollars) and writing hand written letters. I am trying Click2Mail campaigns, but have not had massive success with them. I am in what some consider the hottest market in the nation, so trying to find these deals are scarce. As I was doing that flip I did partner with my dad on an REO we found that we renovate and now rent for about 25-35% cash return. So I know there are deals, I am trying to hustle to get them!

If anyone wants to check out my project I will drop the link at the end here, please let me know what you think! 

Thanks for taking the time to read this, I am looking forward to try to be more active on here.

https://www.redfin.com/OH/Columbus/2600-Maryland-A...

That is kind of the route I have been trying to go. Do you recommend buying these lists from lead services that provide the addresses for absentees, etc? We are just having a hard time finding the best way to get the addresses of these types of people. Any advice helps. Thanks by the way!