All Forum Posts by: Christopher Tyler Hughes

@Daniel Guerra I think @JD Martin did a good job explaining why it's risky to pay up front. Every good contractor has lines of credit/supply house credit accounts etc. 

The key is drawing up a detailed scope of work along with a draw schedule when you meet each contractor. It shows your professionalism, and that you know what you're doing. 

Even with new contractors, I do not pay up front costs. If they take issue with that, we shake hands and move on. I hired 3 new subs on my last rehab and never paid anything upfront. However, I alwaysprovide detailed SOW, lay out my expectations, and establish a draw schedule. It makes the contractor comfortable that they are dealing with a professional.

One great way I've found people is through local Facebook groups (Local Small Business Groups &  Local Buy/Sell/Trade groups). You'll be amazed by how many contacts you get. You can also use Angie's List, Craigslist, & referrals from local investors...but Facebook groups are one of my favorite options!

One you find a good contractor, ask them who they recommend for certain work items. They seem to always have good contacts. My main carpenter has referred me to electricians/roofers and other contractors that I still use today. 

Good luck!

@Daniel Guerra

How much of a downpayment are they asking for? Are they asking enough to just cover materials or more? Is it a General Contractor or are you subbing each job out yourself?

I do not pay contractors up front...been burned before. I've found that most good contractors have reserves to front their materials. But it's all relative to the size of the job. If they have to buy $5,000 in materials, it's fair for them to ask for a deposit. However, it's a problem if a contractor can't afford $200 in materials. 

I personally sub each line item out to different crews, so each contractor doesn't have a huge investment that they have to make in materials. I also buy all finishing material (paint/floors/cabinets/fixtures/etc). 

It depends on how you are handling materials and how you are subbing out the work. Be careful paying too much up front especially with guys you don't know/trust.

@Philipp Grajewski This is a question I hear a lot and the answer depends on who you ask and your risk tolerance. My first investment I had to put 20% down on the purchase, and that was all the money I had. Halfway through the rehab, a $5,000 unexpected expense occurred, which forced me to do a lot more work on the property than I had anticipated. It was a tough 3 months, because I had zero liquidity, however I turned a $45,000 profit on the deal. 

Now.... I was 24 years, not married, no kids, and working a job that didn't make much money. So in my mind, I didn't have much to lose. It was an easy decision for me, but your situation may be different. 

I don't think there is a "rule of thumb" when you start... at some point you just gotta jump in. I wouldn't necessarily recommend doing what I did, but if you have some reserves and a good deal approaches, don't let it slip away. 

Think about how much money you could be walking away from because you were concerned about being at that right number for reserves! Good luck man!

Hello Everyone,

I'm sure this question has been asked multiple times, but I need advice on building business credit. Before starting my real estate business several months ago I had an excellent credit score, and we used my personal lines of credit to finance our rehab costs on our properties since we were limited on cash.

It's been great for us, b/c we didn't use up much capital and its left us cash to buy more. We have been successful so far, HOWEVER my personal credit has been severely damaged in the process, due to constantly asking for credit increases and almost maxing out my cards while on a project.

I don't mind using my credit cards for rehabs at all, but at the same time I would like to get my credit score to something respectable again. Now that we actually have cash in our business account, we are looking to open up a business line of credit.

Any advice on how to get started opening a business line of credit?? Where should I start? Any advice would be appreciated. Thanks everyone!

Hello Everyone,

I'm sure this question has been asked multiple times, but I need advice on building business credit. Before starting my real estate business several months ago I had an excellent credit score, and we used my personal lines of credit to finance our rehab costs on our properties since we were limited on cash.

It's been great for us, b/c we didn't use up much capital and its left us cash to buy more. We have been successful so far, HOWEVER my personal credit has been severely damaged in the process, due to constantly asking for credit increases and almost maxing out my cards while on a project.

I don't mind using my credit cards for rehabs at all, but at the same time I would like to get my credit score to something respectable again. Now that we actually have cash in our business account, we are looking to open up a business line of credit.

 Any advice on how to get started opening a business line of credit?? Any advice would be appreciated. Thanks everyone!

Hey everyone!

I found a potential hot deal from my marketing efforts on a property, but I have some questions on how I should proceed. Here is the situation:

The seller had relocated for a job out of state and wants to get out of paying two mortgages. He had listed the property a year ago with a realtor and had no luck (priced it high), and now he is just ready to get out of what he owes.

I had to offer significantly less that what he owed (around 15K less), and he is considering my offer right now. I'm not sure if a short sale is possible, because he probably will not be able to show any kind of hardship. He makes great money, and there is a ton of equity in the house. How would the process go if my offer was accepted?

The thought of taking over payments also crossed my mind, but it makes the deal less attractive. I've also done some reading on how that process can be a pain. What are the pros and cons of this? Any input will be appreciated!

Thank you everyone! Very excited to get started!

Hello everyone!

My name is Tyler Hughes, and I am a recent college graduate from North Georgia right outside of Chattanooga, TN. I have started and own a real estate company that focuses on wholesaling & rehabbing properties around the North Georgia/Chattanooga, TN area. We are fairly new, and are excited to make our mark in REI!

I look forward to being involved with Bigger Pockets and learning from other investors apart of this organization. We are excited to connect with other investors around the area, and lenders who love to earn a great return on their money!