All Forum Posts by: Thomas Franklin

@Christopher Aguilera In your analysis, you should include Management Fees (10% of the Gross Income, Attorney Fees, and Advertising/ Marketing, to your list of expenses. In addition, you want to obtain the Rent Rolls, for the past 12 months; and at a minimum, the T12 (the last 12 months of Income and Expense). I prefer 24 months. Once you have this data, look for Red Flags such as Property Insurance missing, Property Taxes missing, Management Company Fees missing (if you know one is in place), etc.

Another thing that you want to do is, if there is a Management Company in place call them and try to ascertain if there is any Deferred Maintenance, the current state of the Property’s Condition, and what are the current rents being charged. Being able, to talk with the Property Manager will give you a good feel, for what is going on with the property.

I hope the above information helps you, to confidently move forward.

@Wesley Whitehead I suggest that you use a General Contractor, for your renovations. I would interview, at least three and ask the following questions. In addition, I strongly recommend that you verify all licenses and Insurance Policies.

1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?

2. How many projects is your company currently undertaking?

3. Do you work with Investors that need to adhere to strict timelines and scope of work?

4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?

5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?

6. Are you bonded?

NOTE:

To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.

7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"

8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?

9. Do you pull all necessary permits?

10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)

11. Do you provide all applicable warranties, for materials?

12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?

13. How do you handle dirty work such as debris disposal and clean up?

14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?

15. Would you provide references, from past clients?

@Carissa Meek When I interview General Contractors, I ask the following questions.

1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?

2. How many projects is your company currently undertaking?

3. Do you work with Investors that need to adhere to strict timelines and scope of work?

4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?

5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?

6. Are you bonded?

NOTE:

To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.

7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"

8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?

9. Do you pull all necessary permits?

10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)

11. Do you provide all applicable warranties, for materials?

12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?

13. How do you handle dirty work such as debris disposal and clean up?

14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?

15. Would you provide references, from past clients?

@Christopher Smith Wholesaling in many states is ILLEGAL unless there is intent to purchase, i.e. a Double Closing. For Florida I refer you to Florida Statues 475.42 and 475.43. Many other states have similar language.

@Matt M. For starters, why is there a need, for a markup? Is it for gas, vehicle wear and tear, etc.? If your answer is yes, then you are not running a legitimate business, in the eyes of the IRS and you do not have an EIN because the aforementioned are LEGAL Corporate Business Deductions (at the Federal Income Tax Level, in one form or another, presuming one has a good CPA. From an ethnics and integrity perspective, you are still ripping off your clients whether the markup is 50 cents or Five Dollars. The question that comes to mind is if you are cheating clients, on materials, what else are you clients being cheated out of...workmanship, fraudulent documents, quality of materials, etc.? If you are going to markup your Material Prices, I encourage you to disclose it upfront. I myself would never accept double dipping!

@Hoang Bui If a General Contractor is not willing to itemize, how do you know the work to be performed other than generalizations? Also, by separating labor and materials, you minimize the possibility of a General Contractor marking up material prices. Typically, a General Contractor buys materials wholesale and marks them up without the client knowing. I have renovated hundreds of homes and several large Apartment Buildings. 

This is my third post, in this thread. In the beginning I made several mistakes due to inexperience, poor project management, a lack of initial due diligence, etc. You can accept the lazy way and maybe you will be successful. 

@Hoang Bui The following is a list I highly recommend employing, when interviewing General Contractors. I have created this list, from years of experience. 

1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?

2. How many projects is your company currently undertaking?

3. Do you work with Investors that need to adhere to strict timelines and scope of work?


4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?

5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?


6. Are you bonded?
NOTE:To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.

7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"

8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?

9. Do you pull all necessary permits?


10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)

11. Do you provide all applicable warranties, for materials?

12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?

13. How do you handle dirty work such as debris disposal and clean up?

14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?

15. Would you provide references, from past clients?

@Hoang Bui Your Scope Of Work should be extremely detailed and broken down into each a every task that needs, to be performed such as flooring replacement, a breakdown of what will be done for kitchen remodeling, bathrooms, etc. In addition, timelines, for completion, should be assigned, to every task. Furthermore, materials and labor costs should be separated, for every line item contained, in the Scope Of Work. This will ensure that the General Contractor is not price gouging you on materials. Finally, I would have what I term an “Accountability Clause” included, in your contract. For example, if the General Contractor fails to complete the total project, by the agreed to deadline, for completion, you will deduct x percent, from the Contract Price. If the General Contractor does complete the total project, by the agreed to deadline, for completion, you will pay x percent, as a performance bonus. Finally, you should breakdown the Scope Of Work into phases and pay when each phase is satisfactorily completed and has passed all County and or Municipal Inspections, as applicable.

@George Frye In any Joint Venture, the ultimate goal should be to create a Win-Win Situation. It is important to know and understand the needs, of your Joint Venture Partner. All Vested Parties should feel comfortable and happy, when everyone leaves the Closing Table. Be sure to “Paper Up” meaning everything is in writing, with Ironclad Agreements. If you and your Joint Venture Partner will be forming a Corporate Entity together, you will need to have an Operating Agreement crafted. All documents should be created, by a Real Estate Attorney.

@Maricruz Romero As a seasoned Investor, I propose that you ask the following questions, when seeking a contractor. Even though it costs more, I always use a General Contractor.

1. How many homes have you rehabbed and/ or renovated? What was the magnitude, of your projects?

2. How many projects is your company currently undertaking?

3. Do you work with Investors that need to adhere to strict timelines and scope of work?

4. Do you have multiple Sub Contractors, for similar trade skills, such as plumbers, electricians, flooring crews, painters, etc.?

5. Would you be willing to provide a copy of your GC License, your Certificate of General Liability Insurance, and your Certificate of Workman's Compensation Insurance?

6. Are you bonded?

NOTE:

To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations.

7. Are all of your Sub Contractors Licensed and have Workman's Compensation Insurance? Would your Sub Contractors be willing to provide such information, or would you be willing to sign a waiver stating "All your Sub Contractors have Workman's Compensation Insurance?"

8. Do your Sub Contractors have the ability to verbally communicate, with English Language Only Speakers?

9. Do you pull all necessary permits?

10. Do you provide a written warranty, for all labor? If so, what is the length, of the warranty? (a minimum of 1 year)

11. Do you provide all applicable warranties, for materials?

12. Who is in charge of the job site, to ensure timelines are met and the Scope of Work is properly completed?

13. How do you handle dirty work such as debris disposal and clean up?

14. Would you be willing to receive four draw payments that would correspond to four phases of the rehab project?

15. Would you provide references, from past clients?