All Forum Posts by: Trevor Dominique

Just the name of his LLC

Hello BP,

I am seeking some advice on a current situation I am in:

I recently relocated to South Carolina where I purchased a fixer home with the intention of doing a live-in flip or a BRRRR type investment. Several weeks ago, after having my kitchen fully gutted, I was ready for the electrical to be done (new fixtures added, outlets for appliances, etc.)

Being new to SC (I have 6 rental units in Ohio currently), I did not have any relationship with contractors as I do most of the cosmetic work myself. After calling the local electrical companies and struggling to reach anyone, I went to Facebook marketplace and posted that I was in search of a certified electrician to do some minor kitchen electrical work. 

After a handful of people reached out to me, I talked to a man (let's call him Joe) on the phone who told me he was a certified electrician and that he would love to come give me an estimate. He came out to my house and quoted me $1200 for everything I needed done in the kitchen. He seemed knowledgeable and said that I could pull the permit or he could do it for me. Easy peasy.

However, several days later as he got into things, he explained to me how I should consider rewiring the home. Everything he said made sense to me (old wire insulation peeling off among some other things) and that if I wanted  him to do this he would charge me $4800, or $6000 for the entire project (my house is 1000 square feet 2 bed 1 bath). He also told me he thought it would take him 3 full days roughly to complete. 

After thinking about this, I agreed to do the rewire. I agreed to pay 50% up front and 50% after completion of the project and inspection, meaning I paid $3000 up front. He sent me an invoice, but no contract was signed specifying the scope of the work.

The next week when the project was supposed to be complete, I came home from work to find another man working on the electrical. He seemed knowledgeable and kind, but he was NOT certified. He told me he had only known Joe for a couple weeks. This made me uncomfortable. I called Joe to make sure the permit application was filled out, and he said, "My wife is super busy right now, can you submit it yourself?"

I agreed I could fill out the application, but said I would need his info and contractors license number. After asking him through text message for this info maybe 5 times, he told me that he had the application filled out and would drop it off at the city offices. 

Several days later, I called the city to confirm that this was properly done. The city said that no permit application under my address had been submitted. 

I called Joe frustrated, and he said "Oh the guy working for me said you were not worried about it, so I cancelled it." What????

The next day, the guy working for Joe called me, saying that he was not going to continue working because Joe had not paid him anything. I also called Joe on this, and he said the man working for him was just too slow and that he would get him paid the next week.  

That brings me to the present time: The work is nearly done according to Joe (he came out and worked some yesterday while I was visiting family), and I still have no permit application submitted because he won't give me his info. This makes me almost certain that he is not a certified contractor, but just a handyman who is a good lier.

If he is indeed not certified, what is my best course of action? Should I take this to small claims court?

At the end of the day I am 23 and off to a good start in the RE investment world with 6 units in Ohio BUT I may have to learn my lesson about doing my due diligence with contractors the hard way.  

Hello BP,

I am just curious how you guys factor in capital upgrades into your calculations of net income. 

In my calculation for net income, I accrue for tax/interest/insurance to spread these costs over the year so that we have a smooth net income amount to go off of. However, when I complete an upgrade, say a $10,000 roof, how should I expense this? I am currently just assetting the upgrade on our balance sheet and then depreciating the roof over its tax life (27.5 years), meaning we have a depreciation expense for the roof every month. 

I just want to gauge what other people are doing for their calculations. 

Hello,

We are about to close on our first REO property which we purchased to flip, and we are very excited about this deal. We bought the home on auction.com for $46k, which is the same price FMAC bought it for at foreclosure. The home sold for $97k back in 2010, so we are guessing we can sell for over $110k after rehab.

Just driving by the property, it appears that someone is currently living there. I am guessing this is just the former owner who foreclosed and is just living for free until someone tells her to get out. 

My question is, what is the best strategy to get this person out as quick as possible BEFORE we file for an eviction? (cash for keys, etc.)

Hello,

I am 22 years old and me are my partner are starting to think about doing our third deal. 

We have a local investor in our hometown looking to retire and sell his rentals, and we are an interested buyer. 

Particularly, trying to do a seller financed deal is intriguing to us. For our first two deals, we received private loans from a family member, but we probably will not have access to more money moving forward. Thus, I have some general seller financing questions.

1. What general advice do you have when presenting a seller with the option to do a seller financed deal?

2. What interest rate range is typical (very roughly; I know it will vary from market to market) for these deals?

3. Any advice on the term of the deal? 15 year vs 30 year? Or something other time frame?

4. Are most attorneys familiar with this type of deal? I would imagine a decent amount of legal work would have to occur so that the seller has appropriate collateral to make seller financing low risk for them. 

Thanks for the advice!

Hello,

I am a fairly new landlord in Northwest Ohio. We just acquired a triplex, and one of our tenants is concerned of a led paint hazard in her bathroom since some of the paint is beginning to chip. 

I have given her both the EPA pamphlet and the led paint disclosure form, letting her know that we are not aware of any led paint hazards in the unit. 

If she would like it tested for led paint, is that her job to do, or our job?

If it is our jobs, are the cheap test kits you can get at a hardware store a reliable way to test for led, or would we be better hiring a professional inspector (there are not many in our area)? 

Help would be appreciated!

Thanks for the reply Theo. In terms of apartment syndications, we are not trying to keep our money tied up long-term so that when we are ready to pursue our next rental, we can have the funds within a reasonable amount of time. I would say we are looking for 10-14% returns with hard money loans. 

Hello,

I am a new real estate investor, and a currently now co-own 5 units worth of rentals in Northwest Ohio. My partner and I currently have about 100k in funds available, so we would like to test the waters in hard money lending as opposed to just letting that money sit in cash. 

I am looking for any general advice for starting out. What documents do I need to request from my attorney? What resources are best to determine points and interest rates to charge on these loans? Is it reasonable to give hard money loans to flippers who are not within close proximity to me?

Any advice would be appreciated. Thanks!

My partner and I, age 21 and 22, will now have 5 units here shortly once we close on our second deal. 

Our first deal was a duplex in our hometown in Northwest Ohio. The property rents for $920/month and we were able to find a motivated seller and buy for 32.5k. The property clearly needs some work done, roof & windows being the main two, but we know going in that we would have 20-25k to but into the building without feeling like we bought into a mistake deal. 

Second, we are just about to close on a triplex, also in our hometown. Once again, we felt we had a fairly motivated seller. This property was kept in good condition, and the price reflected that, but we were able to negotiate the purchase price down to 124k. Rents amount to about 1750 at the moment, but we feel we can get rents closer to 1900 given the condition of the units and the fact that rents have not been raised in awhile. We do not anticipate any major capital expenditures for this property right off the bat. 

As far as financing goes, I could certainly use some advice from Bigger Pockets. We were able to finance our first two deals with a line of credit agreement we made with a private investor at a very good interest rate. However, we ultimately want to eventually refinance our properties under mortgages so that we can reopen up our private credit line to buy more properties. Given that we have an LLC with two members under age 22, would anyone have any advice on our chances that every bank we go to does not just laugh at us? Will banks maybe give us a mortgage, but require that it be personally backed, making our LLC useless?

I would love to hear some feedback!

I am curious if investors tend to avoid SFH's over a certain price. As I learn more about the Toledo, Ohio market, it seems that a property won't cash flow much anything unless it rents for at least 1.5% of the purchase price. So, for example, a 150k home would need to rent for over 2250. In a place like Toledo, this eliminates 99% of your market. Even for homes listed at 100k, the amount of renters willing to spend 1500 is going to probably be very small.

The only possibility for cash flowing SFH's for me seems to be to find properties that are in the 30-60k range that can be rented for 800-1400 (obviously hard to do).

I guess my main question is, do many buy & hold investors in "average" markets like Toledo avoid properties over a certain price or avoid SFH's altogether and only seek MF properties when relying on cash flow?