All Forum Posts by: Eric Y.

In my area, it depends on my needs:

1) If I need recurring income, I'd go out and purchase 2-3 rental SFH + reno costs on them (this is assuming you're hiring out the work). That should net you ~$1,600-2,000/mo in profit. Then go work a real job somewhere and save up for the next DP/reno for another rental, or use the increased equity from the upgrades in the properties and immediately leverage myself into another cashflowing property (probably not something I personally would do, depends on final numbers and rental market strength). 3 SFH's also require less "customer service" as you'll only have 3 tenants total in freshly updated properties.

2) If I'm just looking to try and make some quick cash, I'd go in for a flip. It's tougher and can be a bit riskier(better be eating ramen for a few months), but your payday comes sooner and you could then repeat or turn it into 3-4 rental properties if you did it correctly. You'll miss out on steady revenue and be taxed harder, but you can roll it into more real estate and avoid a lot of that. 

@Aroldo Villarreal 

That isn't unreasonable. My normal breakdown is a very small deposit (a few hundred tops) to schedule a job--this only changes if the job is starting in a day and has large material costs, but I almost always still break it (on paper) into multiple payments. I know a lot of contractors don't do it that way, but it helps keep everyone on the same page for timeline and progression/milestones. For instance a kitchen job we recently completed had 11 different payouts in the contract. Due to logistics, a lot of the payments were just lumped together (so the customer only actually wrote ~3-4 checks since things like granite and cabinets were completed at the same time). Verbals, unfortunately, don't mean anything. I stay away from verbals because people (this includes me) either don't remember or mishear things too often. I always put an estimated timeframe in my contracts, and we usually come in way under because they're very generous timeframes. I really hate having someone expect me to be done in 2 weeks and it takes 3.5 weeks--every day is painful showing up to work. As far as the penalty goes, you can try it--but as a contract I'd never agree to it. There are too many moving parts at play and it gets too fuzzy. I'm sure you're a stand-up guy, but a lot of people aren't. I would not want them doing things to interfere with the workplace just to put me over on my completion dates--the incentive structure is too far apart and I would never take the risk on that job. On the inverse, if he tells you 4 weeks you can offer a small bonus if they're done in 19 days or something. Again, as a contractor, I'd never count on it because I would just assume if we did bust *** and finish on day 18--I'd have to fix some BS tasks to put me over day 20, so no bonus for extra hours but work got done sooner. Yes, I'm a pessimist--but I've got to protect my company and employees as well. Your best bet is just find someone with a good track record. Sometimes jobs take longer--but there should be a very valid reason for that. If I am redoing your kitchen and we open the walls up to find a bunch of illegal junction boxes buried in there, that will add time to complete that nobody could foresee and it is a very valid reason to add time to the completion date. 

@Adrian Tilley I agree that he should go after him (I know I've lost money going after people just to put the mark on their record and follow through on my promise) but sometimes it just doesn't make sense and really depends on Aroldo's situation. If the total job outstanding is <$500 to get completed, I'd personally say my time + court fees isn't worth it. Yes, it sucks. In the end this is about getting the job done, and for such a small amount outstanding I would be more focused on keeping my project on the rails vs letting some scumbag contractor derail the entire thing (including myself) completely. Someone has to finish the job, and my $ says the contractor won't even show up to small claims--or if he does, he will just agree to finish the work in 1-2 weeks (and then not) to get out of court & monetary fines. 

@Jason Sampson  Didn't see this in time--but would have gladly referred my plumber to you. $1300 replacement seems high, especially out in Aurora. Should have been closer to $800-$900 for a simple replacement (depends where it is located, etc). 

@Michael Herr  I know it is an old thread but I wouldn't be too worried. I do this for a living, and while I *always* use thinset underneath I've actually seen the majority of the guys don't. Their work isn't failing left and right, either. In fact, a friend of mine having a rental done in So Cal asked this question to me ~2 years ago after the contractor had already installed it. So far, 2 years later, it is still fine. So long as they screw it in as often as recommended (thats what those marks are for), you should be okay. Most grouts have a latex additive anyways which will keep them just flexible enough for tiny movement. If the house settles a bit more, you might get some movement--but thinset under the backerboard wouldn't have fixed that. Just re-grout if need be, and I'm sure you'll be fine. 

Also: I'd just hire someone else to finish it or do it yourself. There isn't a ton that can be done. You can take him to small claims, but it'll take forever and you'll be out a few hundred dollars anyways (a hell of a lot more once you count lost rental opportunity/vacancy). If you explain the situation, you can probably find a decent firm to give you a break. Hell, if you were in Denver I'd send a guy out for a day. I know we've done it for customers in the past--it usually ends up as a great deal for both sides. They take care of you and you sing their praises/toss them more work later. Win/win. 

As a contractor some tips I can give you:

1) Any good/reputable contractor will never sign a deal that charges us money for overages. There are just FAR too many unknowns, especially in bigger jobs. Nobody works for free. Also can't forget when the customer changes their mind about "small" things, they all add up. Even if its just changing from one type of trim to another, we will have to go return and purchase something different which takes away time. I always give expected finish dates (and they're usually very generous, time-wise). It is very rare that we go over, but if we do I always log down every decision and how it impacted the job during the course. This way I can inform my clients on the spot that this will add time--and 30 days later after a major rehab, I can remind them why certain tasks took longer. Don't be afraid to ask for certain things in writing. I never have a problem with it (unless it was like a monetary fine or something unrealistic). 

2) Always get a good contract and pay attention to the pay tables. I normally set up "milestones" and amounts, and it has worked very well. You get to see progress (and pay for it), and I get to keep the machine going. You don't want to be lopsided in either direction. A contractor who is still owed $15k of a $22k job while having 95% of it completed will not be happy when you keep making small changes and delaying his payday, nor will a customer who has paid $15k of a $22k job with only 25% completed sleep well at night. 

3) Look for guys that actually have registered LLCs (or businesses) with the state (aka paying taxes), have an actual insurance binder, and have licenses (if needed). The Craigslist guy might say $250 while a real contractor says $500, but only one of them cares about his reputation and business license. I'm not saying you should overpay (some contractor prices are just too high)--but you gotta choose and there is a reason one guy is half. He's either recycling old material, doesn't have any of the proper paperwork (good luck when he breaks something important), or isn't going to actually deliver quality work.  

It is 100% too much for a 15amp circuit. 1500w will pull ~13.5AMPs solo. That's already maxing and stressing the circuit, toss in a few other things plugged in and you're at the limit. The simplest and easiest troubleshooting method is to just try an 800w or 1000w heater and see what happens. I'm surprised the electrician told you that over the phone, sounds like a stand up company. He could have easily come out and charged you a $150 show-up fee to tell you that info (which you may want him to do so he can inform the tenants as a licensed professional). 

The only part that worries me is why its not tripping. Normally I'd say breaker--but since that is brand new, might be some other issue. I'd start with the lower wattage heaters first. 

The population and distance from metro would scare me. A lot. Not only trying to rent out the 2 additional units, what if someone there falls behind/moves out? 

I like to check macroeconomic data and see why people are living/moving to the area. Is there one local company that provides 80% of the jobs there? Retirees? Just things to consider. Remember, you can just as easily have more vacant units vs getting them all rented. 

@Kris Belco I don't want to help you make a "wrong" decision, but I would probably take a shot. They're young and have good jobs lined up so they're going to meet the biggest/toughest criteria: income. Gut feeling absolutely does play a role. I also know that my current market (CO) is very landlord friendly compared to other places I've been (WI / IL) so even if I only ever get the deposit + first month and then we have issues on month 2, I'm well covered financially and can have them forcefully out within 30 days.

Weigh that stuff in, but if you've verified their offers are real and they've been clean since they were here I'd say that would be enough for me. Just like @Andrew S. said, obtaining a work visa in the US is incredibly hard and they've already been weeded through quite a few filters--I know this first hand. Just make sure to explain everything clearly and let them know if the meet conditions X,Y, and Z you won't be bothering them and everyone will be happy.

Denver

To swap a bad water heater for a new standard 40gal gas one (and not having to repair flooring or lines) I would charge about $450-$500. If we have to replace/repair some copper (or ideally install shutoffs at the heater for future easy maintenance) it would bring the cost up a little, but not too much.

Keep in mind that a standard 40gal gas heater should only be costing you/your plumber ~$200-$300.