Cheep LOTS!!!

Rehabbing, Fix and Flip, Rental Properties
21

Jb…

Were really trying to help…

Your not listening… We buy houses for .50 - .60 cents on the dollar for resale wehn going retail typically without much repair required… (cosmetic)

Some examples… picked up house worth 122k on tax rolls… I figure honestly market has pulled back some… probably will market it at 114,900… It needs 3k tops…

Were into for 80k which is the loan balance… and we lookinto shortselling it… so we may end up in it… for I’m bettin’ 70k or less…

What were saying is that if someone buys a house from you and they are in it… for 80k… and they don’t sell it in 30 days… they probably get there clocked cleaned…

What I don’t understand is… If you believe the margins are there… why not market and sell them yourself… Why build the for others…

My uncle taught me alot of years ago… to be the whole cog… not just a piece of it…

This is a game to make good money in… But, it’s also a game where your mistakes can mount up into the tens of thousands quickly…

If you told me you were building them for say 60k… Selling them for 70k… maybe even 75k… if the market was moving… and you had strong buyers… lined up… I’d say that was good plan… You made your 10 -15k… and whoever steps into your shoes… makes 15k… and they could do it quickly, consistently… cool…

But with a 20k spread to start… The folks your selling to… will get burned at some point… Now, maybe you don’t care about that… maybe if you get yours… that’s all that matters…

But, if that’s the case… you want be a wholesale builder long… Or maybe the folks selling only expect to make 5 -8k a house… Yikes…

Whatever it is… Look through the threads… as you are honestly trying to contribute, so are we…

I don’t want folks to have to repeat my many, many mistakes…

David Alexander

22

I Have been quiet but reading on this so far. But do you realize that in a typical rehab where most investors think there is 25 K Profits… they sometimes are lucky to walk away with 10-15K ??? I have only been at this for hmm almost a year and a half, but I have partnered 2 deals with a VERY VERY Experienced rehabber. Our profits on the one we are in now, was supposed to be close to 40 K… due to our general contractor taking 12 weeks OVER Scedual, and nothing I could do about it (Don’t ask LOL Long LONG line of fraud and them not even paying subs) After a 4-5 week job (stated by them) it went to 19 weeks until I let them go. I finished the last few things myself…
I had the foundation done at the start of the job mind you, all the house finished rehab… OH NO!! The foundation settled, and I had not only roof problems (on my NEW Roof mind you) and 18 crackes in my newly rehabbed walls… Ohhh boy…

I had the foundation redone( It was under warrenty) But then had to fix all the sheetrock and cracks myself, repaint ect…

There are MANY unknowns… and buying RIGHT, I am still looking at about 28K profit if I sell soon for the price I am at. Had I started with 15-20K profit ??? I’d be screwed!

JB Sorry but most of your posts sound full of hype, if you could prove me wrong… that’s great!! But I can have a home that has been fire damaged badly redone for 30K… a new home for about 50… and it would resell for 90-100. Anything less and I wouldn’t even give it a second glance. MANY things can go wrong, and we as investors have to look out for that… and plan ahead for it. David… I am with you totally on this one… if it sounds too good to be true… well =)

And JB If you ARE 100 percent different then all the other GC’s I have met, known or worked with… then maybe you are right on the money, but you have to understand most investors are burned by GC’s day in and day out… and it’s something you have to prove before we can believe, due to the trackrecord of most in your business. I will tell you your company name alone scared the hell out of me, thinking you were someone else that was also a GC here… and I have worked with… I had to go to your website to realize you were not them… I Think :slight_smile:

Heather

23

You wrote,
JB Sorry but most of your posts sound full of hype, if you could prove me wrong… that’s great!! But I can have a home that has been fire damaged badly redone for 30K… a new home for about 50… and it would resell for 90-100. Anything less and I wouldn’t even give it a second glance. MANY things can go wrong, and we as investors have to look out for that… and plan ahead for it. David… I am with you totally on this one… if it sounds too good to be true… well =)
My reply
Those numbers come out to be the same as what I said 80 thousand into it and worth 100 when I am done. (and you’ll still have a fire damaged house where mine is brand new.)I have a build on contingency and don’t get my profit till the house sells. I am different than other contractors. If you spoke with my investors the ones I deal with they will tell you “He is not the cheapest, but he does what he say’s” I have done hundreds of rehabs I am telling you. I don’t want you to call me and say hey build me one house this yr. I want you to say hey develop this area for me,( I am in the process of building a community of garden homes in Friendswood TX)

I really feel like I am defending all contractors. Well don’t let the name fool ya. I hate contractors too. I have been ripped off over and over by subs. (promises promises) I know what your saying but like I said don’t just assume I am another “contractor” check out my rep Check my BBB. report check with investor groups in my area Check Me out. If you have time like David to sit around and just be an investor. That is awesome. But most people don’t. If you asked any investor I have ever worked w/ if I did what I promised they would tell you “YES!!!” I work for people who work.
*I have never gone over schedule
*I have never asked for more money than the contract
*I have never left any punch out list.
*I have never been the cheapest.
You cannot hire the cheapest guy in town and say awww why did I get screwed. There are a lot of really good contractors. and there are ALOT of really bad ones you just have to weed them out. I have been saying that over and over. I currently have 12 liens on homes where I was not paid upon completion. I know about getting taken. All were investors that made me promises (to pay me) but that is what investor means (some risk). Check out whoever you do business with. I am not here to convince anyone to hire me. I am here to offer advice. And I am done arguing about the same thing time and time again.
*Every investor I have promised a certain return has made that
*Every new const. has turned at LEAST 10k
*I have NEVER been sued
*I have over 25 investors I actively to work for.
I will not defend any other contractor just myself. If you got taken by anyone (bank, homeowner, contractor, car salesman.) that is not every other person of that professions problem.
Why would you continue to use someone who was over schedule by days let alone weeks?
J.B.

24

Jb…

Why not do the houses yourself…

Make that extra 10k yourself… Would seem like the smart thing to me…

If you believe the numbers are right…

The properties where the liens are… is that because they ran out of time to sell… and had to rent… or owner finance… (or L/O) so, maybe no cash came out at this time…

See, if you told me… I build houses for 80k, turn them over for to you with 4% financing or even a little more… and you have a few years to pay me back… 3 to 5… I’d say sign me up… build me 25… Because then I could owner finance a whole subdivision… and market them before they are built… prescreen etc… they’d be turned over the day were ready… and the profit would be secured…

You make a killing… I’d make a killing… and we’d all be happy…

I’m sure your a good GC… this is not what it’s about… You keep taking this as a slam…

So, maybe you change your business plan… Sell enough houses your self… pocket the extra 10k you say is there… for say about 10 - 20 houses… if that’s after expenses as you say… that’s a 100 - 200k extra a year…

Then do the rest of the houses creating Investments… get enough out to pay your contractors… and finance the rest… Your profit will go up tremendously…

You could do whole subdivisions that way… and make a killing… Or around here… I know builders who do it a different entirely… they build enough houses… to pay for the land… contractors, materials, etc… in a given subdivison… Then they sell them all out… when that’s done… they are left with enough cash to build just one two more houses… Which they build… cash out, build… cash out… So, now everything they do is profit… they arent sitting on a ton of houses with loans and outgoing expenses… They get it all… becuase they profited enough in the beginning… to buy themselves enough money to build one or two more house… so, if they were building 200k houses… and it cost 100k to build… at that point they are getting huge returns on their money… and No expenses…

They are leveraging their profit… Investing… The first phase paid for there living… and made them a profit… the remaining phase they are their own financiers… so, now they build a house… for a 100k… sell it 200k… and profit 100k… And keep reinvesting the original 100k… plus part of the monies from the profit…

Anyway… turn the glass around and look at it a little differently…

David

25

I would love to do just that… but you have to start. I don’t have enough capitol to start. That is why I build for others. I am building up my capitol. But I started out of the U.S.M.C. with nothing but a good work ethic. (and a broke back) so here I am. I will tell you what you loan me the money and I will do exactly what you just said.
J.B.

26

I’m not a lender… Lol… Not a business I want anything to do with… at least in the since of what your thinking…

I’m an Investor /Slash business owner

Start from where your at… figure out how to do the house with none of your own…

I thought that was what you said before… you had financing place at 4%…

Maybe I read it wrong…

David Alexander

27

I am not able to contribute anything to this discussion, but have read it with great interest for the following reason:

What I am interested in is multifamily properties, 2-4 units nothing big, and have noticed two issues. The first is that the price of the properties for sale make for a poor or negative cash flows, especially for a zero down buyer. The second is I am looking for a good spread between the price and the rents. The areas that have good spreads do not seem to have properties for sale, probably for the obvious reason… they are making good returns.

This lead me to begin contemplating buying a lot in the area I desire a property and building it. I figure this has two advantages; I end up with a new property in a good area that I may not have otherwise been able to get into, and the cost of aquisition is cheaper since I feel, (note I used the word “feel” not “know”), like it would be cheaper to build than to buy.

Anyway, I am interested in some feedback from anyone who has gone down this road or knows anything about it. Is this a good idea or a bad idea?

Thanks
Larry Johnson

28

My only input would be that new means easier to rent/sell and you could get something some ware that may otherwise not be available. You can always find a better deal you just may have to look longer than you want, if you have specifics like area.
J.B.

29

If you can find cheap lots that are buildable, why not tie them up and then sell/assign to the guy who sticks a shovel in the ground for a living? In other words, be a developer and not a builder.

Nancy