Hi,
CHECKING OUT THE HOUSE-
One thing you might be able to do is ask the realtor if you can leave a deposit for the key to the house. Just tell them you want to do some estimating for about 30 minuets or an hour, they should co-operate. Here in NC I’ve found most homes have lock boxes on the doors. Once a realtor knows your an investor and trust you they will give you the code to the box to get the key, then you can spend as much time as you like looking, just don’t damage anything in anyway, even if you intend to fix it later. In other words… don’t rip off a couple shingles to see how many layers there are, thats a bad move!
DRAWS-
Say you got four walls to paint, each wall represents 20% of the project.
Say well thats only 80%, wheres the other 20%? Its it the final touch up work. Say you painted one wall this week, you got three walls left to paint. If the contract stated you could recieve a draw every friday (payment for a portion of the work done) then the work will be inspected to determine what percentage of the overall job has been done in order for you to collect a draw. The inspection reveals you have painted one wall and you are eligible to be paid the 20% that wall represents. Usually the terms in the contract depending on the size of the contracted project will be more like " After 25% of the work is done we will pay you 20% draw of the contract price. Sometimes really large commercial contractors will give draws every 2 weeks on a certian day just like a regular pay check. Its all subject to negotiation before a contract is written and alot depands on who is financing the project. Draws are very common and normal.
Yes, if your doing the real estate investing deal and you want to fix up homes and resell them then you’d better know, how…how long…and whats it going to cost to get it done, who’s going to fix what…in what way, when and why.
It always cost more to try and fix something you don’t know how to fix and then wind up paying someone to come behind you and fix something you made worse, just have it done right the first time, you can experiment on your own home to learn how to do things, not a home where investors are going to be watching your every move. You need to get it done right and quick so you can move this house, pay your investors and find another deal, thus raising your credibility and borrowing power. Anytime you are relying on investors to finance your deals, they are your first priority. A happy investor is a long term investor. Deals will come and go but investors can make everything happen for you. Remember…no dough…no go! Learn as you go but you can’t learn it all at once or you will start going in circles and stay exhuasted and stressed the whole time, thus creating a negitive and doubtful attitude and bringing down your confidence level and pretty soon the whole thing has lost its excitement and is now a huge drag.
If you have a hard money investor, sometimes they will want to inspect the work to make sure it is done properly and that the work is astheticly pleasing, in other words, it looks like a job well done! They have an investment here, they are trying to protect that investment. I know it sounds like a hassle and extra expense but this also protects you because if the work doesn’t pass inspection…the contractor doesn’t get paid until it meets the practicle building standards that were agreed upon earlier in a signed contract before the work begins. Whatever is in the contract must be done to exact detail and extra work orders must be written and approved by the contractor and all parties involved before doing the extra work. I know it sounds like a lot of extra hassle and…why can’t we just talk about it and then do it without all the paperwork? Well, because people forget things, people don’t understand and comprehend all conversations in the same context, get it all in detailed writing and everyone knows what to expect. Remember…the more details in a contract means more ways to win in court if it ever should wind up there.
The investors will probley have a release form for the contractors to sign…meaning they have been paid in full or either a certian percentage, this is so once the contractor has signed the release form…he releases all claims of money owed from the property, this is so a contractor cannot come back later and say he is owed money and put a lien on the property in which the house cannot be sold until he is paid off or the matter is reconciled between the two parties or by a court.
Other work like plumbing, electrical, framing, roofing all have to meet certian building codes and standards. say you build 4 walls, on three you use 30 two by fours each, which is the building standard, you can’t say… I want to save money so I’ll just use 20 two by fours for the same size wall 4, it is not the stanard and it will not pass the local building codes. You wouldn’t want to do electrical work if your not familiar with it, if the house burns down from fualty wiring you can be held liable for damages or maybe even a crime even if its years later. When you hire someone to do work for you never pay them in advance and never pay them 50% when only 40% of the work is finished, alot of times they won’t return to finish the job if you get a less than professional company. Usually most professional companies will not ask for any payment until the job is completed for your inspection, then full payment is made to them upon passing inspection. I have had companies that have had to return because of unsatisfactory work or something didn’t pass the inspection of standard building codes. Sometimes there are honest mistakes made by workers, contractors even inspectors. When you haven’t paid the contractor for the work it is much easier to get them to correct problems especially if you can re-inspect it quick and pay the contractor as soon as possible. You got a professional job done and usually a workmanship warranty is provided by the contractor (good for you). The contractor got paid a good wage fairly quick (good for him) and he is willing to do more work later down the road, maybe for a better price next time? (good for you) You’ve increased the value of the property (good for you). You can sleep at night (good for you).
One thing your gonna have to know about buying fix up real estate is how to price repairs quickly and effeciently.
First as I go through the house I take pictures, video sometimes.
I always carry a pen and a small pad and make 2 or 3 pages of notes as I go through the home listing everything I see or any ideas I come up with along the way. Sometimes if you don’t have time to write notes a small tape recorder is very helpful to make voice notes. It comes in very handy if you have alot of measurements to take for repair work…its hard to measure and write at the same time. My voice recorder has a necklace, I just put it around my neck and measure while talking the measurements into the recorder.
After you get where your using your own money to buy houses you can do anything you want to it, take as long as you want to do whatever without paying the high interest to the investors or partners because its your money!
Good Luck!