Just bought first flip! Couple of questions.

Bird Dogs, Wholesaling
1

Hey everyone, just bought my first flip. Oh yay! Couple of questions for you.

It has a ‘natural’ air conditioned wall on one side :slight_smile: any recommendations on security approach, otherwise I’m heading down there with plywood and screws.

I have two bids so far.both wholesale contractor, one v heavily involved with the local REIA. Aside from a) getting a third and b) ensuring that the quote breakdowns are like for like, any further advice? The potential start dates are pretty close, and there’s not much difference in completion duration.

I JUST received the realestate on steroids book, slight blip on ordering as I received a mobile home flip book by mistake :confused:

Purchase $92, ARV 235 - house right next door which is 90% similar to this one (mine has additional niceities) just sold for 230.

Thx loads!

2

Try again. That post made no sense. Avoid euphemisms in describing what you mean. Just say what you mean to say.

Bids for exactly what? Fixing the air conditioner in the wall?

3

Thanks for responding - I’m so sorry for being vague. Here’s the situation. :slight_smile:

Security - what would you suggest?

One of the walls has a hole big enough for someone to get in - apparently people have been found in there before. In addition, the crawl space needs to be secured as the 3 foot door to it is unsecured. I’d be grateful for your thoughts on security. I am considering taking plywood and screws to cover the door until a contractor can secure it for me, but any advice gratefully received. this is a turnover area, so there is a mixed demographic.

Renovation estimates - some background, any specific advice?

On the subject of the renovation, I have two estimates (not bids yet) for the renovation so far, and am soliciting a third. One contractor came in lower than the other, and is very heavily involved with organizers of the local REIA. This was before I wrote up a full SOW, which I’m in the process of creating now. Both contractors knew the property already. I’m anticipating the SOW will allow a full apples-to-apples comparison. I’m creating a Basic list, and an a la carte.

Both contractors who have provided estimates so far can start days after closing, and the length of the reno - based on the content of their current estimates - is similar, around 60 days. I’m planning on completing by end August/beginning of September.

Thanks so much!

4

There’s not much to say, you haven’t asked any specific questions, but I’ll punt and suggest that you plywood over the holes, and screw the door shut to the crawl space, and not store any supplies or tools at the house, unless you have a way of protecting them. A lock isn’t enough.

I’ve had thousands of dollars worth of supplies and tools stolen from houses I was working on, where I locked the house, and came back the next morning and found a break-in.

Since you are hiring contractors, this will be their responsibility.

One last thing, you need an agreement that segregates portions of the work, and allows for payments to the contractor as segments are completed.

Furthermore, you don’t want to pay upfront for materials. If the contractor doesn’t have enough going on, that he’s demanding money up front, you’re probably in front of the wrong contractor.

Anyway again, the job should be segmented, so that when the contractor has completed certain portions of the job he gets paid for that segment completed.

My contracts allows me to hold out 10% of the bid, until my punch-list has been satisfied. This way, the contractor maintains incentive to complete the nuisance work that always shows up at the end of the job.

That’s all I’ve got.

5

Good information, thank you so much, will pass all of this over to the contractor, verify the payment segments, and ensure they have enough to cover materials. Good tip about the punch list/hold back.

I planned to add a completion date into the contract, with a financial penalty each day past completion date, unless the delay is related to any change order. I’m used to adding such provisions to corporate contracts, but flipping is a different paradigm. Would you do this?

6

The contractor should be able to front his own materials costs (withing reason). Of course, it just depends on whom you’re dealing with; the cost/size of the of the job; etc. It also depends on whether the contractor plans to file a preliminary lien (‘prelim’) against your project. In the latter case, he runs the project on his own dime, until you pay him for completed work, and he guarantees payment by partially/totally securing your property.

Yes, I would build in a penalty for failure to perform on time. Every state/region has unique limits and customary percentages for penalties, and I would have no idea what they should be for you. You should discuss this with the contractor. I’ve asked them what I should expect if the project is not done on time. I think any reputable contractor will have those terms included in his contractor’s agreement.

Be sure you read the agreement thoroughly, before you sign. Contractor’s agreements are NOT the same from operator to operator.

So, yes, get a late penalty.

7

You’re awesome. Thank you.

8

There’s also something to be said about rewarding a contractor who finishes early.

In California, there was a heavily-used bridge that needed replacement.

I don’t remember all the details exactly, but Caltrans wanted the bridge completed something like ‘not just yesterday,’ but the ‘day before yesterday.’

The contractor that won the bid, had the shortest schedule, and the cheapest price, but “demanded” $1M a day for every day he completed the job before the deadline. Caltrans said “fine.” Nobody believed it would get done early. Never mind that change orders are the sole profit centers for most of Cal Trans contractors in the first place, and the predictable extended deadlines, you’d expect. I mean, nothing gets done early with Caltrans involved… Pfffttt!

Well, the contractor opened the job, started working everyone over the top of everyone else, ran the job 24/7 for something like six weeks straight, using several crews, using fast-drying concrete, and completed the job more than a month early. He made an additional $30M profit simply by running several 24/7 crews. Now, he could have probably made the same $30M with change orders, but Caltrans wanted a ‘fast bridge’ more than they wanted to change the style and width of guard rails, concrete decoration, or light standard design, or whatever Caltrans is wont to do in the middle of a job.

Which reminds me of another situation…

In an episode of Frasier, Frasier’s dad hired a contractor to fix something minor in the apartment, but the contractor kept finding more and more things that needed immediate repair, and in the process created a mess …on a day that Frasier was supposed to be entertaining a Senator.

Just as the Senator showed up downstairs, the place was still clogged full of construction equipment. Frasier had a melt-down.

Frasier’s dad got an idea, and asked for all the money Frasier and Niles each had in his pockets, and offered all the cash to the contractors to split up, if they could have the apartment cleared and cleaned up before the Senator arrived at the door. Well, they were able to gather up everything and clear out in practically no time at all.

It cost Frasier, Niles (and their dad) something like $800 to get the job done. Never mind this sweaty, fat guy came out of the bathroom just as Frasier was inviting the Senator in the door.

Anyway, there’s something to be said about rewarding work that is completed early. Why not?

9

Hi,

I think the bridge your referring to was the one severely damaged by the 1992 southern California earthquake, the bridge was the I-5 pair of north bound (Damaged at the bridge abutments) and the south bound collapsed completely that was just after cresting the peak after the 14 interchange and  just before entering Newhall Valencia. I believe the bridge contractor was Jeff Kasler (Kasler Corp.) they were the builder of the 405 / 55 interchange there in Costa Mesa. Jeff has now passed and his company was sold to a Washington state company, his son in law owns and operates Ortiz Construction.

They routed traffic for north and south bound I-5 onto the old road and worked 24/7 as this bridge is the only way north and south bound traffic can get in and out of southern California. They made a small fortune on both bridges.

So in your scope of work (SOW) you are specifying your materials and finishes? Have you developed a critical path schedule and determined what happens between day one and finishing the contract? Your contractor should be able to carry material costs until his 1st draw and you should put very little down before that draw! What does the building department want to see or inspect? Do you need permits for this project?

Make sure that the generals scope of work included as part of the contract includes as many items as possible which may be unknowns at the time of starting. It’s in your favor if the agreement includes “All” , “Everything” , “Unknowns Included” , “Inclusive Of” , “Etc”. You want the GC to include these kinds of items which otherwise will come back to you as change orders.

Also make sure things like soils reports, engineering, architectural, etc. are done before putting out your SOW for bids. I believe a bonus for early completion should also include a penalty for late completion, and change orders should be handled by adding man power not extending schedule.

Good luck,

             GR
10

In my scope of work I’m specifying general finishes, ,for example, granite countertop, under sink, plain wHite shaker cabinets, but haven’t gone into somewhere like Lowes for specific makes.

Bonusc for early completion sounds good.

I’m having the paint inside and out tested for lead. It’s a 1920 house. Any advice for this?

Incidentally, I bought the Realestate on Steroids book, but am looking for a recommended book for flipping. Thanks!

I’m not exactly starting small with this one. There is no floor in two rooms - the former main bathroom and the kitchen. I have to construct a kitchen, two bathrooms, a master closet and uncover the fourth fireplace (it has 4 in total), fix the foundation. … and maybe a lick of paint :slight_smile:

11

Hi,

 It sounds like there is time for tea, crumpets, dinner and a snort of brandy in this one.

In a 1920’s home you could have leaded waste connections, asbestos in the roof shingles, insulation, siding, tile squares, adhesive, sheet flooring, plaster or texture / popcorn, duct insulation, pipe insulation, flue pipe insulation, etc. Leaded paint is not a if you have it, it’s whether the city, county, state will allow encapsulation or will require complete removal because of the scope of your remodel.

I have seen homes like this run $25k or more in total remediation costs of hazardous waste removal, then of course heavy costs to rebuild. It could take a week or more to remove hazards and certify air quality.

Sounds like you need an architect and structural / civil engineer for plans and stamping for permits for floors and foundation work.

                     GR
12

Interesting choice of words in your first sentence - do I know you?

I am going to speak to the county to determine what permits are needed.

Most shingles are new,
Siding is wood
All plumbing needs to be replaced, it’s cast iron
No tiling squares
No sheet flooring, all wood
No duct insulation
No pipe insulation - no pipes
No flue pipe

Insulation possible
Textured ceilings possible

Foundation is brick perimeter, and brick piles. The piles are fine, but some of the brick wall foundation perimeter needs to be rebuilt -bricks are loose - and all repointed.

The house next door just sold, and they simply painted everything inside and out. They didn’t mention leaded paint, but I’m not all convinced.