Tricks of the Trade

General Real Estate Investing
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Here’s a quick list of things I’ve learned over the years buying and selling homes…

NEVER give advance money to a contractor. Buy the materials yourself. Have them delivered to the job site and explain to your contractor that if he misses ONE DAY without calling you, don’t come back because there will be another guy here finishing his job. It sounds tough but let me assure you, these guys know who they can push around and who they can’t. I don’t get pushed around.

Never pay a contractor until the job is COMPLETELY FINISHED. Once they have their money you become a very low priority. If you still have $3000 of their money it’s AMAZING how fast they return to your job to fix things.

Once the job is complete always PAY your contractors QUICKLY. They will LOVE you for this. You will become a preferred customer and will be treated as such.

It is FAR cheaper to pay 4 guy’s to work on your home at once than YOU trying to do each of these jobs yourself. My days of painting, laying hardwood floors, and tile are OVER. 4 Guys can blow those jobs out in less than 1 week, vs. my 5 weeks.

New cabinet doors can make a crappy looking kitchen look like a $20,000 kitchen for $500.

Paint is GOLD, but make sure you have someone who can pick colors for you. We all like to think we have good taste, WE DON’T. Don’t believe me? Break out your year book. You actually tought that green tux looked good! Pay people to pick out your colors who know what the hell they’re going. IT IS THE BEST MONEY I SPEND ON REHABS. PERIOD. Make sure they pick the tile and carpet colors too.

NEVER sign a listing agreement over 90 days!!! NEVER EVER!! Agents will bitch about this, but I tell them it’s a deal breaker. You need more than 90 days, I need a new realtor. Remember, you should be pricing your homes VERY aggressively in this market. If it looks great, is priced great, a 6 year old should be able to sell it. NEVER VIOLATE THIS RULE!

Details sell homes. I put built in book shelves and hardwood floors in all my rehabs. There is nothing that gets a buyer excited like a nicely built set of book/TV shelves with cabinets below them and a window seat in the middle. It costs me $500 and about 2 days to build and paint them gloss white. When the buyer see’s them with the new hardwoods it’s a knock out punch. I know for a fact it has sold my last 5 homes. People LOVE them because NO ONE does them anymore.

Don’t buy homes that need to be completely rebuilt. There are much easier projects out there. And always remember, you can only see about HALF the problems in a home that needs MAJOR work. The other half will present themselves as you try and fix the stuff you can see.

DO NOT rehab a home to YOUR standards. You want to sell it and MAKE MONEY. Putting in Brazilian Cherry floors at $8/sq. ft is not going to get you one dime more for that house over $2.50/ sq. ft. oak. You also don’t need to make the home new. If you leave some money on the table most buyers can live with a blue tub. Or better yet have in resurfaced (painted) for a quarter of the rip out price.

Bring your finished home to market cheaper than anything comparable in the area.

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Everything that you said fdjake said is golden. When you watch those flip this shack shows on TV, they always pull out the cabinets. You usually can’t buy cabinets as good as what comes in these houses. They are usually solid wood just in bad shape. Redo the fronts and put new doors on them and you get a better product at less cost.

I paint all my interiors the same color that I buy by the gross in 5 gallon pails from a paint store (not Lowes or Home Depot Sherwin Williams type store). I use the color China Doll it is fancy enough that trendy people like it, it is light enough to not shrink the room, but it is not white.

My contractors sometimes are very good with their tools but not with the pen. When I ask for bids (always try to get at least 3 bids) I have a contract that I use. I fill in what I want done, and give the contractor the form and tell him to put a price on it. That way they all bid the same thing. That takes into account one guy bidding painting the house and the other bidding only power washing it or one guy bidding replacing the internal doors that have holes in them and another guy bidding patching the holes. It levels the playing field and makes sure I don’t get a contractor bidding low and making it up on change orders.

That idea about the built in cabinets is a killer idea, do you do the work yourself, or have your contractor build them?

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awesome thread…

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I do them myself. It keeps my hands in the trade end of the business and I enjoy the cabinet work. Any decent carpenter can do them for you. Just draw out what you want so they understand it. Once you build one set it’s a joke repeating the process.

I think your contract idea is one of the best I’ve ever heard. The key to dealing with these guys is doing the thinking for them. When you let them start thinking that’s when problems start.

As far as those kitchen cabinets go Bluemoon again hits the nail on the head. Half the cabinets I put new doors on are custom built (1960’s era) Birch plywood cabinets. Get some prices on birch plywood, it’ll make your hair stand up. Why rip that down to replace it with particle board boxes. I use www.lakesidemoulding.com for all my cabinet doors.
Their web site is beautiful. All you need to do is fill out the door measurements online and pay with a credit card. 1 week later your new cabinet doors arrive. The last house I did had an old birch plywood kitchen, ugly as hell, but built like a brick sh*thouse. Ordered 22 doors and 4 draw fronts from lakeside in MDF raised panel,

Total charge…

$324 :shocked

Painted everything a nice gloss white, new hinges, knobs, $30 worth of primed pine crown moulding for the wall cabinets, and new formica. BOOM instant $20,000 kitchen for $700.

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Yo fdjake! Since reading your post a few weeks ago I started looking harder at kitchen cabinets. You know what I found?? I found that your exactly right! We have painted kitchen cabinets before, but on a few of our houses that had bad kitchen doors we gutted the whole damn thing! Spent around $3,000 for new cabinets and c tops. Well, we have looked at about 20 houses in the last few days and have found 4-5 of them needed only the doors replaced and the cabinets painted. Talk about a time and money saver. Instead of paying $3,000 we figured out we could cut that to about $750 or so buying new kitchen cabinet doors and having somebody replace the c tops and paint. Thanks for the tip my friend! Your check is in the mail! :biggrin

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Jared,

The best part is all that money goes right in your pocket! Not to mention your turning a 3 to 5 day job into a one day project.

I pull those old doors off, throw away the hinges. I always keep one hinge so I can match up the mounting holes when I buy new ones, this way you don’t even have to drill new holes in the frames. Next prime the frames with a latex primer/sealer. Then paint. When your doors arrive I mount my new hinges on the boxes and transfer those hinge locations to my new doors. Drill and pre-fit BEFORE painting the new doors. Then a quick coat of latex primer and later the same day a finish coat of paint. All that’s left is attaching the new doors to their hinges.

I can do the entire job in about 8 hours total time. Use a small foam roller to paint and you can just fly! Most of the time I break the job up into 2 days to allow for drying time. I can not tell you how much a simple 2 1/2" piece of crown moulding adds to the finished look of these cabinets. Try it on your next project. I guarentee you’ll be blown away. Best part… for a typical ranch house kitchen your looking at $20 for the crown. Paint it the cabinet color and it’ll look like a million dollars!

If anyone here is intimidated by crown moulding DON’T be. It’s candy.
There’s some new jigs on the market that make it fool proof. Check out the video at…

www.easycoper.com

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Not to mention what you might find UNDER the tub that might cost you even more.