Tag: sub2 (6 articles found)

Be Careful Out There

by  Randy King  on  Friday, September 15, 2017

I’m on a safety and protection kick this month, so going to roll with it.  This time, let’s talk more about liability protection for your awesome rehab.  This is especially poignant right now because it’s a little difficult to find general contractors (they’re all booked solid), so the natural instinct is to find anyone that can fog a mirror while operating a worm-drive Skilsaw.

I know, I’ve been there.  It’s frustrating, the clock is ticking on your rehab and you can hear the money flowing out of your pocket into your private lender’s.  Not that you don’t just love your private lender to death, it’s just that you want to get on with the next one and keep things moving, right?

Here’s the potential problem with hiring Ted & Ed’s Most Excellent Carpenters, Inc. for your project.  You may have scored a good new find for your projects, but each and every time that you get a new contractor on your projects, acting as a general or a specific trade, you have to check a couple of things.

First, make sure that YOU write the contract between you and your contractor(s), otherwise the terms will all be in favor of the contractor.  If S/he refuses, hard as it may be, you should walk.  You have not experienced pain as difficult as having your contractor not showing up on your job site because s/he has taken on other jobs along with yours and there’s no contract language.  Tick-tock on that private money.

That’s a whole world of discussion and exploration to talk about contractor agreements; we spend an entire class session discussing it in our REI Blueprint Course.  But the one thing that you must have and must follow-through on is your contractor’s liability insurance or bonding, along with that of the subs.

The best first step to get this assurance is that your agreement makes it clear that your relationship is an arms-length 1099 sub-contractor arrangement, and that no one is your employee.  Then you must act in this manner – you can’t go buy materials and drive them to the job site.  This is a no-no and can constitute an employer-employee relationship if things go bad and lawyers get involved.

Secondly, you need to require (a) proof of Wisconsin licensure as a Dwelling Contractor, and you can check this yourself at the DSPS website at https://app.wi.gov/licensesearch.  You should also require that your contractor provide a copy of his or her liability insurance for your project files.  Make sure that you check the expiration date.

Wisconsin requires that Dwelling Contractors show proof of insurance or file a $25,000 surety bond with the state as proof of financial security.  Your best bet is to require that liability insurance certificate, because a surety bond will not do much good if someone falls off the roof and breaks a leg.  When that happens, people tend to sue everyone in sight, and you need to be protected from that.

This also calls into play how your company is organized and the protections that you have set up, including your own liability insurance.  If you’re in an LLC (typically recommended), be sure that the operating LLC for your rehabs is not the same company that’s holding any rental properties, or they are potentially exposed to reach-through liability if something happens in the rehab company.

As always, I’m not a lawyer or an accountant and, even though I’ve seen them on T.V., I wouldn’t dare advise you on what to do except to tell you to go get a good attorney and accountant to set all this stuff up for your company or companies.

If you’d like to find out more about all this stuff, drop in on our Real Estate Investor Blueprint informational dinner meeting on September 20th where we talk about the topics that we cover.  Go here for information:  REI Blueprint Intro

 

   Currentely rated 5.0 by 1 People

How to Find Hidden Real Estate Bargains Online

by  Nicolas Zepeda  on  Tuesday, September 12, 2017

The internet is full of hidden bargains!  As many as 24% of the real estate market is composed of self-sellers, and you have a 10-23%  chance of finding a property well below market value depending on the seller’s intentions.

Kinds of Properties

There are so many different types of property, its almost like a smorgasbord. It can be a fixer-upper,  foreclosure or just motivated sellers. With a few online strategies and tools, you can tap into the hidden bargains available online. Investors who use the internet wisely can find 100s of real estate deals monthly.

Use the Internet

Why shy away from internet marketing, when there is massive potential and you can get more deals faster than your competitors. Many experienced real estate investors have turned to the internet to find as many real estate deals they can without leaving the office.

Virtual Investing  can become an alternative to building a local real estate investment business in your area. If the market  is not performing in your area, its very easy to use the internet to your advantage  and win over any competition. Imagine what you could do with software that can handle the real estate deal making the process for you?

Make Deals Faster

Imagine that you are finally taking control of your marketing and finding hidden bargains in record time Imagine that you can have systems and software constantly monitoring the internet alerting you for great deals.  Imagine then  that there is software that can help you generate offers via email and fax and follow up agents by SMS text.   Imagine having a full-time income while working only 2 hours per week!

There are many  people already out there using the innovative strategies and technologies that area available to make your more successful faster.  In fact, real estate bargains are all over the internet and you can’t find them all on your own. The right tools can turn any investor’s business into a full-fledged spin to generate massive income. Finding the properties is only one step to making deals faster.

The world of real estate investing will continue to rise for experienced investors. Some of the best are taking over the market with new developments available through consistent marketing. In fact, they’re learning the ropes by paying attention to pros. Hidden real estate bargains will not make it to the list if you can get to the sellers first. Do you want to wait with the others or do you want to steer ahead focused on achieving your goals? You know what you need to do; all you have to do is make that decision today. Change the direction of your business and come to our presentation and Saturday training here is how you can take advantage

Written By: Duncan Wierman

   Be the First to give this Blog Post a 5 Star Rating

Shifting Gears a Little

by  Randy King  on  Tuesday, September 12, 2017

We’ve been talking about safety over the last couple of these little chats, which is under the risk umbrella of “liability”, so I’ll hang here under that cover for a little bit.  First of all, if you’ve got an established entity, probably an LLC, you’ve already started the basic requirements of liability protection.

If you’re touring a vacant OR an occupied property and “something happens”, your first level of defense is going to be your LLC which, by the way, assumes that you are visiting that property as someone doing business in that LLC.  So what kinds of things could possibly happen during a property visit?

Wow, well – any number of things, many of which you may not have caused, or inadvertently so.  Like turning on a light, but the fixture is shorted out and wires heat up and a slow-burning fire begins to smolder,  only to burst out long after you’re gone.  Did you do that?  Well, yeah – but did you cause it?

Or you test a kitchen sink and it’s difficult to turn on the faucet.  Finally, you get it to turn, but no water comes out, so you shut if off again.  However, something broke inside that faucet and long after you’re gone, water starts leaking and eventually turns into a massive flood.  Did you do that?  Cause it?

As you can see, there’s an unlimited number of wacky things that can happen that someone can attribute to your carelessness or neglect, and property owners may be looking for someone to blame.  Now, in these simple examples, homeowner’s insurance should cover it all, but what if there is no insurance, or the property is bank-owned or corporate-owned without that kind of insurance?

Another area of concern with occupied properties or properties that may be in a probate situation is that there may be valuable possessions in the property.  If you are someone that has gone through the property then something turns up missing, you could be called out, questioned, or charged with theft.

So having that LLC protection is a good start, but it may not be enough.  Talk to other investors and ask them about their Business Liability Insurance – who do they use and what kind of policy they have.  It may be something you’ll want to look into.

Over and above these “instruments” of protection, nothing does it better than common sense.  For example, while it may be fun to take friends and family members through properties that you are looking at, if they are not part of your LLC, it may not be a good idea.

And it goes without saying, but I’ll say it anyways – you absolutely need to be above reproach when it comes to integrity and honesty.  It doesn’t matter if the property has been vacant 4 years and all of the owners are long gone, do NOT ever remove a single thing from a property until you own it.  Yes, we often see cool stuff just lying there, but until you own it, it’s still someone else’s stuff.  Period.

If you maintain the highest level of integrity and ethics in your dealings with everyone, whether they are watching or not, your business will be far better off.  And you’ll sleep better knowing that’s how you do things, whether it’s YOU or someone that works for you.  Be safe, be honest.

   Currentely rated 5.0 by 1 People

Danger, Will Robinson!

by  Randy King  on  Friday, September 01, 2017

A select few of you will immediately know that unobscured reference to a favorite television show of the mid-to-late 1960’s called Lost In Space.  The show’s helpful robot was programmed to protect the young man of the family, Will Robinson, from the dangers around in their space travel.

But what if the only space you get lost in is that trashed-out vacant property?  Well, I’m here to tell you that there’s plenty of things to watch out for – plenty of danger – to you and anyone named Will in your party.  Continuing with the thread we started last week, let’s talk about a few more ways you need to be alert and careful when looking at these kinds of properties.

This warning does not generally apply to properties that are inhabited, as any dangers there would likely already be identified and, if not fixed, at least marked somehow.  So, we’ll focus on vacant properties that you may come across in your travels through space.

One of the most prevalent dangers of a vacant property is mold and toxins.  It’s remarkable how fast a property degrades when people leave, and many times this is because when humans move out, critters move in.  Most critters don’t abide by proper bathroom etiquette, so their biological output goes just about anywhere, and frequently everywhere.

When these bad boys and girls move it, they generally don’t knock either – they love chewing through soffit, fascia, or even roofing to get in.  Of course, that kind of damage also lets something else come in quite freely – the rain.  And soaking wet drywall, studs, carpeting, and other building materials are ideal breeding grounds for black mold.

Mold is everywhere, but when it’s allowed to proliferate and grow, it’s starts showing up as dark spots on surfaces.  I once toured a property where one wall by a leaking roof looked like it was wallpapered with black fur.  Yes, that is quite frightening.

You can protect yourself to a large degree from these things by wearing a respirator.  If you get into a property where basic respirator technology is insufficient – get out.  In particular, and this is really important, if you find yourself in a Meth lab property, run – don’t walk – to the nearest exit.  The only remediation for a Meth property is complete demolition and soil-incineration.

In many cases, a particulate nuisance mask like a 3M 8200, cat N95 is sufficient for dusts and light mold if you’re going to be in a property for under 30 minutes.  If the airborne toxins are strong or really offensive, you may want to step up to a cartridge-style unit like the 3M 6191 cat P100 that has two screw-on discs on either side of your face.

Any of these half-face style masks only protect you against inhaled irritants; they will not stop gasses or vapors, and if you encounter a property that would require something serious, you should reconsider even looking at that property.  There are plenty more in better condition, and the costs of repair of such properties may be prohibitive.

The bottom line is simply this: use common sense when walking through vacant properties, and be vigilant for lurking dangers like mold, animal feces, structural problems or that cunning Dr. Smith.

   Currentely rated 5.0 by 1 People

Solid Kitchen Floor Danger

by  Randy King  on  Monday, August 28, 2017

I was looking for something in my old properties folders when I came across a couple of gems that made me smile and, at the same time, made me thankful that no one was killed in the process.  Now, before you think I’m being all dramatic, let me explain what one of these two properties was all about.

This was “back in the day” when most of the properties that we acquired came off the MLS.  Life was so much simpler then.  Banks would foreclose on properties in default, many of which had been long since abandoned, then they would take them back into REO inventory and have a REALTOR list them.

We miss those days of so-called easy pickin’s when banks had no intention of touching the properties, they just wanted them GONE to eliminate the “non-performing asset burden” on their books.  Now there are “programs” and “PMI” and other things that can make holding these assets lucrative.

We all thought it was weird when a bank would come in, strip out carpet, spray everything in sight with a bad flat white paint, carpet the floors, and then list the property at a price as though it was newly remodeled.  It was truly lipstick on a pig in the strongest sense of the word.

So, let’s talk about property 1 – it was pretty trashed and had that special brand of homeowner uniqueness to it – one step up into the living room, one step down into the kitchen, two steps into the main floor bathroom, etc.  You get the idea; an ADA nightmare.

But we noticed something interesting about the kitchen – the floor was rock-solid, but all the surrounding floors (one and two steps up and down) were regular-sounding wooden subfloors.  The kitchen sounded like it was “flat on grade”.

When I got to the basement, I was looking up at the floor joists and noticed a severe sag across all of them in one area, and there were some makeshift timbers stuck in random places to hold up that sag.  Then I realized that this was under the kitchen floor that we thought was so solid.  Really confusing.

After more investigation, I determined that a previous homeowner had poured about a 3” slab of concrete directly on the wooden sub-floor of the kitchen.  He must have been pretty pleased with how solid that floor was, and I wonder at what point the joists started sagging.

It would not take much for that entire sub-structure to collapse under all that weight.  As the joists sag, they pull away from their connection points, either nails or joist hangers, until there’s nothing there to keep them up, then – boom.  Because part of the kitchen was on an outside wall, this could have caused failure of that wall, collapsing all the way to the roof.  If there were people inside, they could have died.

Once I realized this, we carefully got out fast and I reported all of this to the listing agent.  Who knows if anyone ever did anything about it.  And I have no doubt that many other investors toured that property before and maybe after me.  Everyone was at serious risk of death for just walking around.  Just imagine someone thinking the kitchen floor was really cool, then jumping up and down on it to feel the firmness.

So, the take-away is this:  If you’re touring vacant properties, especially those in REO, learn what possible hazards could exist and look for signs of those hazards as you carefully move through the building.  You should have a good familiarity about generally-accepted building practices so you can identify things that are potential life-threatening hazards.

We’ll take some time in later installments to talk about the most common hazards for you to be aware of as you’re touring properties, and as you’re preparing to rehab a property back to usable condition.

   Currentely rated 5.0 by 1 People

Real Estate Investing and Brain Surgery

by  Randy King  on  Friday, August 11, 2017

 

I hate flying.  Not only do my arms get tired, the whole process has become encumbered with ridiculous charges and even more ridiculous assertions – like the fact that 3.5 ounces of shampoo has the potential to bring a Boeing 777-300ER widebody out of the sky and smash 396 passengers into the dirt.  Really.

Sorry for that “arms tired” pun – too much CaddyShack, I guess.  I used to fly so much that I had one of those super frequent flyer special god-like cards that often whisked me into first class.  Trust me, it’s not all that glamorous, flying is just annoying and stressful; even more so now.

So, we drove to North Dakota last week, and the nice thing about a couple of real estate investors driving in the car is that we will often detour through interesting neighborhoods – because we CAN – with a fair amount of ooo’ing and ahhh’ing and the frequent exclamation of “send ‘em a letter”.

It made me think – how much different is real estate investing in Bemidji, Minnesota than in Madison, Wisconsin?  Well not much, but the devil’s in the details.  True, there are distressed properties and, more importantly, distressed owners, and the real estate law is similar, so what’s different?

For one, real estate investing is a contact sport, and what you need to play are lotsa contacts.  From contractors to REALTORs to title company to attorneys to suppliers – all relationships that need to be built and nurtured.  You can come into an area and start from scratch, but it takes time.

It’s one of the reasons in our coaching program that we introduce students to the people they will need to work with.  So, no matter where you are, find someone that can introduce you to the people that you will need.  A reference is 100 times better than cold-calling – on both sides of the equation.

The other thing about real estate being “local” are all the small nuances that you learn when you live and work in an area – the state of the real estate market, local customs, character of neighborhoods, building inspection processes and, of course, where to get the best coffee and tacos.

Where people looking at real estate investing have a disconnect is in knowing what this profession is all about.  True, there’s lots of moving parts and technical aspects related to, say, rehabbing a house.  But we can (and do) teach that over a period of 8 weeks, 3 hours a week.  It’s all the other stuff that matters.

One of my favorite analogies is to liken real estate investors to surgeons.  Not that this stuff is brain surgery by any stretch, but both the surgeon and the real estate investor are practitioners.  The best way to see what I mean is to get on Netflix and watch Grey’s Anatomy from the beginning.

Grey’s interns come out of 4+ years of intensive book-learning in pre-med and full med programs at a university, and they still don’t cut anyone open until they’ve had a LOT of time in the O.R. with an attending surgeon that shows them the nuances to put their book knowledge into practice.

So, don’t focus entirely on the book knowledge – for sure, get some good schoolin’ – but focus more on finding your “attending investor” and let his or her knowledge and experience guide you and help navigate you around the mistakes and pitfalls; some of which can be costly (or cratering).

These things all contribute to the notion that real estate investing is local.  It’s not the houses, it’s not the state of those houses, it’s not the distressed state of owners.  It’s about resources, understanding, developed skills, and the support around you.  If you don’t have that support yet, go find
   Currentely rated 5.0 by 1 People
1 - 6 of 6
© Copyright 2017 Mike Jacka | Powered by: www.RealEstatePromo.com | Contact Us | Admin: Sign In