I am disappointed. But at the same time, I applaud the guy’s honesty. He says he’s stressed out. He’ll finish the job, but he doesn’t want to do another one.
Flips are stressful! The first real flip we did in 2014 burned through three contractors (see previous blog posts on that drama: http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-7-flipping-avoca and http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-8-house-flipping-reality-not-reality-show)
The guy we used this time around was much more of a pro. He was incorporated, had done quite a few other jobs, was an investor in his own right. But he ran into problems that caused the renovation to run 60 days past due. The New Jersey-based investor backing our flip is upset, and that lead to a lot of pressure and late nights. The flip was a bigger job than our contractor thought, and no one knew until he got the plaster off the walls just how big a job it would be. He had unreliable laborers on his crew and ended up doing much of the work himself. That’s not his fault. But then again it isn’t ours, either.
So now we’re back at square one, looking for a good contractor to work with us on flips. But a little smarter this time. How can we prevent this from happening again? Communication, first and foremost. Our guy thought he was doing the valiant thing, not putting in change orders when he discovered it was a bigger job. But all that did was lead to resentment and burn-out on his part, and it left our New Jersey investor wondering why the job was 60 days late. All along he thought everything was fine!
I’m sorry we won’t be working with our contractor again. He did good work! But losing him will not stop us from building our business. Now we know better what to look for in the next contractor. Now we know better how to manage the next contractor’s expectations.
We know how to better manage our investors’ expectations, too. If your contractor tells you a flip will take two months to complete, have a plan in place in case it takes four. Make sure your numbers still work at four months. Thankfully, ours do. I’m just a little concerned about the home buying season. Although our first flip closed pretty much on Christmas Day!
I’m hoping this one closes well before then. I could use a little success this quarter! All in all, I am happy with the nearly finished product. Let me walk you through it:
We also leveled the yard – it was hilly and overgrown, unusable as an outdoor space. I regret we won’t have time to grow in a lawn, but we will spread some grass seed. At least now it’s a nice flat space one could imagine putting in a patio, or a swingset, or an above ground swimming pool.
We also added a half-bath and laundry room to the space.
So there it is. 99% done – our most recent flip. The buyers who saw it this morning are professional painters by trade and pointed out some imperfection in the edging. Hopefully our guy will fix that. It’s on the market for $118,000. Fully remodeled, with new roof, windows, electrical and plumbing systems.
One thing we will NOT do this time is panic if it doesn’t sell right away and rent it. It’s a great house in a desirable school district. Somebody will buy it.
The rental portion of our business is undergoing some serious renovations. Literally. We found ourselves having to remodel several units that tenants left in various states of disarray. That is a whole other blog in itself, perhaps next week!
I’m not exactly sure what happened to Luzerne County, but it seems like the vast majority of people looking to rent are those you wouldn’t want living on the same street as one of your units let alone in them! The more I reach out to other landlords online the more I realize this isn’t just a problem with Luzerne County. It’s people in general. They are more entitled than ever – especially the ones on government programs! (See my earlier posts: http://thisgingerjustsnapped.weebly.com/blog/do-you-accept-section-8 and http://thisgingerjustsnapped.weebly.com/blog/more-things-you-should-know-about-government-rent-programs)
Bottom line: it’s going to take us longer to find the kind of tenants we actually want living in our investment properties. We’re going to have to do renovations and upgrades to attract them. And when we find someone we’re okay with renting to we’re going to lay out some clear rules at the very beginning.
Never before have we had this many empty units! We’ve found suitable tenants for the half-doubles we had available, applications have been submitted and approved, deposits put down. Our biggest challenge is going to be renting the empty apartments in the two six unit buildings. The tenants who moved out left messes – not just of the apartments themselves, but the common areas and the exterior spaces. The government teat-suckers we just evicted from West River St. actually left a diaper on the front lawn. Who does that?
I want to class these buildings up. Barney St. will always be a blue collar building, but it can still be nice and solid and garbage-free. West River could be a high-end residence if we poured some money into landscaping and security. Now that Wilkes-Barre is moving forward from its One Strike ordinance I don’t feel as uneasy about spending money on these properties.
Now I just have to find some money…