Given the immense and amazing rehabs we do on the inside of the house, how much weight can a crappy driveway really carry in terms of swaying the buyer’s decision? Honestly, I have no idea. I do know however what I like. And, I like a good looking brand new driveway. So if you’re in the Baltimore area, and you need a driveway, a cement deck or sidewalk, pavers….etc… you have to call my man Ernie Stanley of E.S.A. Paving.

See the video below of Ernie’s (but I paid for it) sweet new driveway. The house goes on the market next week so stay tuned for all the pictures and video. Give Ernie a call. He’s a good guy and his crew is phenomenal.

Post from: Craig Fuhr

Hey Baltimore House Flippers.

In Maryland we got crushed in February with two huge and historic snow storms – VERY uncommon for Maryland. Following the blizzards we had record cold, so no melt and NO buyers trying to get out there in all that crap to look at houses. They turned out to be the perfect storms. The pent-up demand coupled with the looming end of the tax credit actually created a buying frenzy, the likes of which we have not seen since the mid-2000’s. We sold 5 houses in less than a week or two on market – and we had multiple offers above list. Thank you Lord, and thank you US Gov for giving us the incredible artificial market.

Following the April 30th deadline things slowed considerably, but after a couple weeks it appeared buyers came to their senses. They figured they missed the deadline, but still could take advantage of historically low rates. At just over 7% unemployment, we’ve not been affected too much by the downturn in the economy in my town, but I think we’re every bit affected as anywhere else in the country by a tremendous lack of consumer confidence. That said, the phones were ringing for showings and following the end of the credit, we got a couple deals under contract in May.

Fast forward to the last 14 days. Much like the entire east coast, we’re under the jackboot of the “dog days of summer.” Its HOT! Real HOT! And folks, I’m here to tell  ya; you can do some sweating in Baltimore when its 98 degrees coupled with 90% humidity. Talk about some “Schweddy Balls.” The result: The phones are dead! I mean, its like the calls just stopped as of about 6 days ago.

What’s going on in your town? I want to hear from you, especially if you’re on the east coast, or if you’re trying to sell houses right now. Chime in.

Post from: Craig Fuhr

Where Are The Buyers?

Let’s begin our journey with what NOT to do.

As an example, let’s say you’ve just purchased a crappy house for $68,000. Because you’re smart, you did your homework and have a pretty good idea that the rehab should cost about $65,000. Comps in the area suggest a back end (ARV) of $215,000. Sounds like a sweet deal, huh? <Shyly> Yeah, its one I just did.

You close on the purchase, and like every rehabber, you’re just busting at the seams to see some dust fly. So you set up a meeting with a contractor. If you’ve been doing this as long as I have, you’ll want to to swing some hammers THAT day! Time is money, right? Hold on there, Speed Racer. First thing you need to do is, get out a fresh pad of legal paper and a shiny new pencil. As you walk through your crappy house, understand (I mean, really internalize) that EVERY rehab no matter how big or small has a rhythm and rhyme. It has a flow. And, you can never go against the flow. Like the Ten Commandments hewn into stone, so is the precise logical workflow of a rehab. Do ya’ hear me? Don’t mess with the flow! You wouldn’t start drywalling before the plumbing was done, right? So, go through each logical step of the flow – and associate each step with a precise cost.

Something like this: demo will cost $7000.00, framing will cost $5500.00, roof $4500, mechanicals $21,000.00, doors & trim; $2500.00, windows… You get the picture, right?

If you follow my directions, at the end of this process, you will have a very basic Scope of Work (SOW). Now, let’s say you’ve decided to let a General Contractor handle the whole process for you, and miraculously, he agrees that you were right – the cost of the rehab will be $65,000.00. The first thing he’ll want is money. Like most greedy penniless bastards, he’ll have the balls to demand 1/3 of that $65,000.00 up front before the first hammer is swung. Get out your calculator. Mine says, “Are You CRAZY? OUCH! Don’t do it! That’s $21,400.00!”

I have a really fancy calculator.

First things first; how about getting something in writing? I’ve never been a fan of a written contract with contractors mainly because I know you can’t take blood from a stone. 99% of these guys have no money, so even if a judge finds them in breach of even the best contract – how do you suppose he’ll make the contractor pay you if the contractor has no money! What I do do (I said, “do do”) is make the basic Scope of Work (from above) into a much more detailed document. This post is not about writing a detailed SOW, so I won’t get into all the gory details here – but know this – once the formal SOW is developed, the contractor then signs it, and it becomes the work blueprint and best contract you’ll ever have.

So you have a signed SOW, and there he is; Mr CON-tractor standing there with his hand out waiting for a super-fat $21,400.00 check. You’re ready right? You’ve got your SOW and you’re swollen checkbook is burning a hole in your pocket. Wait! Hole on! You’re still not ready to go! You can not give him a dime yet. Doing so would be a GRAVE error and would be going against the natural work flow!

Stay tuned. I’m just gettin’ started here. I’ll tell ya more in my next post!

I want to hear what you have to say about Part 1 of How to Successfully Work With Contractors.

Post from: Craig Fuhr

How to Work With Contractors. Part 1

So, sorry for the radio silence on the blog. OK – let’s get to those lessons! When dealing with contractotrs, keep the following ion mind:

I Give You My Word. If a contractor talks too much, promises endlessly and gives you his word – he’s a liar! Don’t trust him. For those of you working in the Baltimore, MD area – take it from your boy Craig; Avoid Joe Chavis of Joe Chavis, LLC. As much as it pains me to say so, Joe is just not a trust worthy guy. If you come across him – read all of the lessons below – and proceed with GREAT caution.

The Money Grabber. Never give money up front. NEVER! Don’t even think about it. Whether dealing with subs, or generals, most contractors will ask for 30% up front. If your job is $10,000 that’s $3 grand. If its $50,000.00 – you’d be shelling out $15,000.00 just to get the ball rolling. While I know it seems crazy – most of us have done this without even blinking an eye.

You wouldn’t pay a heart surgeon before he gave you a new ticker, right? How about a mechanic? Would you pay him for a  new tranny before he put it in your car? Then why – why do we pay freakin’ CON-tractors (notice the “con” as in Con-Man and Con-trary) a dime before they get rolling? Why? My guess; because they have the balls to ask for it! If they didn’t ask, would you offer? Of course not!

If you MUST pay up front – pay ONLY for materials but not for labor.

Tony The Tiger. All contractors – EVERY single one, sooner or later “flake.” NO Contractor is problem free. NONE! Ok, maybe 1% are problem free, but even they “flake.” Knowing that they are all basically ticking time bombs, why then would we offer to give them such large checks before any work is done? But – that is a trap I’ve fallen into many times. If you’re guy is “shit-hot,” and always delivers, ask yourself this – “What if his truck broke down, or his wife left him, or if he got sued, or had a serious emergency?” Who would get paid first? Who would be taken care of first? You or him? And – if his small buffer of savings ran out, how would he use that FAT check you just gave him?

They ALL flake!

Extreme Makeover to Extreme Dud. Be wary of ANY contractor who finishes the demo in a day, then slows down to a grind just after the demo. ANYONE can swing a sledgehammer. A lot of newbies get impressed when they see such a stark change in their rehab in such a short period of time. Again, demo is easy AND cheap. Any gorilla can do it. Don’t be impressed.

The Artist. Some of these guys think they are Picasso. They’ll make you believe that good work takes time. Bullshit! The VERY best drywallers I know are also the fastest drywallers I know. Same goes for painters, trim guys, plumbers…and right on down the line. These guys make money by being good AND fast. You can’t make money in this business by being a quality supplier only. The best guys are stacked with jobs because they deliver quality and speed. Stay away from Picasso!

Quick Draw McGraw. Every job begins with a great scope of work and a draw schedule that clearly defines how the money will be paid once that work is complete. When you’re doing one rehab or ten, its so easy to get away from the scope and draw as long as you see progress. But folks – the Empire State Building was not completed in record time and on budget by straying from the blueprint. A well-defined scope and draw are your precise blueprints for success.

Unscrupulous contractors have learned to manipulate the draw when they start to get behind. Here’s how it works; You don’t follow the rules above and you pay the contractor some money up front. He uses up that money for his growing crack habit – and now he can’t afford to pay for your interior and exterior doors – but maybe his tile guy owes him some money. So, instead of following the draw he does some tile work – then asks, “Hey can I get that money for the tile?”

Your answer should be, “Yup! As soon as you give me those doors!” See, they have to sign off on the scope and draw, and the more you hold that up in their face – the less they have to argue about. Stick closely to your blueprints for success and use every opportunity to point them out to your contractors.

The Partner. This is one of my favorites! Contractors for all their issues are NOT stupid. And, it doesn’t take a brain surgeon to do a little digging to surmise what we investors must be making in profit on these deals. I’ve actually run into guys that felt entitled to a share of the profits. The shift in their demeanor will be subtle, and it usually happens after you’ve done your 2nd or 3rd deal with the same guy.

Here are the signs: The contractor will start to slow down a bit while getting chummy at the same time. Maybe over lunch he’ll say, “Damn – I envy you Craig.” or, “I’ve always wanted to do what you do.”

Then, he’ll say – “Hey Craig, how much did you pay for that house?” or “I saw that you sold that house for $____ dollars – that’s CRAZY!”

Trust me – its happening folks. You’ll think he’s happy for you, but you’re contractor is wondering why he made $5000.00 while you made $50,000.00. At that precise moment, you need to nip it in the bud. Tell him YOU are the investor and that he is the contractor. Period! If he wants a partnership, he needs to put up the money. Period!

Good luck. Follow all of the above, and you’ll be on your way to conquering your contractor issues.

Post from: Craig Fuhr

Getting My Zen On & Contractor Lessons.

Even if you don’t have deals, I can tell you where to look. If you do have deals and you need to flip them fast, I can tell you that NO ONE has more cash then me, and NO ONE pays bigger wholesale fees.

Check the video and hit me with some comments, people!

NOTE: In the video I say I paid $6500.00 to the wholesaler. That is incorrect, I paid $65000.00 for another deal. I paid a $2500.00 fee for Kipling. Just keeping it real.

Post from: Craig Fuhr

Sell Your Wholesale Deals to A REAL Investor.

Life is pretty good these days, but it hasn’t always been this good. I savor each day. Less than 15 years ago I owned a bar in Baltimore City. At that time I was on top of the world. Business was great and the money was rolling in. I knew that I was destined to be an entrepreneur. Unfortunately, things didn’t work out with my partner – and I was forced to sell my 1/2 of the business. The sale sparked an almost 5 year turnaround marked with a seemingly endless death spiral of cascading debt, endless calls from bill collectors, horrible credit – and worst of all – depression and a complete lack of focus on my “next” destiny.

It really is amusing now, but I actually tried my hand at all of the following before becoming a full-time RE investor; mortgage loan officer, fine-wine sales, liquor store manager, desktop-support, server support, IT security – and finally RE investor. From a monetary standpoint, the jobs in IT were admittedly much better than the others, but I gotta be honest, I hated every one of those “in between” jobs.

Most who know me know that this was a VERY dark and depressing time in my life. Why do I tell you this? I tell you because I want you to know that its never too late to make a 180 degree shift in your life. If you hate the road your on, make a change! It may be a slow change, but if you never start, you’ll never finish.

At 43, and back on top of the world, I’m melancholy (at times) in knowing that so much of my early adulthood was spent in desperate search of something. And now that I’ve found all that I was searching for; my wife, my beautiful children and my dream-like “job” – I’m so sorry that it did not happen sooner.

I don’t wallow in melancholy, though.

So, Happy Birthday to me! Get out there and find what you love.

Post from: Craig Fuhr

Its My Birthday. Another Year.

Sorry for not posting lately…

…but my “brain” was severly damaged on the way back from Detroit. “Hey, F’ers in baggage, take it easy when chucking those bags!!”

So I get on this 20 minute flight from Philly to BWI, and the flight attendant says, “Sorry Sir, this plane is way too small to fit your carry-on.” With that, she takes my bag, and I don’t see it until I get off the plane.

The next morning, all bleary eyed from my mad-dash with Bobby, I open up my Mac and the LCD is shattered!  Yeah, that’s $1240.00 bucks people! Nice huh? And did I mention that U.S. Sc’Airways is giving me the cold shoulder?

Anyway, check out this video of me having fun, Commando-Style in Dirtty-troit. This is what Bad-Ass investors do. And if I was a bad-ass investor, I would do it more often. By the way, that is REAL blood in the end.

Post from: Craig Fuhr

Objects May Have Shifted in Flight

I used to think all these people were so much different than me; so put-together, so firmly resolved, so on track. During lengthy conversations, my thoughts inevitably drifted to inner-doubts and questions regarding my own ability to succeed like them. My inner voice would say, “Gees, I’ll never get there because….,” or “If only I could be that lucky.”

Tell me if the following rings true with you.

I knew I could reach their level of success, but I didn’t really believe it. Like a snowball rolling downhill, my disbelief then generated layers upon layers of doubt and excuses. With the doubt then came reflex-like changes in my focus. I was a ship without a rudder. Every time I met a successful investor; each with their own niche, I then tried (and failed) to become that guy.

That is some SUPER-dangerous thinking, people. If you don’t truly believe in yourself and have 100% resolve in your personal definition of success, you’ll always be modeling yourself after the next successful person you meet. Meaning, success as you’ve defined it, will essentially become success as they’ve defined it. And when the inevitable frustration comes as you don’t quickly reach the bar they’ve reached, rather than that of which you’ve set for you, you’ll always make excuses for not, “getting there.” Like a ship without a rudder, you’ll blow with the wind to the next niche.

Making excuses for failure is so much easier than
constantly striving for success.
(I just made that up. Damn I’m good!)

That’s some pretty convoluted stuff, so I’ve broken it all down for you in a little video. Ever wonder why some people reach their goals and some don’t? The true answer is in the 5 minute video below.

Post from: Craig Fuhr

Video Tip: Are You A Crap-Magnet?

Maryland, for whatever reason, seems to be a hotbed for Real Estate Investment Clubs. Perhaps its the ever-hot market, perhaps we just have a lot of budding entrepreneurs – or maybe, we just have a lot of guys who are tired of doing deals, and they want to teach. Whatever the case, I know of at least TWELVE REIA’s in our little-tiny state.

Here’s the list I came up with, but I’m sure its not exhaustive:

Baltimore REIA
DCREIA.COM
Mid Atlantic Real Estate Investors Assoc
Capital Area REIA
Washington DC Metro REIA
Washington REIA Network
District REIA
Beltway Breakfast Club no website only an email address
Maryland Real Estate Exchange Network
Young Investors Club of Crofton no website only an email address
DMV REIA
Hub City REIA
The Real Deal

Are you kidding me? Do you get it? If so, shout it out!

Let me explain. In the past, REIA’s for the most part started out rather innocently. A small group, or even a single guy would get an idea to share his idea’s, tips, failures and successes with other like minded folks. Doing so would enable each to hold-up each other and therefore all would be more successful more quickly. Get it?

That was then. Let’s fast forward to a year or so ago, and allow me (the grizzled veteran) to pull back the curtain for ya. I hope this doesn’t shatter your view of humanity.

REIA’s, my little newbie pals, are nothing more than incubators for dollars. By in large they are now set-up to bring in newbies who hopefully have fat wallets. Think about it. Do you honestly think every organization above is run by charitable people who are all simply giving of their time and money just for the betterment of others? C’mon!!!!

The Guru comes to town, making his pitch.

Most REIA meetings start with a open forum where attendees can pitch a deal, or business. Then a the featured speaker gets up, fires up the crowd about a particular investment topic, tells you just enough to get you all foamy about making an easy bazillion, then says, “I just don’t have enough time tonight to go into all the details, but my whole system of books and tapes is for sale right now in the back of the room,” and, “I’ll be here on Saturday doing a morning workshop where I’ll speak in depth about how to make that bazillion.” That meeting will cost…..dollars.

And before the guy steps down from the podium, the newbs are already reaching for their wallets.

The speaker makes a killing…..but wait…..he only makes 1/2 a killing. Guess who makes the other 1/2? You guessed it. The REIA!

Now don’t get me wrong, I’m all about the free-flow of good info. And I even think that you should pay a price for knowledge.

Problem is, most info Guru’s have figured out how to make far more selling their stuff online rather than doing a dog-and-pony show at every REIA all over the fruited plain. That has left the REIA’s in search of new ideas to make profits.

The new profit center for REIA’s:  Education and Mentoring.

Today, REIA leaders see themselves in a different, yet much more lucrative light. They see themselves as that of a teacher or mentor. Now, ANYONE with any level of success (or failure) can start a REIA. If I wanted to, I bet I could have 50 attendees at my first REIA meeting.

REIA’s are now in the business of mentoring and deal partnering. Most make no bones about it. They say, “Go find the deal, put up the money, and we’ll help you….for 50% of the profit.”

That’s not so horrible, actually. But you have to ask – who am I getting into bed with? Does this person have an extensive track record of success in THIS market as well as in previous markets? Can they illustrate real proof? Can they show me a track record? And, most importantly, are they in this for my success as well as theirs, or are they in it for a fast buck?

I dare any REIA leader reading this post to tell me I am wrong. Do your research. Look into the each of the Maryland REIA above. I guarantee that most if not all offer mentoring services.

Here’s my call to you.

If you have a deal, and you need to wholesale it quick – I urge you to contact me. I’ll make you a sweet wholesale fee, and I won’t jerk you around. On the partnering front: I get so many requests to partner on deals and to mentor others. Let me just say -  if you want to partner on a deal, shoot me all the details. Under the right circumstances, I’ll think about it.

Post from: Craig Fuhr

REIA’s in Maryland.

So how about a recap?

House Number 1: I told you all how I lost my buyer for the house in Glen Burnie. Like a little lamb; so demure – the buyer waited until day number 30 of the contract to let us know that she wasn’t interested in buying the house, then she had the unmitigated gull to ask for her deposit. We were obviously forced to re-list the property. I did on so on last Thursday night; Mrach 4th. By Saturday we had 5 showings, and one week later; this Thursday evening, we had two VERY solid “above asking price” contracts. We accepted one, ratified it, and we’re on our way (again) to settlement.

And to you; Miss Cold Feet – I want to extend my sincerest and warmest thanks for not buying our home. Thanks to your complete lack of integrity, I will make an additional $10,000.00. Not bad for a week’s work.

House Number 2: Our cute little rehab in Parkville went on the market last Saturday, March 6th. I don’t normally put houses on the market on a Saturday, but in this case, I thought, “F-it”, I’m gonna go for it. By Monday morning we had several showings, and by Wednesday, I had a fully ratified contract for $5,000 above asking price. Mmmmm….can ya feel it? God, I love when the stars align and a plan comes together. I knew Craig Fuhr-style house would go fast, but I never dreamed that we would have such a huge amount of interest in such a short period of time

House Number 3: My crowing glory and my greatest rehab yet in Hamilton went on the market on March 5th. I really struggled on pricing the beast. I originally put it on the market at $225,000, then, in a Sybil-moment, I immediately reduced it to $216,000. Man, I slept rough that night. The next morning I got on the phone with my partner, Bob Norton – and he affirmed my gut instinct that I should have left the price at $225,000. I immediately increased the asking price back to $225,000. Its a roller-coaster, Baby! Keep your hands in the car until it comes to a complete stop and, Enjoy The Ride.

It was a good thing I did make the change, as we had two competing contracts by the end of this week. One was full price with $10K Seller-help, the other was full-price with no seller help. Which one do you think we accepted? C’mon, just shout it out! No need to raise your hand.

So what’s the moral of the story:

1.  My real estate investment formula works well.

2.  The buyers are out there people! At times this week, it felt like 2004 again. I know I do incredible houses, I know I do them in places where people want to live, and I know I price them right – but damn – multiple showings in one day? Multiple offers and above asking? The buyers are out there. If you have rehabs, you better get ‘em on the market soon!

Post from: Craig Fuhr

The Real Estate Market in Maryland