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My good buddy and fellow FlipVIP; Steve Cavanaugh not only runs a great REIA in Southern Maryland, but he also knows a thing or two about rehabbing houses (and he plays a mean guitar). I ran across this great rehabbing tip from Steve on YouTube and I’m gonna post without even asking Steve if its OK, ’cause that’s just how tight we are.

And – even if he said “no”, I still would have done it!

By the way, if you’re looking for a REIA to call home, you really should check out the SOMDREIA

httpv://www.youtube.com/watch?v=m8uNCgxNGVA&feature=sub




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As you all know by now, I’m pretty obsessed with design and layout. I just can not stress the importance of a modern functional layout. Simply put, I believe all my homes sell faster and for more money because I take old houses and make them REALLY shine by giving them modern and open layouts that function exactly the way consumers want houses of today to work.

With bigger kitchens, eat-at bars, master bedrooms with private baths, big closets, family rooms equipped with wiring for media – today’s homebuyer expects these types of amenities even when they are buying houses built 100 years ago.

As I’ve said before, making such vast design changes takes great vision and knowhow. Many of you asked, how I do my drawings? Quite honestly, I don’t do drawings except for my kitchens. In almost every case, kitchens must be professionally designed so that you don’t end up with a room that won’t easily accomodate standard cabinet sizes. In all other cases, my homes come to life from my vision matched with the skill of my contractors.

Last night I came across an online and totally free tool to help you with design and layout. And, even better – you don’t have to be a rocket scientist (is any one actually a rocket scientist anymore) to use it. This thing is easy-peasey.

Its called AutoDesk HomeStyler and again, its free! The link will take you to the Google Chrome store. If you are not using Google Chrome to may be able to go directly to the AutoDesk site to find the tool. I simply added it as an App to Google Chrome and it runs perfectly in my Chrome browser.

Hope you have fun with it! Let me know you thoughts.

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Have you ever wondered what it would be like to get real life practical information from the very best real estate investors in the country. What if you could tap into the collective genius of the VERY BEST short sale tactician, the best whoesaler, rehabber, money guy, etc… How could something like that change your business? What if you could ask them, (pretty much at any given moment), any of the questions that are stopping you from achieving the kind of success you dream of?

I’m gonna drop a little simple truth on ya here. The three greatest barriers to real estate success are:

1. Knowing how to find an endless stream of deals
2. Knowing how to FUND an endless stream of deals
3. Knowing how to turn every one of those deals into cash

If you have all three of those little dilemmas covered, you’re gold. Move on. If not, read on.

I’m begging you, watch this video then TAKE ACTION.

CLICK HERE after watching the video

Want to change your life like I did? You best be clicking this LINK RIGHT HERE

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Its an incestuous little industry; this RE Investing thing. If you’re around long enough and you always do good by others – you get to know the players. I’m lucky enough to know one of the nicest, smartest, and most honest guys in the industry. Becauase his site, ROCKS, many of you may already know JP Moses, and if you do, you  absolutely love him (I must confess, I may have a man-crush on him). If you don’t know JP or his kick-ass site; REITips.com you need to make his site part of your routine.

I’m a huge fan of the movie, “Goodfellas” – and I love the part where Henry Hill explains how the term Goodfella came about. He says, “You know, we always called each other goodfellas. Like you said to, uh, somebody, “You’re gonna like this guy. He’s all right. He’s a good fella. He’s one of us.”

Take it from an old Paisan, – J.P. Moses is one of us. He’s a Goodfella.

Check out his site!

I received an email  a week or so from Brett Neely; a reporter with National Public Radio (NPR). That was pretty astonishing given the fact that my  political views align more with Rush Limbaugh than with most every reporter on NPR.  Brett said he was doing a story on the housing market and while researching, he came across my little blog here on Al Gore’s world wide web.

After a few minutes of chat, Brett asked if he could come hang with me for a few hours.  Anyone who knows me, also knows that regardless of your political views, I “LOVES” to show off my pretty houses. I of course obliged Mr. Neely. The result of our time toegther was a news report filed for radio and for NPR’s blog. Pretty cool, stuff. I’m all tingly just thinking about it.

As a newbie (several years ago) I always dreamed of being featured in a story by the Baltimore Sun. Well, I haven’t reached that goal yet, but this is pretty close.

For those of you interested in hearing what some Americans think of us RE investors, you MUST go immediately to the blog link below and read some of the reader comments. I was fascinated to see all the venom aimed at little ole’ me. Heck, I’m just out there everyday trying to make a better life for my wife and for my kids – and the readers of NPR’s blog think I’m some fat cat who lights my cigars with hundred dollar bills, all while stepping on the necks of the tired masses.

You gotta read this:  NPR Blog Link

The link to the audio is here

I don’t do many driveways, but lately it seems I have purchased more houses in need of driveway repair than in any other time during my illustrious investing career. It’s all about curb appeal right? So when a potential buyer drives up to the house what’s the first thing they’re gonna see? My guess…the house, then the driveway.

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.

The Homebuyer Tax Credit is over and with it – so it seems went the buyers. As you know, purchase contracts had to be ratified by April 30th, 2010. I just wanna talk real quick about the run up to April 30th, then the time just following April 30th – and then today. Also, I really want to get all of your feelings on what’s happening in your town.

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.

I received more comments on my last post than any previous post. Looks like I struck a cord, huh? I could (and should) write a book on how to not get taken by contractors, but before I do, I’ll just share all my info here. Just call me, Mr. Good Karma! So this will be the kick off post; Part One of a series of posts on How To Sucessfully Work With Contractors so that you can (one day) be a Professional FullTime-Rehabber like your old pal; Craig Fuhr.

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.

Its been a very trying past few months. I had a contractor quit while in the midst of 5 jobs, and another contractor quit while working on 1 house. So there’s been many lesson learned and I’m gonna share them with you – ’cause that’s what I do. I share. I play nice. Amongst all the craziness I will tell you that I have remained remarkably calm, which is not a DNA level trait for me. The state of calm is learned, people.

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.

Man, it it a gorgeous spring day in Maryland today. It actually feels like summer. I headed over to house we just flipped on Kipling just to make sure all was still well. It was. The rehab turned out so nice – I just had to shoot a video talking about how the wholesaler made $6500.00 selling us this house.

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.