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
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.
There is no lack of Guru-related products on the market hawking the latest greatest system for finding great probate deals. I personally haven’t evaluated any of those products, but I’m sure there is some good info out there.
So what’s a probate? If you are a real estate investor, you should know (if you don’t) that houses previously owned by dead people often represent great deals. I’ll be frank (as if the previous sentence wasn’t frank enough), I don’t do a whole lot of marketing these days. I really don’t have to. But, if you are wholesaler, you’re number one job is to develop a great buyers list, you’re second most important job is to develop great sources for a never-ending stream of deals. Probates can be an excellent source.
I had an astounding revelation when it comes to marketing for probates, and I’m sharing my brilliant twist with you in the short video below. Check out the video and let me know what you think. Am I on to something, here?
When I was but a budding, fresh-faced real estate investor, I couldn’t wait to get off of work, or get up on a Saturday morning to go out to look a bunch of houses. “Driving for Dollars,” is the term most often used – and to this day, I still think its a great way to find distressed properties. Its also a great way to farm your neighborhoods and to find new neighborhoods to invest in.
I would kiss my wife (then fiance’) good-bye, load my pockets with a few of my favorite cigars, stop at the Starbucks for a Vente’ black, and I would just drive. It gave me time to think, time to dream, and time to plan. Most importantly, it got me in touch with what the heck was out there. Hell, if she didn’t call me home – I’d be out there until it got dark.
Learn from my mistakes though. Use your time wisely. Pick a farm area first and know EVERY house in the area. The ONLY way you can do that is to “drive for dollars.” Its all so simple, really.
I don’t really need to do a whole lot of driving for dollars anymore, but as I was driving to my first house this morning I must have seen six or seven houses that jumped out at me. Spring is the VERY best time to find deals. Check the video for why…
From The Washington Post
(Can’t believe they didn’t interview me! I need a better publicist.)
By Ovetta Wiggins
Washington Post Staff Writer
Sunday, April 11, 2010
The house on 29th Street in Mount Rainier is a shambles. Mold and mildew cover the walls. The carpet reeks of urine. A chandelier in the dining room and dingy white curtains in the windows are the only reminders that the house was once a home.
Despite the condition of the house, it is just the type of property that Granzow, his business partner, Patrick Ricker, and other investors have been snatching up in Prince George’s County since the housing bubble burst about three years ago. Granzow and Ricker bought the home on 29th Street a few months ago.
The properties are inexpensive. They are inside the Capital Beltway. And they are in communities where redevelopment projects and new construction are underway.
Granzow and Ricker said their company, Property and Industry Coordinators, has bought and renovated eight homes in the past year. Most of them are in Mount Rainier and Hyattsville. Bright Lusk Properties, a family-owned business in Hyattsville, has bought three since 2008. All are in Hyattsville, one of the Prince George’s communities hit hardest by the foreclosure crisis.
Last year, Prince George’s had 13,412 foreclosure filings, more than any other jurisdiction in the state. A filing could mean that the homeowner received a notice threatening foreclosure or that the property was sold at auction or was repossessed. The county, with 13.8 percent of the state’s housing units, had 31 percent of the state’s foreclosure filings.
Under the circumstances, housing and foreclosure experts said, it is no wonder that investors are eyeing places such as Hyattsville, Mount Rainier and Capitol Heights, communities with older housing stock near the District line.
“These are desirable locations,” said state Del. Doyle L. Niemann (D-Prince George’s), who has sponsored a number of bills dealing with foreclosure in recent years and who prosecutes mortgage fraud as an assistant state’s attorney. “Mount Rainier and Hyattsville are strong and attractive communities to folks, even in the current economic recession.”
Maryland does not track what happens to homes after they go into foreclosure or how many of those homes are bought by investors, said Raymond A. Skinner, state secretary of housing and community development.
But Skinner said it seemed likely that people would be looking for bargains and that many investors would focus on older communities, where the prices are lower and the chances of resale are greater.
Rebekah Lusk, a resident of Hyattsville and a founder of Bright Lusk Properties, said she chose to buy a house in the county’s Lewisdale section because her company wants to be part of the redevelopment effort in the city. All of its properties have been renovated and are being rented out.
“Our goal is to be active investors and be involved in the community,” she said. “We don’t flip. That’s not our goal. We’re not looking to put properties back on the market when there are so many already on the market.”
Niemann said the properties would otherwise become increasingly blighted or would be scooped up by speculators with no ties to the community.
Ricker said that he has made a living brokering real estate deals and investing in new developments — his company’s offices were raided by the FBI in 2008 during a probe of a proposed development near the Greenbelt Metro station — but that he had to refocus when the market dried up.
As he drives his black Cadillac Escalade through Mount Rainier and Hyattsville, he searches for signs of neglect in the neighborhoods. Brown lawns. Weeds. Missing curtains. He is looking for any possible indication that a homeowner is in foreclosure.
“When the bubble burst, I said, ‘Why not buy some of these homes?’ ” he recalled.
Instead of going to auctions, Ricker negotiates with lenders to arrive at an acceptable price.
He bought one house in Brentwood for about $100,000. He gutted it, installed marble countertops in the kitchen, new appliances and new bathroom fixtures, and he transformed attic space into a master bedroom. He said the house will sell for about $300,000.
“The positive is that they are not fly-by-night speculators who want to make a quick buck,” Niemann said. “Yes, they are making a return on their money, but there seems to be a strategy to make the community stronger.”
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.
This is off-topic, I know.
The new iPad is here and as much as I’m a fanboy of all-things-Apple (I would have given a kidney to Steve Jobs), I’m just not sure I see the need to buy one, yet. I dig the form factor and I think its very pretty, but its feature-set wouldn’t make me get rid of my kick-ass MacBook Pro.
Have you checked out the iPad? If so, let’s have some fun. Answer my slick (figured it out myself) survey below!
I’ve been getting a lot questions lately from astonished people, all asking, “How in the Hell can you do 13 rehabs at one time?” Fact is I solely (and with the help of three general contractors), am in the process of flipping 13 houses right now. To be perfectly honest, 5 are on the market and under contract, and I have yet to start on one of the rehabs – but until you collect that paycheck and the money is in your account, you are in fact rehabbing the house.
So how do I do it? Focus, great contractors and a lot of coffee. Sprinkle in a little luck and some pixie dust – and that’s my formula. Seriously though, there is a rhythm and flow to every job. There is a process, and like the Ten Commandments, that process is etched in stone and should never change. If you follow the process, and you stagger your buying, you can easily do 13 rehabs at one time.
Here’s the secret:
When your life is really good or really bad birthday’s can be somewhat melancholy, right? A time of celebration and a time of reflection. This past weekend, I celebrated my 43 birthday. Yes, ladies and gents – I’m middle-aged and I’m having my crisis. No fast cars, or 25 year old bimbos for me, however. I’m just begging for more of the same wave I’m currently riding.
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.
Last week I decided to go out to see my boy Bob Norton in Detroit. He didn’t need my help, but he was doing a bootcamp for some of his students, and some other folks – and I thought, what the heck, why not go have some fun, and hang with Big Bob. We had a blast, but my MacBook Pro did not.
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.