HORRIBLE rehab advice from LeGrand - Posted by HR
Posted by HR on June 21, 2000 at 07:28:54:
The intention of this post is not to bash Ron LeGrand; the intent is to critique the rehab materials he publishes. Let me also say, before I begin, that I am a huge fan of this site, because it offers a wonderful give and take of ideas and feedback. That for me, means sharing the best of times and the worst of times… and right now I’m in the worst of times. It would be easy to always publishize my successes, but that would not be honest or helpful.
I have profited from rehabs; I’ve made some good money. So, I’m not knocking rehabs. I’m also not ungrateful to LeGrand for getting me started. His rehab module, though, is GROSSLY DEFICIENT, in my opinion, in a few areas. It’s these areas I would like to highlight, and, hopefully, people can offer their own comments. Hopefully, we all will be a little wiser from the discussion.
Ok, let’s list what are, in my opinion, some GROSS DEFICIENCIES, in the LeGrand rehab method (as published in his rehab workbook and tapes).
- HIS INSPECTION PROCESS IS PURE FOLLY!!! LeGrand says to spend more than 15 minutes inspecting a home is to spend 5 minutes too much. Oh man, what a horrible idea this is! I took the time to cost out what a new roof replacement is in my area, to get bids on interior and exterior painting, etc. so I could estimate repairs on rehabs. The problem is, if you are like me and have limited house construction knowledge, there are FAR more things that can be wrong than can be seen. And those things can come back and get you! It’s what you don’t know that you don’t know that comes back and harms you!
Case in point: I’ve got a rehab under contract for 110k, we had the inspection yesterday, and the licensed engineer that did the inspection tore my house a new a-hole. It needs some new sills, some ceiling joists repaired, etc. While this won’t run me a fortune or kill my profit, it is a MAJOR drag. First, it has now shifted the tactical advantage of the negotiations from me to the buyer. Second, I now have to discount the sale or have it fixed, which would cause a temporary cash flow crunch for me. Next, I have to add this to the list of things to get done…
OK, let me admit from the start, I TAKE RESPONSIBILITY FOR THIS! It’s my corporation. It’s my business. It’s my profit. If something is wrong, it ultimately is my fault. After this slamming yesterday, I learned I must personally inspect everything myself because some of the info I was given was blatently wrong (like: everything is ok in the attic. It was a hot day, so I didn’t climb on the shed into the back attic attic access. When I did, yesterday, with the inspector, I was horrified to find old termite damage that harmed roof rafters, etc. Bottom line: it’s my biz, it’s my responsibility…)
I do fault, though, the person who taught me the process I have used for rehabs: LeGrand. His quick inspection method is sheer insanity. What was I thinking? We have older, wooden homes in New Orleans. We have termite, water, settlement damage galore. The notion of doing a quick inspection with a low ball offer is SHEER LUNACY.
See, the problem isn’t that I didn’t buy the place cheap enuf; I did. The problem is that I don’t know home construction well enuf to identify all that needed to be fixed. As a result, on the back end, when the buyer pulls in a deal killer inspector (which I have to assume may be every inspector, even though I know other inspectors would have let much of this go), I’ve got some construction problems to repair that I didn’t even know I had!!!
Anyway, we could go on and on about this. What’s a better method? Myer’s advice of pulling in a licensed inspector at the inspection period and then using that info to build the repair list. Man o man, this is twice I’ve gotten hammered by a licensed inspector, and it ain’t no fun…
LeGrand’s cost estimates are WAY off for my market. Enuf has already been written about that on the NG, so I won’t dwell on it.
He has NO Paperwork for contracts, etc for sub contractors! None. This is like diving into a pool with pirranah. The contracts at least give some psychological advantage over the subs to get them in line somewhat, and LeGrand offers no contracts. unbeliavable.
Let me critique Myer’s for a moment. Myers recommends using a multi-skilled handyman for the rehab work. BAD IDEA. First, good ones are really hard to find, and the ones I have used are good at some things and not as good at others. I’m moving more towards a model that subs out the work to specialists… roof to roofers, tile to tile guys, etc.
Anyway, I have to go meet a section 8 inspector to get a house qualified. What is that going to bring me today? I could go on and on, but this is a start. Since embarking on rehabs as a biz, I’ve had some eye opener experiences, and yesterdays was particularly unpleasant. While it may kill the deal with this buyer, it won’t kill my profit. It does kill my other plans and cash flow activities, though, and it all could have been avoided if I ran my rehab biz differently. Ultimately, the responsibility is mine, but LeGrand (and Myers) are at fault, in my opinion, for suggesting some flawed processes as well.
Just my 2 cents. Let the debates begin!