Part-time or fulltime??? - Posted by John STL

Posted by Ron (MD) on February 08, 2001 at 11:37:15:


I limit my properties to homeowner neighborhoods that are relatively safe.
However, in Baltimore City, the character of the neighborhood often changes
from block to block. As a result, you sometimes have to drive by marginal
blocks to get to your homeowner block. I have never had a safety problem.

The only part of the business that is scary is looking at prospective houses
to purchase. They are usually vacant, and have been for some time. Even
though the front door is almost always locked, you never know who might have
entered from the rear. I enter very gingerly and usually carry pepper
spray. The very worst part is going down into the basement, which is often
pitch black. A flashlight only illuminates so much, and I am always nervous
about who (or what) might be lurking down there. However, I’ve probably
done it a couple hundred times and the worst thing I’ve ever encountered was
a cat.

Having said that, I would not do it if I were a woman. I often drive by
street corners with a handful of young men (putting it nicely) standing
around. I’ve never been bothered, but I wouldn’t let my wife drive down
there. I certainly wouldn’t let her go into an empty house. Even when I go
into these empty houses, I often think it would be nice to have someone
along (preferably bigger and stronger).

Ron Guy

Part-time or fulltime??? - Posted by John STL

Posted by John STL on February 07, 2001 at 12:58:47:

Just wondering how many people are fulltime and part-time??
As a fulltimer are you just constantly looking for deals or do you find some and then digest or are you constantly marketing and buying. As a part-timer do you work only on weekends and at night? Just wanted to have someone kind of explain a day in the life for myself and the other people on the board. Any special scheduling tricks?? I am new but I have read extensively at this site and am currently looking at some deals but just need to pull the trigger>


Re: Part-time or fulltime??? - Posted by Teresa

Posted by Teresa on February 08, 2001 at 24:57:34:

I’m new. I’m on my second deal with 3 more possible. I would say I work part time, but I do not have a full time job, so I do it whenever it’s convenient. I think new people spend a lot more time on the basics because it’s not second nature. But that’s just my opinion.

Re: Part-time or fulltime??? - Posted by Ron (MD)

Posted by Ron (MD) on February 07, 2001 at 19:50:31:


I do rehabs full time. I do about 15 a year and don’t do any of the repair work myself. That means that each month (roughly), I buy one house, oversee the repair of one house, and sell one house. I buy almost all of my fixer-uppers through multiple list, and I don’t make a lot of offers. (I probably only make about 3 offers per accepted offer…I don’t waste a lot of time making low offers on properties clearly over-priced.)

My deals are very cookie-cutter. Most of my rehabs are city townhouses and the remodeling is very similar from house to house. I stop in at each house once a week to make sure all is well. When a house is being remodeled, I generally stop by for 15-20 minutes, three times a week. If you have contractors who have worked for you before, they shouldn’t be difficult to manage. You have to spend more time with a first- or second-time contractor.

I get calls from prospective buyers morning, noon and evening. (I’ve had a few from goofballs after midnight and before 7:00 a.m.) Fielding these calls is not one of my favorite activities. See my post answering someone’s question about worthless realtors.

It sounds very simple and hardly full time. I don’t spend 40 hours per week at it, but close. My hours are very flexible and are scattered from morning to evening almost every day of the week.

I do a fair amount of paperwork…when you own 8 or 9 houses at a time, you spend time each week paying bills and updating your accounting records.

Hopefully that gives you some insight into the life of one rehabber.


Ron Guy

Re: Part-time or fulltime??? - Posted by John STL

Posted by John STL on February 09, 2001 at 14:06:29:

I really appreciate the feedback. Where does most of your work come in to play. Is it the paperwork or answering the calls. How do you make sure you don’t miss any. Do you forward calls to your cellphone?? What city do you operate in? I’m in St. Louis. People like you make this such a great site!!
Thanks John

More On Rehabbing - Posted by WayneMD

Posted by WayneMD on February 08, 2001 at 07:26:58:

Ron – Could you share a few numbers on rehabbing such as average cost and markup percentages. Do you pay cash for all these houses or do you finance them?


Wayne (do I dare give my last name?) Carpenter

A typical rehab deal - Posted by Ron (MD)

Posted by Ron (MD) on February 08, 2001 at 09:00:40:


Here’s a very typical (real) deal:

Purchase price - $22.5
Rehab cost - $21
Misc. costs - $6
Profit/Financing - $23
Re-sale Price – $72.5

I pay cash for my houses. Sometimes I borrow from a line of credit, sometimes I use personal cash reserves, never a mortgage loan with all of the associated costs.

The misc. costs ($6k) shown above do not include realtor commission, which I usually don’t incur. They include: $1.5 (closing costs when I buy), $1.5 (closing costs when I sell), $2 (my contribution toward my buyer’s closing costs), $1 (six months’ property taxes, utilities, and insurance).

These numbers are, as I said, typical for me. Note that my repairs are $21k. My average is probably a bit below $20, but not much. I saw a recent post from Steve Cook who also works in Baltimore. He said that he can make an offer without seeing a townhouse because he factors in $15k for repairs, which he felt was about as much as you could possibly spend in one of these houses. I’ve never seen one of Steve’s finished houses, so he may do the same work I do, but pay $5k less. I can say that I do more and better repairs than most investors (I sometimes go into their completed rehabs…I have a real estate agent license) and mine are done better. I usually tear out radiator heat systems and install ducts, furnace, ac, windows, new electric panel, new kitchen, new bath, new lights, etc. I’ve also been told by realtors and appraisers that mine are a cut above. Some would say that I over-spend. My attitude is that since I’m selling houses at the absolute top dollar that they will appraise for, I should deliver a quality product…especially if I can make $20k on a $45k investment.

This is a project I am currently in the middle of the rehab repairs. The profit is a bit higher than normal. In this case, I went in with a lower offer (this house was listed at $29), expecting to negotiate upward a bit…but the bank took it.

Hope that helps.

Ron Guy

Thank You! - Posted by Wayne L. Carpenter

Posted by Wayne L. Carpenter on February 08, 2001 at 10:29:52:

Your figures are very impressive. What stands out most is that you?re spending more on rehab and miscellaneous costs than on the purchase price. Are you buying in war zones or typical blue collar neighborhoods? And are you carrying the financing? Do you have any difficulty getting such a high price for your remodeled houses if you don?t carry the paper yourself?

I?m in Anne Arundel County and am trying to visualize neighborhoods here and further south in which I could mimic your general operating plan. Glen Burnie comes to mind. Possibly Harundale and parts of Pasadena, although there are no townhouses in the latter two areas. I would like to do a couple of the rehabs myself, just to get back in practice but I am a soon-to-be candidate for by-pass, hence I have to take things a tad on the easy side. Dealing with contractors has never been one of my strong suits, unfortunately. I will work on those skills.

I cannot thank you and the other experienced persons out there for your unbelievably generous sharing of knowledge and contributions to this board. I find it amazing that you are able to do so much work and still have time to coax along wannabes such as me. I hold a few cards of my own and one day will be able to repay your generosity quite well (I hope).



Re: A typical rehab deal - Posted by Brenda

Posted by Brenda on February 08, 2001 at 09:55:12:

Hi Ron,

Applause on your success! What part of Balto. do you work in? I am in western Howard County, and rehabs are hard to find out here, plus the prices are very high. I’m thinking of gravitating toward Baltimore, maybe western Balt. county (Landsdowne, Catonsville etc.) Any suggestions?


I meant to add - Posted by Ron (MD)

Posted by Ron (MD) on February 08, 2001 at 12:01:04:

You asked about selling houses at high prices. In addition to the work being good and the price being supportable by comps, the monthly payment has to be in line with local rents. The house I mentioned elsewhere ($67.5k, $500 cash out of pocket from buyer) will have a monthly payment of about $560, a bargain for my “new” house compared to nearby rentals.

Ron Guy

Re: Thank You! - Posted by Ron (MD)

Posted by Ron (MD) on February 08, 2001 at 11:52:07:


I only work in homeowner neighborhoods where the re-sale price is at least $60k. I don’t even like to drive through war zones.

My repair costs are high relatively to the price of the house. I have a house under contract that I paid $6k for, and put $30k into repairs (plus the misc costs). (The neighbors were very happy to see what we did to this blight on the block.) The sale price is $67.5, so the net will be a bit over $20k.

I don’t carry any of the financing. In Baltimore, and a lot of other places, buyers can borrow money from the city for closing costs and down payments. My buyers can give me a $500 deposit and not take another nickel out of their pocket, unless they get a home inspection (which I always recommend…in writing).

As you may know, Baltimore City has been the subject of a lot of scrutiny lately for abusive lending practices. As a result, appraisers tend to be conservative and, if your buyer is going FHA, HUD looks at the appraisal and loan package very carefully before guaranteeing the loan. This means your selling price has to be supportable by valid comps.

Last fall, when HUD really started cracking down on these deals (i.e., properties owned less than one year and showing a sharp increase in price), I got nervous and held back on buying houses for a month or two. When I saw that my sales were surviving the scrutiny of HUD, I became more comfortable that they wouldn’t be too much of an obstacle. (Remember, I do very good repairs and price my houses at a point that I think will be supportable.) I’ve started aggressively buying and will settle on six houses within the first two months of this year. I’m expecting it to be a very good time to have houses for sale…springtime is coming and interest rates are low.

I don’t know Arundel County, so I can’t comment on that. Managing contractors can be a challenge. When you have good contractors who have done a few jobs for you, it becomes a breeze.

Ron Guy