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• Your expectations may not be the same as the expectations of others.  You may be a bit more demanding than others.  Ask the subcontractor to show you a place where they have done work before.  Verify their quality of work with those who have hired them.
• NEVER pay for labor in advance; an honest contractor should not make that demand.  I will buy the material or pay for it in advance, however.
• Pay them every Friday for what was done during the week, or when the work is complete.  I always pay immediately when a job is done.  Cash flow is important for any small business and they are more likely to help you out and go the extra mile when they know you will follow through with your end of the bargain.
• When contractors quote a job, make sure the quote is based on a specific list of things to do on which you both agreed.  If additional work becomes necessary along the way, COMMUNICATE!
• Don’t let them leave a mess.  Communicate ahead of time what level of clean-up you expect from them after the job is done.  When plumbers and electricians need to open up a wall or a ceiling, communicate with your carpenter and dry-wall person to make sure they do not create more of a mess than what it’s worth.  (One more electrical outlet may not be worth ripping open an entire wall).
• Treat them with respect and seek their input, even if you make the final call on things.  You do not want mindless robots; you want partners who enjoy working for and with you.  People love to share their experience and their knowledge. Let them!

Since I live in a small town, word goes around fast and people are concerned about their reputations; however, if you are new to an area, it might not be so easy to find reputable help.  Let GoHuman help you to connect.

• Make it ready to move in.  A lot of home buyers will not consider a house that they do not see themselves moving into as-is.  Help them to envision themselves in the house.
  • Kitchen and bathrooms must be clean and in good repair.  Tile or high quality vinyl are good floor choices.  A dishwasher is almost a must and it won’t cost you that much more if you have a new kitchen.  The 24-inch cabinet may cost you $125 and a dishwasher $250.
  • My bathrooms always have white towels over the towel racks, a soap bar on the vanity sink, toilet paper on the holder and a shower curtain that pops.  The smaller the bathroom, the more important the quality of the vanity and fixtures.   Make sure the vanity is not too small to look cheap and not too big to make the bathroom look small.  Spending just a little extra for a nice vanity, mirror and lights will go a long way in making the bathroom inviting.
  • All rooms should have new paint (or paint that looks new).  Especially in older homes, it is a good idea to use a technique called “knock-down” which gives the walls a texture and covers a multitude of sins (imperfections).  It looks sharp, too.  Use light, neutral colors.  Get rid of all wallpaper; they are just not popular and you need to go with what the majority of potential buyers will like.
  • Avoid carpet.  If the carpet was still good when you bought the house, have it professionally cleaned.
  • Switches and outlets.  They are cheap and should all look new. (no paint on them).  They all should have the same color, ideally white.
  • Registers often look rusty and dirty.  They are just $6-$8 per piece and look so much better when new.

Enjoy the process, and if you don’t have a good feel for colors or for decorating, find a friend who does. They usually love to provide their input.

In my next blog, I will be discussing sub-contractors. As luck would have it, GoHuman can help you to find the right ones.

1. You do not want to have any of your own money invested in the properties. Otherwise, the number of homes you can buy is limited by the amount of money you have.
2. You never buy a property for more than what you can borrow.  Most banks lend up to 80% of the appraised value, some a bit higher.  A good rule to set is to never spend more than 80% of the market value for an investment property.  That includes the purchase and the fix-up.  This way you can finance 100% of what you have in it.
3. The 80% a bank will finance applies to either the purchase price or the appraised value, whichever is lower.  So, if you buy a $100,000 house for $80,000, the bank will only finance $64,000.  Here is how you can get all the $80,000 you want from the bank:
1. You buy and fix up the property using cash. There are three ways to get that cash:
1. You have that much available yourself in savings.
2. You have a line of credit (such as a home equity line of credit on your home).
3. You have a cash partner.  This person is a good friend or relative in whom you can trust (and they in you). You get a short term loan from them to purchase and fix up the property. Be generous in your terms. My partners get a one-time 5% loan origination fee, then I pay them 10% annual interest starting the 2nd month, until I refinance.
2. Once you have the property in your name, you can refinance.  When you refinance, the bank will only go by the appraised value and will not look at what you actually put into the property.  This allows you to take money out at the front end
4. Find a partner!  If you reached your financing limit with the banks because your debt-to-income ratio is too high or your credit score too low, you can again partner with somebody who has no time to devote to real estate investing, but would love to get in on the game.  For example, you could link up with a professional who has good credit; he or she can get the loan for the property and you can split the cash flow while you lease it and the profit when it sells.

A word of caution when using partners: put everything in writing and review your agreements together to ensure there is good communication.  But as my father, who was a contract lawyer, said:  “The best contract is worthless, if there is no trust.”  So make sure there is mutual trust when you seek an investment partnership.

In this blog I want to share a potential mutual solution for both frustrated home seekers and fed-up landlords.  It’s called Rent-to-Own, and it’s a real estate investment model that has worked well for me and several of my friends over the years.

The benefits of Rent-to-Own for renters:

• They can become homeowners if they have income, but poor or no credit.
• If something changes and they need to move out, there are no penalties, and no effect on their credit rating.
• They can lock in a purchase price to protect themselves against rising housing prices.
• They can renegotiate the purchase price when the market goes down.
• It is great for small business owners as renting vs. paying down a mortgage is good for their debt-to-income ratio.

The benefits to investors:

• They will get renters with an owner mentality vs. a renter mentality.
• They can typically ask for full-market or slightly above market price, as there is not much competition for homes that can be rented with the option to purchase.
• When providing the rent-to-own option, homes typically move much faster than ordinary sales. My own experience (and that of some of my friends) is that homes that may normally stay on the market for 6 months can move in 1 to 2 months.
• The renter takes care of maintenance and repairs, minimizing the time and energy required to manage a property. (No phone calls Saturday night at 11 o’clock complaining about a clogged toilet).
• In some states like Tennessee, the income is considered passive and therefore not subject to corporate income tax, if you have an LLC that is owned by your family. (See your lawyer/accountant for details or your state’s appropriate tax form: TN Tax form FAE 183.)

If you like the sound of these benefits, stay tuned, as we’ll explore how this all works in more detail in future blogs. In the meantime, check out the Real Estate section on GoHuman.com (update to your zip code)!

But what about the little guys, the small business owners, the kind of folks who make up the heart of the GoHuman community? Is it okay for them to be greedy, because their greed may not cause quite as much harm? Or because they are only greedy for thousands — rather than for millions or billions?

It’s helpful to consider these kinds of questions, because the motives which drive us to become entrepreneurs have a strong influence on how we conduct our businesses. Many people take pride in what they do and in our culture that is seen as positive. I must admit that pride motivates a lot of people to do good things. But pride can also motivate people to do bad things because pride – at its core – is a selfish motive, just as greed is a selfish motive. I believe that greed is actually based on pride. Pride leads people to want to be number one, just for the sake of being number one. Whom does that serve? It serves the self, and our own ego.

If we are motivated by pride, it can have several negative consequences on our business. Pride tends to rob us of our objectivity. For example: When customers complain about our service, we become defensive instead of realistically looking at what we could improve. This kind of pride is focused on superficial concerns, and it does not create loyal customers, but rather hurts the bottom line.

Alternately, when the motive is a genuine desire to serve the customer, we strive to do our best for them. We put pride aside and and avoid cutting corners or cheating in any way, even when the customer does not realize it. This kind of give-rather-than-get approach, when done in a smart and thoughtful way, will pay dividends for both our business and our customers. By de-emphasizing pride and greed at the local level, we can build a better community than what the big shots in the financial centers and capitals of this world have created.