# Dealing with real estate investors



## inmo (Feb 27, 2010)

Greetings everyone,

I am a GC. We do just mostly residential Kitchen, bath, and basement remodels, home repair, maintainance and repair.

I was wondering if there are any contractors out there who can offer some advice when dealing with real estate investors. I have done some work with them over the years and always feel like I end up working for next to nothing. I understand these guys are out to make a buck but so am I. How can I work for them and still be profitable? In my experience I find it almost impossible. 

Recently painted the entire interior of a house for a investor friend of mine. I' have done some work with in the past but I never felt like I was getting ahead with him. He likes to pay on a time and material basis and always insist on paying cost for materials.

He recently purchased an abandoned 3 bedroom, 2 bath, 1175 sq. ft. ranch home foreclosure that was really rough. The job was to be done on a time and material basis at his request. The house was a wreck and I did A LOT more than just paint. 

I ended up using about 30 gallons of coatings to get this job done. Most of the house required a prime coat plus two coats of high quality paint. I used a good primer, SW Super Paint for the walls, BM Murasco ceiling paint, and several gallons of SW Pro Classic Aklyd for doors & trim. 

We prepped the walls and washed all the trim down with TSP before we started. I patched holes as needed and part of the kitchen ceiling from water damage. 

I had to remove the wallpaper in the main foyer and main hallway. The walls were so rough behind the paper I had to apply several coats of mud to make it smooth. I ended up using about 5 gallons mud to finish the walls.

I removed and replaced 6 interior doors with hardware. I removed the appliances, replaced light fixtures, and a whole host of odds and ends, repairs, debris removal, and repairs. Plus I hauled all our debris out of there.

There was water in the basement so there was mold everywhere. I didn't have to clean the mold but they left the drywall in tact after they cleaned it. I primed and painted x(2) the entire finished area of the basement. I painted the walls, another bathroom, and floors of the unfinished side of the basement as well.

When I got done the place looked like a million bucks. The owner stopped by and said the place look absolutely great!

Long story short I billed the him $7,100 for labor and $1,500 for materials. He about had a cow! 

I on the other hand thought that was a reasonable price considering the amount of time it took to prime and paint everything several times and all the other extras we did. 

He's willing to let this one go as a fluke but expects me to paint any future homes a lot cheaper. He thought I should have done that job for around $4000 including materials. I told him he was crazy. 

Turns out he really does like my work a lot. He told me that he would like to use me more often but can't pay that kind of price to paint a house again. 

He asked me to estimate the cost on another house he bought. Again on a time and material basis. I agreed. They wanted a 4 bedroom 2 bath 1814 sq. ft. 9 room+ ranch home with a 850 sq, ft basement to be painted from top to bottom. The walls on the main level were cocoa brown to be painted in linen white. Two rooms were painted top to bottom with scenery's. Clouds, sky trees, etc. One of those rooms also had wall paper that needed to be removed and all of the ceilings are heavily textured. The basement was white with a grid drop ceiling but they wanted the floor painted. 

I calculated that I would need to coat about 8000 sq. ft of surfaces up to two coats in order to complete the job to my satisfaction. Once again I was probably looking at about 30 gallons of coatings in order to complete the job.

I gave him an estimate for $5,600 for labor and $1,250 for materials. 

Yep! You guessed it! He had another cow! 

He told me he had another house up the street that he got painted for $3,100 including materials. Of course that one didn't have a basement, they didn't paint the ceiling, and it was a 3 bedroom 2 bath 6 room ranch that was about 1514 sq. ft. 

We got to haggling and he told me he thought the other guy would paint this one for about the same. Once again I told him I thought he was crazy. I told him he should hire him instead. 

After going back and forth we agreed and settled on using the same dark cocoa color to paint the walls in one pass, skip the ceilings and skip the basement. I told him that would get him more in line with what he wants price wise but I also told him it won't look as good as the other house I did for him. 

Fact is he wants a diamond finish for a blow and go price. It seems like I can never work profitably with investors. If work wasn't slow I really wouldn't bother but right now I have no choice. He acts like I'm making him broke just as he heading out on that Caribbean vacation. I on the other hand haven't had a real vacation in years, I'm in debt up to my ears and my kid needs braces. I'm about at my wits end!

If anyone has some advice on how to survive with a investor I would really appreciate it.


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## C.M.J. (Feb 20, 2010)

This guy sounds exactly like a guy I'm dealing with now. I'll be starting a project on Monday for him that consists of a lot of little things that will add up. I've come to the decision that in the future I will give him my price and he can take it or leave it. If I have learned one thing on this forum it is that I can stay at home on the couch and make no money easier then working for someone and losing money. Another thing I've learned is to stick to my guns and not waffle back and forth on price and/or quality. 

As far as dealing with my guy, the secret is to do small jobs under $500 for him and he's good to go. It's when the jobs get over a $1000 that he starts to cry poor. Good luck.


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## greg24k (May 19, 2007)

You need to separate the two Investor and Friend, they cannot fit in the same pair of shoes. Investor is looking to get it done as cheap as possible to make as much as possible and Friend is looking for you to do him a favor which is at Cost...That is why you cannot get ahead and always working next to nothing.


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## inmo (Feb 27, 2010)

I appreciate your comments. I tell him all the time it wouldn't hurt my feelings in the least if he hired someone else cheaper. Business is business. Its nothing personal but we each have to do whats best for our companies. I have tried to work with other investors in the area and it always seems to end up with the same ole, "thats way too much".

I'd like to know if there are any other contractors out there that have found a way to make it work.


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## DPCII (Mar 14, 2010)

inmo said:


> Greetings everyone,
> 
> I am a GC. We do just mostly residential Kitchen, bath, and basement remodels, home repair, maintainance and repair.
> 
> ...


Time to fire your customer.


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## Tech Dawg (Dec 13, 2010)

I tried this once when I first started out and was trying to fill the books... investers are born-bread con artists/manipulators that couldn't cut it as a priest or loan shark! Once you give them cheap work then that's all they will call you for... hasn't worked for me or anyone that I know


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## oteroproperties (Oct 18, 2009)

I am an investor and while I cant agree that we are all born con artist I will say we want as much as possible for as little as possible. Its the nature or the beast. I do all my own work, but if I didnt I would look for a guy that can balance cost with quality. A very hard thing to do when one direclty controls the other


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## Rockmonster (Nov 15, 2007)

I have an acquaintance that is just like this guy.....he pays faster than anyone else. He is always busy. But it is all about the bottom line. He doesn't love building. He doesn't love architecture. He doesn't care about the people that work for him. He loves making money. And we are still friendly, because I don't do any work for him......There is always someone who will do the job for less, and he will find those people. Stick to your guns, it sounds like he likes your work; it sounds like he appreciates your effort and experience. If he learns how to like your pricing, you're home. Don't budge. That what he is expecting. Cheap painters are fairly easy to find. _ Good_ painters are not so easy. You have to go with your gut for sure, and in these times, you can't always be that choosy. I wish you luck.


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## Tech Dawg (Dec 13, 2010)

Appologies for the rash statement, I'll switch that to(90% of investors)
That's great that you do your own work, I also know someone who does this as well and he does not bother contractors at all because of the dividing line of pride vs. Cost... when he actually needs one, he pays the price without complaints because he "gets it"


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## Tech Dawg (Dec 13, 2010)

Inmo, one thing that I have done and profited on with investors is faucet replacements. I use Wolverine Brass faucets and have them in stock. I give an "installed" price for the faucet and additional bill for hoses, shutoffs etc... if needed
They cost more that your $30 crap from lowes and depot but they last and are durable. I've received nothing but good comments from rental owners etc... because now they're not changing them every 5 months.
It's probably the quickest/most profitable job that you can do in that situation... won't get rich but it's work


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## inmo (Feb 27, 2010)

C.M.J. said:


> This guy sounds exactly like a guy I'm dealing with now. I'll be starting a project on Monday for him that consists of a lot of little things that will add up. I've come to the decision that in the future I will give him my price and he can take it or leave it. If I have learned one thing on this forum it is that I can stay at home on the couch and make no money easier then working for someone and losing money. Another thing I've learned is to stick to my guns and not waffle back and forth on price and/or quality.
> 
> As far as dealing with my guy, the secret is to do small jobs under $500 for him and he's good to go. It's when the jobs get over a $1000 that he starts to cry poor. Good luck.


 

C.M.J. Thanks, I use to do a lot of those little jobs with this guy and others. I still do some occasionally but not as many. The thing about those little jobs is that typically I never found them to be profitable at all. I would load a bunch of tools in anticipation of what could possibly be wrong. I'd end up driving across town for a job that takes less than a hour or two. I always bill a minimum but still. I just chewed up a half a day to change a light bulb. Funny thing, those investors never seem to complain about those ones!


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## inmo (Feb 27, 2010)

I don't want people to call me only because they think I'm cheap. If they do, than I probably am.


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## ohiohomedoctor (Dec 26, 2010)

*Making Money with the Impossible*

My market is the forclosure capitol of the US and as such I have extensive experience in just this, polishing the investors turd for almost nothing. If you need the work then you have to figure out a way to provide him with what he wants and make the money you and your family need. If the budget is $3000, then you have $1000 for labor, $1000 for materials, and $1000 for yourself. Hire cheap labor and supervise, supervise, supervise! $1000 buys you 10 ten dollar an hour guys for 10 hours. This amount of labor should be enough to do any job in one day, leaving you with a $100 an hour profit. Find out of work painters through classifieds and maybe even CL. Make sure you watch them like a hawk. Dont be shy, just demand quality and spped and be fast to end somebodies day. Working with these kind of budgets there is no other way to make the money you and your family needs. You will be suprised what you can get done in one day with 10 guys. You make money, he gets his house done in a day for his price, and you are able to complete as many of these jobs as he can throw at you.


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## inmo (Feb 27, 2010)

ohiohomedoctor said:


> My market is the forclosure capitol of the US and as such I have extensive experience in just this, polishing the investors turd for almost nothing. If you need the work then you have to figure out a way to provide him with what he wants and make the money you and your family need. If the budget is $3000, then you have $1000 for labor, $1000 for materials, and $1000 for yourself. Hire cheap labor and supervise, supervise, supervise! $1000 buys you 10 ten dollar an hour guys for 10 hours. This amount of labor should be enough to do any job in one day, leaving you with a $100 an hour profit. Find out of work painters through classifieds and maybe even CL. Make sure you watch them like a hawk. Dont be shy, just demand quality and spped and be fast to end somebodies day. Working with these kind of budgets there is no other way to make the money you and your family needs. You will be suprised what you can get done in one day with 10 guys. You make money, he gets his house done in a day for his price, and you are able to complete as many of these jobs as he can throw at you.


 

Ohiohomedoc, 

I really appreciate it. Anyone that can make a turd shine is the right man for advice! Lol! You had me rolling on the floor with that one! Thank you.

I'm glad you can get a heart beat for ten bucks an hour. I have to babysit, console, and buy lunch just to get them to show up and pick up a brush for $15. The work ethic of today is pathetic.

I'm assumeing these $10 dollar an hour guys are not around long enough to bother with work comp and all the bs that goes with hiring? 

Thanks again!


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## wireless (Nov 2, 2006)

Best way to deal with investors is to sell your services to their buyers! It won't be long before they realize not everything was done right.


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## A. Spruce (Aug 6, 2010)

Why are you letting the client dictate price or materials? When I was swinging a hammer, I had an hourly rate, PERIOD! If your investor wants materials at cost, then he can buy the stuff himself - which will save you time and money not having to chase materials on your own dime.

Whether this investor is a friend or not, he's taking advantage of your abilities and generosity, which is fine if you enjoy working for free while they reap the benefits of your time and efforts. If, however, you want to be justly compensated, then you have to charge your normal rate for the work you do. If the investor/friend doesn't like it, they can find someone out of the **** Cheapo parking lot who WILL work for free. If anyone else were to come to you with the same proposition as this "friend", would you accept the work?:no::no:


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## inmo (Feb 27, 2010)

A. Spruce said:


> Why are you letting the client dictate price or materials? When I was swinging a hammer, I had an hourly rate, PERIOD! If your investor wants materials at cost, then he can buy the stuff himself - which will save you time and money not having to chase materials on your own dime.
> 
> Whether this investor is a friend or not, he's taking advantage of your abilities and generosity, which is fine if you enjoy working for free while they reap the benefits of your time and efforts. If, however, you want to be justly compensated, then you have to charge your normal rate for the work you do. If the investor/friend doesn't like it, they can find someone out of the **** Cheapo parking lot who WILL work for free. If anyone else were to come to you with the same proposition as this "friend", would you accept the work?:no::no:


 
So far I've been sticking to my guns. Like I said I normally wouldn't bother but work is slow right now and these guys can keep a person pretty busy. These guys are buying up foreclosures at a record pace. I'm just trying to find a happy median in exchange for all the no bid work. He doesn't want me to bid every house but we need to have a understanding, whats works, and what doesn't. I don't have a problem giving him materials at cost because I bill for my time acquiring them. Most of the time I come out way ahead on that end because I usually make way more than the usual 20%. Its always at least an hour to shag after materials. More often than not its more than one trip and more than a hour.


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## Rob PA (Aug 30, 2010)

I work with a real estate agent that controls investment property...she came out in the start and said low bid always gets it...ok i told her, but i will not always be the lowest

we have done serveral jobs..both they complained about price but they gave it to us...one job i know i prob broke even on it...afterwards the prices is what it is

im not working on investment houses that are destroyed and make them look great for what evens out to be 5 bucks an hour.. if people want to rent them or flip them for the 5 bucks..do it yourself


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## Rob PA (Aug 30, 2010)

one thing i like to add is when these 10/hr guys get hurt on your work site...who pays? im sure they dont have comp for 10/hr

im not going to put them on mine for such a low job..so that leaves the HO?


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## Tech Dawg (Dec 13, 2010)

What he said...


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