I had a great visit with my friend Ricardo to go meet a Tacoma real estate investor named Walter Johnson yesterday. Walter has been investing in Tacoma real estate since 1997. Lots of investors I know are having success in this market, and I wanted to learn more about what they are doing.
Walter is finding properties in good middle-class neighborhoods in Tacoma that he buys for $40-50K. Many of them are in foreclosure. He then "re-faces" or "re-surfaces" them.
I'd never heard of that. That's because no one I know does what Walter does. Walter has an artist on his team, along with architects, engineers, in-house real estate agents. This artist used to work in high end "Street of Dreams" types of homes and won many awards for his work, before the market tanked. His work includes a very high end product which is inexpensive to produce, but looks like a million bucks.
It is ground-up granite mixed with (secret ingredients) that can be applied to any surface. It can be poured into a mold and used as window and door trim or base moulding. It can be thinned and applied as wall texture. It can be applied as faux brick or stone blocks, or used to build fireplace mantels.
Walt spends maybe $15,000 per house "re-surfacing" interiors and exteriors, and then resells it or keeps it as a rental. His costs have gone way down since discovering this product. Being this much below other commercial and residential listings has kept his business profitable and thriving.
And Walter explained to me the reasons to be optimistic about Tacoma: 3rd largest port in the country, a big military presence, and lots of money being pumped into casinos and related development by the Puyallup Tribe. It doesn't hurt that housing prices are so much lower than those in its big neighbor of Seattle.
Interesting model, interesting work. Good job, Walter!
Showing posts with label rehabbing. Show all posts
Showing posts with label rehabbing. Show all posts
Thursday, July 15, 2010
Saturday, April 17, 2010
New Lead Paint Requirements
RRP RULE AND NEW LEAD-SAFE PRACTICES REQUIREMENT AFFECTING LANDLORDS BEGINNING NEXT WEEK ON APRIL 22, 2010
The EPA has issued a Renovation, Repair and Paint rule (RRP) requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, landlords and contractors performing renovation, repair and painting projects that disturb lead-based paint in rental property built before 1978 must be certified and must follow specific work practices to prevent lead contamination. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
What types of properties and facilities does the lead paint rule apply to?
The RRP Rule applies to "residential houses, apartments, and child-occupied facilities such as schools and day-care facilities built before 1978." In addition, the rule must be followed when "repair or maintenance activities disturb more than 6 square feet of paint per room inside, or more than 20 square feet on the exterior of a home or building." Renovation is broadly defined as any activity that disturbs painted surfaces and includes most repair, remodeling, and maintenance activities, including window replacement.
Exceptions?
The EPA outlines activities which are excluded from the rule, such as emergency repairs and "minor' repair or maintenance, including work with less than six square feet of disturbed interior space. However, the EPA specifically states that "window replacement" is not minor repair or maintenance.
Who must follow the rule?
According to the EPA, the rule applies as follows: "In general, anyone who is paid to perform work that disturbs paint in housing and child-occupied facilities built before 1978, including but not limited to: residential rental property owners/managers; general contractors; special trade contractors including painters, plumbers, carpenters and electricians." As to landlords and property managers, the EPA booklet says, "The receipt of rent payments or salaries derived from rent payments is considered compensation under the EPA's lead paint rule. Therefore, renovation activities performed by landlords or employees of landlords are covered [by the rule]."
What are some of the rule requirements?
Rental property owners or contractors working on your rentals, who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing must, before beginning work, provide tenants with a copy of EPA's lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools. Owners of these rental properties must document compliance with this requirement. The EPA werbsite provides a sample pre-renovation disclosure form, which may be used for this purpose.
Understand that after April 22, 2010, landlords who work on their own properties or contractors doing the work, and perform above mentioned projects in pre-1978 rental housing, must be certified and follow the lead-safe work practices required by EPA's Renovation, Repair and Remodeling rule. If you are the landlord/owner and do the work yourself, you must be a trained renovator. You are allowed to teach any workers helping you and they perform the work under your training. And, if you aren't a contractor, and are an owner/landlord, then besides being "a trained renovator", you have to file with the EPA that you or your company is certified and responsible for your trained workers.To become certified, property owners and contractors must submit an application for certification and fee payment to EPA.
A "certified renovator" must be assigned to each renovation project, and "must be available, either on-site or by telephone, at all times renovations are being conducted." This person must have completed an 8-hour training course approved by the EPA. A full list of providers is listed at: http://www.epa.gov/lead/pubs/renovation.htm
Property owners who perform renovation, repairs, and painting jobs in rental property should also:
* Learn the lead laws that apply to you regarding certification and lead-safe work practices beginning in April 2010.
* Keep records to demonstrate that you and any one working under your supervision have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklist on the EPA website that was developed to help renovators comply with the renovation recordkeeping requirements that will take effect in April 2010.
Any requirements for homeowners working at their own Home?
If you are a homeowner performing renovation, repair, or painting work in your own home, EPA's RRP rule does not cover your project. However, you have the ultimate responsibility for the safety of your family or children in your care.
Any additional requirements for Contractors working on your rentals?
Any contractors who perform renovation, repairs, and painting jobs on your rental property should also:
* Take training to learn how to perform lead-safe work practices.
* Find a training provider that has been accredited by EPA to provide training for renovators under EPA's Renovation, Repair, and Painting (RRP) Program.
* Please note that if contractors previously completed an eligible renovation training course they may take the 4-hour refresher course instead of the 8-hour initial course from an accredited training provider to become a certified renovator.
* Provide a copy of your EPA or state lead training certificate to landlord clients.
* Tell landlord clients what lead-safe methods you will use to perform the job.
* Learn the lead laws that apply to them regarding certification and lead-safe work practices beginning in April 2010.
* Ask landlord client to share the results of any previously conducted lead tests.
Provide landlord clients with references from at least three recent jobs involving homes built before 1978.
* Firms are required to be certified, their employees must be trained in use of lead-safe work practices, and lead-safe work practices that minimize occupants' exposure to lead hazards must be followed.
* Keep records to demonstrate that you and your workers have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklistfrom their website that EPA has developed to help contractors comply with the renovation recordkeeping requirements that will take effect in April 2010.
* Read about how to comply with EPA's rule in the EPA Small Entity Compliance Guide to Renovate Right.
* Read about how to use lead-safe work practices in EPA's Steps to Lead Safe Renovation, Repair and Painting. NOTE: Contractors and training providers working in Wisconsin, Iowa, or North Carolina must contact the state to find out more about its training and certification requirements. These states are authorized to administer their own RRP programs in lieu of the federal program.
What is the penalty for landlords or contractors who do not comply with the EPA rule?
Fines for violating RRP Rule requirements can be up to $37,500 per incident, per day.
Above excerpts are taken in part from the EPA website. For additional information, clarification or answers to frequently asked questions, refer to the EPA website.
The EPA has issued a Renovation, Repair and Paint rule (RRP) requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, landlords and contractors performing renovation, repair and painting projects that disturb lead-based paint in rental property built before 1978 must be certified and must follow specific work practices to prevent lead contamination. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
What types of properties and facilities does the lead paint rule apply to?
The RRP Rule applies to "residential houses, apartments, and child-occupied facilities such as schools and day-care facilities built before 1978." In addition, the rule must be followed when "repair or maintenance activities disturb more than 6 square feet of paint per room inside, or more than 20 square feet on the exterior of a home or building." Renovation is broadly defined as any activity that disturbs painted surfaces and includes most repair, remodeling, and maintenance activities, including window replacement.
Exceptions?
The EPA outlines activities which are excluded from the rule, such as emergency repairs and "minor' repair or maintenance, including work with less than six square feet of disturbed interior space. However, the EPA specifically states that "window replacement" is not minor repair or maintenance.
Who must follow the rule?
According to the EPA, the rule applies as follows: "In general, anyone who is paid to perform work that disturbs paint in housing and child-occupied facilities built before 1978, including but not limited to: residential rental property owners/managers; general contractors; special trade contractors including painters, plumbers, carpenters and electricians." As to landlords and property managers, the EPA booklet says, "The receipt of rent payments or salaries derived from rent payments is considered compensation under the EPA's lead paint rule. Therefore, renovation activities performed by landlords or employees of landlords are covered [by the rule]."
What are some of the rule requirements?
Rental property owners or contractors working on your rentals, who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing must, before beginning work, provide tenants with a copy of EPA's lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools. Owners of these rental properties must document compliance with this requirement. The EPA werbsite provides a sample pre-renovation disclosure form, which may be used for this purpose.
Understand that after April 22, 2010, landlords who work on their own properties or contractors doing the work, and perform above mentioned projects in pre-1978 rental housing, must be certified and follow the lead-safe work practices required by EPA's Renovation, Repair and Remodeling rule. If you are the landlord/owner and do the work yourself, you must be a trained renovator. You are allowed to teach any workers helping you and they perform the work under your training. And, if you aren't a contractor, and are an owner/landlord, then besides being "a trained renovator", you have to file with the EPA that you or your company is certified and responsible for your trained workers.To become certified, property owners and contractors must submit an application for certification and fee payment to EPA.
A "certified renovator" must be assigned to each renovation project, and "must be available, either on-site or by telephone, at all times renovations are being conducted." This person must have completed an 8-hour training course approved by the EPA. A full list of providers is listed at: http://www.epa.gov/lead/pubs/renovation.htm
Property owners who perform renovation, repairs, and painting jobs in rental property should also:
* Learn the lead laws that apply to you regarding certification and lead-safe work practices beginning in April 2010.
* Keep records to demonstrate that you and any one working under your supervision have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklist on the EPA website that was developed to help renovators comply with the renovation recordkeeping requirements that will take effect in April 2010.
Any requirements for homeowners working at their own Home?
If you are a homeowner performing renovation, repair, or painting work in your own home, EPA's RRP rule does not cover your project. However, you have the ultimate responsibility for the safety of your family or children in your care.
Any additional requirements for Contractors working on your rentals?
Any contractors who perform renovation, repairs, and painting jobs on your rental property should also:
* Take training to learn how to perform lead-safe work practices.
* Find a training provider that has been accredited by EPA to provide training for renovators under EPA's Renovation, Repair, and Painting (RRP) Program.
* Please note that if contractors previously completed an eligible renovation training course they may take the 4-hour refresher course instead of the 8-hour initial course from an accredited training provider to become a certified renovator.
* Provide a copy of your EPA or state lead training certificate to landlord clients.
* Tell landlord clients what lead-safe methods you will use to perform the job.
* Learn the lead laws that apply to them regarding certification and lead-safe work practices beginning in April 2010.
* Ask landlord client to share the results of any previously conducted lead tests.
Provide landlord clients with references from at least three recent jobs involving homes built before 1978.
* Firms are required to be certified, their employees must be trained in use of lead-safe work practices, and lead-safe work practices that minimize occupants' exposure to lead hazards must be followed.
* Keep records to demonstrate that you and your workers have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklistfrom their website that EPA has developed to help contractors comply with the renovation recordkeeping requirements that will take effect in April 2010.
* Read about how to comply with EPA's rule in the EPA Small Entity Compliance Guide to Renovate Right.
* Read about how to use lead-safe work practices in EPA's Steps to Lead Safe Renovation, Repair and Painting. NOTE: Contractors and training providers working in Wisconsin, Iowa, or North Carolina must contact the state to find out more about its training and certification requirements. These states are authorized to administer their own RRP programs in lieu of the federal program.
What is the penalty for landlords or contractors who do not comply with the EPA rule?
Fines for violating RRP Rule requirements can be up to $37,500 per incident, per day.
Above excerpts are taken in part from the EPA website. For additional information, clarification or answers to frequently asked questions, refer to the EPA website.
Thursday, April 15, 2010
New Lead Paint Requirements
Effective on April 22nd, the new EPA Residential Property Renovation rules for pre-1978 housing renovations apply when doing any repair or maintenance activities that disturb 6 sq. ft. or more of paint per room inside, or 20 sq. ft. or more on the exterior of a home or building.
Any work exceeding these minimal areas must be done by a certified lead paint contractor. This includes plumbing, heating and air conditioning, painting, wall covering, electrical, finish carpentry, drywall, insulation, siding, tile, glass and glazing work. And know that the EPA considers rental income as compensation for
purposes of this rule and therefore you will need to be certified if you are having work done on your own property!
Please let me know if you hear of classes for this lead paint certification in the Seattle area!
Any work exceeding these minimal areas must be done by a certified lead paint contractor. This includes plumbing, heating and air conditioning, painting, wall covering, electrical, finish carpentry, drywall, insulation, siding, tile, glass and glazing work. And know that the EPA considers rental income as compensation for
purposes of this rule and therefore you will need to be certified if you are having work done on your own property!
Please let me know if you hear of classes for this lead paint certification in the Seattle area!
Thursday, November 19, 2009
Investor Tip on Estimating Repair Costs
The next tip in our investor series is to avoid the common error of underestimating the need for and cost of repairs. One can never be pretty enough and one can never have enough money set aside for rental repairs. A good rule to follow is always considering the worst case scenario. When you see a soft spot in the floor, even before you consider the cost of replacing the floor board, consider that the joists underneath may be rotten as well. Rarely will you see a fix-over come in under budget. When you are discussing costs of repair with a potential seller, a good strategy is to double it. When you underestimate repair budget and overestimate what a great deal you believe your first big purchase to be, you have a recipe for disaster, and one many enthusiastic newbie investors fall into.When going into a sale, underestimate what you believe the value of the house is, and overestimate what you believe it will cost to rehab it. With this set of expectations, you will more often be pleasantly surprised rather than bankrupt when all is said and done.This mindset is also critical when dealing with contractors discussing the cost of their services. Never settle for an hourly rate; you will almost always spend far more than the original estimate. Get specifics, and be sure to get the contractor's worst case scenario numbers. Set a timeframe, and get it in writing. In fact, if they tell you the job will take 2 weeks, include in your contract the deadline date, as well as a daily charge to them for each day over deadline. This helps keep everyone on a realistic schedule.So remember, prepare for the worst, get everything in writing, and you will be purchasing many sequels to that first sale.
Subscribe to:
Posts (Atom)