Im Getting Lots Of Leads BUT - General Discussion - Contractor Talk

Im Getting Lots Of Leads BUT

 
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Old 09-08-2008, 09:47 PM   #1
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Im Getting Lots Of Leads BUT


I cant sell any thing to people with no money .Ive had 6 jobs sold in the last 2 months but the bank wont give up the cash .I lost a job today. A $55000 garage add a level shell with some roofing and sideing work . The banks value on the house is 209000 dollers WTF. In the spring a house down the street sold for 369,000 it was the same house +- 10000 . last week i lost a 2 car garage for around 40, 000 It kills me to give back the deposet . Im getting some small baths, kitchens, and deck jobs around 30 gs but what elce could or should i do ? The people dont even no there broke . I have been spending lots of time on my bids drawing plans ect but it seems like a wast of time and fuel , its lots of hoopala for people with no money. I could get a old pick up truck and a dog and do handy man stuff for cash money $200 here and there 10 times a week but i hate that type of work I have a help wanted ad out now and today we had 8 calls from contractors looking for a $12hr job! I need a new plan . any ideas out there.
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Old 09-08-2008, 09:50 PM   #2
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Re: Im Getting Lots Of Leads BUT


My first question... why on earth are you giving the deposits back?

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Old 09-08-2008, 10:43 PM   #3
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Re: Im Getting Lots Of Leads BUT


Sounds like a perfect time to look into some other financing options for these people. Get them another credit card, finance part of the job through you, find some financing company that does this. Basically get into the complete solution offering them the construction and the financing.
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Old 09-08-2008, 10:57 PM   #4
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Re: Im Getting Lots Of Leads BUT


I realy didnt do any thing to earn it . It seems that every one around my area is sitting on a pre aproved lone that they think they can realy have when they need it . But they cant . Keeping a $2000 dp on a $60,000 job wont help me much and i think i would rather have every one saying nice things about me when the big crunch is over. I no most of the jobs will be done by someone sooner or later and its like money in the bank .I work in a small area and most of my work is word of mouth I have 10 jobs hanging in the air since Nov , that cant be done because of money . I have three jobs sold for the winter and i should get some more but who knows if the cash is going to be there when its time to do the jobs ? I like to be booked out 6 months but i mite just selling for NOW and tell the people to call me when they are ready to build . Its looking like a long winter
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Old 09-08-2008, 11:16 PM   #5
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Re: Im Getting Lots Of Leads BUT


Thanks for the reply mike I am holding money on the tail end of most of my jobs. It starts to add up fast . I dont realy have the mind set to deal with the banking end of the biz. I would think the copps and school teachers would be good for the money. I will look into some banking on monday .
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Old 09-09-2008, 12:02 AM   #6
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Re: Im Getting Lots Of Leads BUT


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Originally Posted by mdshunk View Post
My first question... why on earth are you giving the deposits back?
Ha, that's the first thing I thought of. We do mostly garages and they are always 1/2 down non refundable with four progression payments till the end. I can assure you they would find the rest of the money. I would ofcourse build up to the point of the next draw stop then wait indefinately until the next draw came around even if it was two years.
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Old 09-09-2008, 06:36 AM   #7
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Re: Im Getting Lots Of Leads BUT


I guess i could do that but I have three garages im looking at two are new from the ground up the other has the block work and we are riping the old trusses My dp is only to cover the plans and permits some times i get up to 10% down My jobs are sold 6 months to a year out and most people dont want to give up 5o% off the bat I realy cant blame them . With out the banks money they realy dont have money to do any thing .I cant realy see riping up someones house and then leaveing it like that for years . It would not realy make me money in the long run and i dont thing the HO would be happy . Thanks brock Im off to the dump
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Old 09-09-2008, 10:40 AM   #8
 
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Re: Im Getting Lots Of Leads BUT


You should just finance them yourself
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Old 09-09-2008, 11:22 AM   #9
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Re: Im Getting Lots Of Leads BUT


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You should just finance them yourself
Complicated enough being a contractor. I'm not so sure adding banker to the list of hats you wear is a good idea.

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Old 09-09-2008, 11:29 AM   #10
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Re: Im Getting Lots Of Leads BUT


For you guys who are saying to finance it yourself, other than Mike who specified helping them to obtain new financing other than you, do you actually finance it out of your lines of credit? How much, if you don't mind me asking, do you have in lines of credit (percentage wise) where you can have enough in the bank to cover unexpected things, payroll/taxes/WC/OH, Contingency, Personal funds and then still cover customer projects?

I think it sounds like a good idea, I simply don't have credit lines like that now but I'd work towards getting a set up like that in the future.

What type of structure do you use. Small payments for a couple years and then a balloon? 5 to 7 year amortized? 30 year??? What kind of rates/points are you charging? Are you cranking up the price since you know they probably have little other options? Are you recording a second on the property?

Seems that you have a sizable risk sinking money into a non liquid option like that when the economy and industry are so unstable. Might it not be better if you have that kind of cash/credit to just downsize and go fishing for a couple years?

I'm very interested in creative alternatives both for work now and for a safety net set up for the next time this cycle hits us.

Man Shunk, I'd hate to have given you a large down payment expecting my financing to cover it and then find it won't (through no fault of my own) and you simply won't give it back. I'd be ****in pissed, regardless of what the official paper work we signed said. I'd be a bad mouthin mother ****er.

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Old 09-09-2008, 12:37 PM   #11
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Re: Im Getting Lots Of Leads BUT


On occassion I do it for 12 months and one time I did it for a 24 month period.

The terms are very specific and severable. Also, there is another clause to cause default on the entire sum, if one payment is late. Without that, you would have to sue for each individual payment that is late, one at a time.

Typically, it is when they have no other outlet, especially for unkown extras that exceeded any reasonable estimation and their budget and is charged at 2% per month.

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Old 09-09-2008, 01:48 PM   #12
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Re: Im Getting Lots Of Leads BUT


I would consider factoring my A/R.

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Old 09-09-2008, 08:06 PM   #13
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Re: Im Getting Lots Of Leads BUT


The guys i worked with in the 80s have a banker that will lone money for a job ,when the job is done and they get there CO.You have to put up the money till its done. Then they buy the lone from you . It is a lot of extra work for a small job 55000 .And the way thing are going the banker could go under and you would get stuck with the lone .
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Old 09-09-2008, 08:09 PM   #14
 
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Re: Im Getting Lots Of Leads BUT


I have done this for some smaller jobs. I will get enough money to pay for the materials and the labor and profit i will finance so i'm not really paying for things out of my pocket. Then over the next 2 years the HO makes monthly payments. So far it has worked out good and it's kinda nice during the slow times you still have checks coming in every month.
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Old 09-09-2008, 08:14 PM   #15
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Re: Im Getting Lots Of Leads BUT


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Originally Posted by SES Constructio View Post
I have done this for some smaller jobs. I will get enough money to pay for the materials and the labor and profit i will finance so i'm not really paying for things out of my pocket. Then over the next 2 years the HO makes monthly payments. So far it has worked out good and it's kinda nice during the slow times you still have checks coming in every month.
What interest rate do you charge?

How is your extended terms payment form worded if you would ike to exchange clauses or complete forms?

Ed
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Old 09-09-2008, 08:53 PM   #16
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Re: Im Getting Lots Of Leads BUT


I dont realy do small jobs . I did some tile work and some sideing this year both jobs where over $10000 The thing is that most houses in my area are in bad shape and need to be done over inside and out. When we start working on a job i cant leave it half done because the HOs have no more money. Im working on a job now, it started as a $ 39000 addition and it went up to 73000 then to 97000. Now we are ripping all the windows, sideing, roofing ,bathroom , heat, AC ,plumbing , parking lot , out and puting it back new. I think i will be holding a note on this one to . . I told him at our 1 meeting that we should push the hole place into my trucks and haul it to the dump. He thought i was jokeing. I realy need one more fish this year.
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Old 09-09-2008, 09:39 PM   #17
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Re: Im Getting Lots Of Leads BUT


What I've heard is you finance the profit portion of the job, you want the rest paid from them or some other form of financing to cover your materials. Then your profit becomes monthly income with an additional profit(interest plus the up front charges you charge on this for doing it this way). In other words, you are the bank so the extra intrest is additional profit. If you finance them from your line of credit then you are just making money off the difference or or the spread in the interest rate you pay your bank and they are paying you. (Doesn't sound worth it to me to do it that way)

I also see a lot of ads in trade mags for companies who will finance your customers I think GE is real big in this.

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Old 09-09-2008, 10:36 PM   #18
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Re: Im Getting Lots Of Leads BUT


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My jobs are sold 6 months to a year out Thanks brock Im off to the dump
See I don't get that. I have heard a couple other ole boys in here say that to. I just can't see a customer waiting that long for a garage or large remodel. I understand that more than likely you are the best in your area and are in high demand, but we are not talking about sculptures or falacious palace reconstruction. There is so much competition in garages and standard upgrades to residential in my market that i'm sure any potential customer would laugh at me if I told them we'd swing by in a year and fix 'em up. I would be in hog heaven if I was selling jobs for '09 and '10 right now. Maybe I have missed something along the way and need to just spend '09 booking jobs. OMG 2010 would be a banner year.
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Old 09-10-2008, 01:24 AM   #19
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Re: Im Getting Lots Of Leads BUT


I just had both of my banks (Bank of the West, Bank of America) turn down a 500K custom because they didn't have 10% down. They are husband and wife Physicians Assistants. Both making around 100K each. They are renting an apartment and both have around 700-750 FICO's. They took a beating to get rid of their last home. They actually wrote a check to the bank so the buyers could close. We currently have 20 homes under construction and about 5 of them we are carrying the loans. The bank told us no more loans until one of the 5 closes. Well, I loaned the couple the 50K so they could qualify. Risky, I know, but desperate times require desperate measures.
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Old 09-10-2008, 10:40 PM   #20
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Re: Im Getting Lots Of Leads BUT


Well I can only do 8 additions a year. It would not pay for me to try to rush the jobs. My wife helps me and i could build more jobs but It takes me to much time to plan sell & permit the jobs . The money i would spend to replace my self on the job would cost me in the long run . If i had two more men i would have to build 2 more jobs a year and i would break even. I would need 12 jobs a year to see any real cash .I dont realy need the money every thing i have is payed for. So the HO would have to wate or get the guy in the old pickup truck with the dog to do it today. Thanks for the reply I have two more HO to see saterday one job is a nice deck for 13000 that i should get , the other is a 2 car garage with 2 bed rooms above I mite ride my bike there to save on fuel. This guy has been in his house for 4 years and his house is worth about 2/3s of what he payed. bummer

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