Season 1,

61: How to Lose Money by Choosing the Wrong General Contractor with Reed Goossens

June 20, 2017

Reed Goossens is a serial real estate entrepreneur and founder of RSN Property Group. As a native Australian, Reed moved to the US to pursue his investing career.

A qualified structural engineer and project manager, Reed has been involved with construction and real estate since 2007. Reed’s expertise includes project management, property development and key stakeholder management. Reed has been involved in the development and acquisition of over $500 million worth of real estate and infrastructure across four continents; Australia, North America, Europe and South East Asia. After gaining valuable experience working in the engineering and construction industry, Reed decided to pursue his passion for real estate development and investing by starting RSN Property Group.

Time Stamped Show Notes

[5:30] While living in New York City, Reed tried his hand at house flipping with a two-story property he found in Philadelphia.

[8:16] Reed planned to add another floor and at the beginning everything was going well. But some costly expenses popped up.

[11:30] They hired a recommended general contractor who had no experience in what they needed, but he was cheap.

[13:04] One day when visiting the site, Reed asked the GC for the plans he had drawn only to find that they were being ignored and and the GC had subcontracted someone else to do the job.

[16:04] After moving across the country, communication with the GC started to break and Reed’s partner had to be on site to look after the project.

[17:40] After the first six months that went well enough, no schedules came from the contractor and near the end of the project the project wasn’t near where it needed to be.

[19:50] They fired the contractor because they were basically doing his job for never being there and later found the GC working an entirely different job.

[20:35] With the general contractor out of the project, they did manage to get the flip done.

[23:30] Reed hired another general contractor to get the proper license to sell the flip. They later find the original GC didn’t do work up to code, which definitely is identified as a black flag due to all the stress related with dealing with the city.

[26:36] Finally finishing the flip 13 or 14 months later, they managed to sell it after a couple of setbacks, money lost and a lot of learning experiences.

[32:00] Lesson learned: hiring the lowest bid isn’t always the best decision for jobs like this.

[35:55] Failing Forward Segment

  • What is the bottom line reason of this failure? – “Unknown out of state contractor, relying too heavily on someone’s story.”
  • What is the single most important lesson they and you learned from this? – “I think it goes back to proper betting. Due diligence.”
  • What are the major ways you protect yourself from future failures? – “Making sure we’re putting the earnest on the property management company to hire the right GCs and then I bet all the subcontracts that they’re implementing.”
  • Who do you turn to when you need help? – “In terms of construction I got a few gentlemen that in the previous consultancy gig became very friendly with and I always reach out to them.”
  • What advice would you give to someone in a similar position? – “Don’t throw in the towel. Don’t think emotionally.”

[41:55] Looking for financial freedom, Reed has looked for having investments like getting involved in syndication, that free him from the 9 to 5.

[44:54] Reed’s podcast Investing in the US was started to help international investors with everything to educate themselves when wanting to succeed in the US and you can reach out to him at reed@rsnpropertygroup.com

[48:06] Reed’s final thought: “If you’re sitting at there thinking how do I get off the fence, the first is education, keep investing in your education, your financial IQ, get a mentor if you can because they are going to point you in the right direction.”

To hear this episode and many more like it on your mobile device, you can subscribe to How To Lose Money via iTunes or Stitcher.

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