POS Violation Requirement

[Christopher Blanco]

I am looking at a fix and flip in Shaker Heights, OH. The house is a gorgeous 1925 colonial just begging to be rehabbed. The numbers work out fine for a normal flip. 70% ARV is $154,000. I estimate repairs to be around $90K, and I can probably get the place for under $45K in its current condition. The problem is the city requires an itemized list of repairs with estimates of repair for each violation. 90% of the violations are things like peeling paint, windows and doors not working etc. I plan on replacing all of them anyway so most of the violations are moot. After the itemized estimation they require 150% of the repair costs to be put in escrow.

Has anyone dealt with a situation like this? How did you handle it? I really don't want to tie up more than $130K in this house, any chance the city will reconsider since I plan on a gut anyway?

I don't know who would buy this place or any place in Shaker Heights with these requirements!

[Lincoln Coverdale]

Christopher Blanco - unfortunately this is an unavoidable situation in Shaker Hts. You can request reinspections along the way and get some money back as you go, but that is how Shaker Hts works. We live and work (as real estate agents) in Shaker and this is a very common concern with investors.

Also, don't forget it is 150% of an approved contractors estimate. So you will have to find someone on Shaker Hts' approved list to give you an estimate. This can be challenging, unless you plan to use that contractor to do the work they tend to not want to do estimates for free.

Good luck