How are people doing rehab right when they buy?

[Chi Ta]

Sorry in advanced if I sound like I have no idea what I'm talking about, it's because I have no idea when it comes to rehabs.

I just bought 2 investment properties in orange county california. Both SFR. My architect is telling me it's going to take at least 3 months to get construction documents approved before I can start any work.

How is it I see flippers buy a house and start work the very next day all the time? Are they just not pulling permits and doing all the work unpermitted? 

[Eric Teran]

@Chi Ta I’m an Architect and what I do for my developer clients if they want to take the risk is to start the plans as soon as their offer is accepted. They ask for a longer closing period around 2-4 months. During that time we have permission to submit plans and get a permit. The risk is if my client backs out of the deal because they still pay my fees and other consultants. The gain is four months and less holding costs. That’s the legal way.

The riskier way is start the work and hope to get a permit before you call the first inspector. However, a neighbor can call and you will get a stop work order which are expensive.

Another option is you get a demo permit first to start the work and that is pretty straightforward. Unless you demo the entire structure. Another type of permit is non-structural and those are easy to obtain in a few days.

These developers have being doing for a while so they have their system down so much so that they don’t even have to speak to their architect and waste time making decisions. I have two clients like that. I also have first time developers that can’t make up their mind and the project just takes longer to design and submit.

I Hope that helps.