All Forum Posts by: Adam Wodka

Hi all-

First off, I've already learned so much from this community and am so grateful to those who take the time to offer their thoughts and are so willing to help others.

After GCing the renovation of my rowhome in South Philly and catching the itch, I am looking to start rehabbing properties to both flip and hold. My goal is to operate two rentals and execute one flip in the next 12-15 months, with the intention of starting to build a rental portfolio while also generating some short-term profit with the flip. 

I've read a fair amount about how to get started without much cash on hand, but, frankly, my income is low as a result of the pandemic and I'm not super liquid after completing the renovation of my house, so I'm not sure conventional financing routes will be available to me. I'm comfortable with the hard money lender approach, but for the rates available to me (~10-11% interest, 3 points upfront, ~$1,200 processing fee), I figured I might as well ask a few high net-worth friends if they would be open to acting as investors and offering more favorable terms. I'm lucky to have friends like this in my network, and they have agreed.

As currently planned, I will borrow a total of $250-300k split between two investors. This brings me to three main questions:

1. Financing – My investors are flexible with repayment options and we have discussed a mix of fixed interest and/or profit-sharing. My thought right now is to keep it predictable and offer them a fixed interest of, say, 8% on the money. I'd prefer to have a get-in/get-out relationship so that we can go our separate ways if it goes less-than-stellar, rather than continuing to own properties together. A negative of this approach is that I'd be paying interest on the money regardless of how much I'm using at that moment, but I like the freedom of using the funds as I see fit (for rentals or flips). I know there's a lot of flexibility in how to structure private money deals, but any creative ideas for use of this cash that leave me owning my rentals and leaving the end of the year with some returns in my pocket?
2. Strategy – I'm still kicking around ideas, but one idea is to start with one or two lighter rehabs to set up as rentals, refi each after renting them out, and use the cash I'm able to finance out to purchase a flip. Essentially, my plan would be to purchase one property at a time in cash until either refinancing the rentals or selling the flips, and then moving on to the next one (BRRRR-ish). I'm afraid this isn't leveraging the cash very well though, and ideally I would like to be able to move on to the next project before refi-ing/selling the previous property. Any ideas here to use the cash most effectively to pursue multiple projects in a year?
3. Ownership structure – Since I'd prefer to just pay them out for the cash as essentially a loan, I'm thinking it will be best to just have my own LLC, rather than name them as owners of the LLC. I was originally exploring S-Corps and C-Corps, but I think for just starting off with some small projects, it doesn't yet make sense to pursue a complicated structure. Does that sound right?

Thank you again so much for any thoughts you may have.

-Adam

Hi all-

I'm seeking out my second renovation project and am in talks to buy and rehab a 3-unit existing building in South Philly. I'm planning to register for a Contractor License with my partner (who has been in construction for 15 years) to manage the project. My understanding is that an EZ Permit is only eligible for one and two dwelling buildings, so we'll need to apply for a proper Building Permit to renovate this 3-unit building, and would therefore also require plans. Is that correct? Thanks for any information you can offer, the city can be really hard to get answers from.

Unit used natural gas. Makes sense, will research scrap dealers. Thanks.

I'm towards the end of the demo portion of my first home purchase and renovation of a rowhome in Philadelphia, most of which I've been doing myself due to the pandemic. I'll be replacing the old baseboard hot water heating with HVAC ductwork. I've cut out most of the copper piping and need to get rid of the 25-year old boiler. Any recommendations on how I should go about getting it removed? My understanding is that it might still have some value, so I'm reluctant to pay someone to take it away. Any thoughts on how I might be able to value it? I'm not looking to make any significant amount of money on it, but would just like to be educated on its value. Thank you!

Thanks so much for sharing your experience Rob. It's a good reminder to not make too many decisions until I have a structural engineer come out, which I do plan to do first. My understanding is that the going rate for a structural engineer to come out and provide a letter is now $750. Thanks again.

Thanks Jimmy, this is really helpful advice. I'd ideally like to buy and hold, but I do plan to evaluate my plan and the market once I'm done with the renovation in the next 3-6 months. We didn't talk too specifically about how much of the wall would be parged, but I'd think that just around the gas line and the broken brick would make the most sense. For that, the $750 starts to feel like a bit of a high price to me. Thanks again.

I recently purchased a two-story rowhome in South Philly with a nice brick facade. Unfortunately though, the facade has a clear bow coming out about 2-3 inches in the middle. I've been told by the inspector and my realtor that installing star bolts is the best course of action to mitigate further bowing, which I've (mildly reluctantly) accepted. 

One of the contractors I'm speaking with suggesting parging the brick from the interior of the house to better hold it together, in addition to installing star bolts. Does anyone have any thoughts on if that would be effective in preventing further movement

of the brick/worth it? He quoted me $750 for the parging and $1,000 per star bolt installation. 

Thanks for any thoughts you have.