All Forum Posts by: Eric Black

Hi James,

I appreciate your excitement and passion however I would be very wary of this project as your first one. If you do decide to go ahead with it I would just strongly suggest that you go extremely conservative on your estimates, and then add another 20% to them. 

For the mold, the cost will depend on how you are going to treat it. If the house is a gut job and you're going to rip out any affected materials then that should be included in the bid from your contractor. Some contractors won't deal with mold however and will require you to have it removed by a mold remediation company. Going that route gets very expensive, very quickly. We had to remove some mold from behind a water heater, an area just larger than the water heater itself, and that ran us over $2,000 not including replacing the torn out drywall. 

My advice would be to get a licensed contractor in there to give you a full estimate on the rehab costs, including taking care of the mold if they will do it. Still add the 20% to their bid because projects, especially major projects, rarely come in on time and on budget. 

Cheers!

Eric

Hi Jackson,

It depends on who owns the units. You cannot make a "package" offer unless the same lender owns all of the units you want to purchase. You will still need to finance each unit individually so you will just be negotiating the final price of each unit based on the fact that you'd be purchasing multiple units. Just be aware that you will need to replace every piece of drywall in each unit to avoid any issues in the future. And I would recommend having a licensed and bonded contractor do the work in case anyone tries to come after you in the future.

Cheers!

Eric

Hi Dani,

A lot depends on what is outlined in the lease agreement. If it outlines that the tenant is responsible for any issues that are not considered normal wear and tear then it is fully within your rights to bill the tenant for any costs to replace the toilet. If you did not outline in your lease agreement an hourly labor rate for any work you perform then it may be hard to justify a labor cost, therefore it may be best to use a plumber. On the other hand, knowing how much plumbers charge it will end up costing probably quite a bit more.

Cheers!

Eric 

Hi Darius,

Take it from someone who has made the mistake, don't pay anyone who claims to want to be your mentor. You'll find more than what you need here at BP. At most it will cost you a few bucks a month if you sign up for a Pro account, or free if not. You don't have to go it alone but you don't have to pay anyone to show you the ropes.

Cheers!

Eric

Hi Darius, 

You can search your local MLS, Zillow, Trulia, etc. for recently sold properties in your area that are similar to the property you are looking at and then you can get a pretty good idea of what the market is in your area. Go to a local real estate investors club, get to know some people and start asking questions.

Cheers!

Eric

Hi Tom,

There's no "general rule of thumb" as to how much you pay a contractor. If your rehab costs $20k, you pay your contractor $20k. If you have more specific questions please feel free to post.

Cheers.

Eric

Hi Darius,

I haven't done this but I know there can be some issues. For one, I believe the bank could technically call the loan due under the Due On Sale clause since you are changing the owner of the property, even if you're the owner of the LLC. Second, I believe there will be issues between your insurance company and the lender because you cannot have the house in the LLC name but have the insurance in your name. And if you try to get the insurance in the LLC name then the lender may catch it and again, could call the loan due.

I think it's very tricky, if at all possible, to do what you're looking to do. I know I've heard it discussed on different podcasts but can't quote you for sure.

Cheers!

Eric

Hi Robert, 

Yes, SD-IRA's are very confusing and you have to be extremely careful when using them that you follow all of the restrictions and regulations to a T. Make sure you choose a good custodian if you decide to go down this road.

You can use your IRA funds to partner with another individual or IRA, but I'm not sure if you can use them to partner with an entity. I would recommend calling a custodian and/or attorney who is very familiar with SD-IRA's and run the scenario past them to get their input.

Cheers!

Eric

Yes, please let me know if you'll be heading down this way and we'll see if our schedules match up.

Cheers!

Eric

You're welcome. As for the crime, it's hard to tell exactly based on what the media says. First you'll see a story talking about how the murder rate and gang violence is on the rise:

http://santamariatimes.com/news/local/crime-and-co...

And then you can read articles that show that the area has one of the fastest dropping crime rates in the country: 

http://247wallst.com/special-report/2016/02/16/cit...

I have only lived here since 2012 so I don't have a large block of time to compare but it has seemed like lately we've been hearing about more murders, etc. On the other hand, they just arrested 13 members of a violent Mexican gang who they attribute at least a handful of murders to, so hopefully that will help.

I can't speak to Lompoc but it is quite a bit smaller of a city than Santa Maria so it wouldn't surprise me if their crime rate is lower, but you'd have to compare the per capita rate. 

My advice would be, if you can, make a trip out, even if if just for a few days to drive around and see if you get a gut feeling for or against any of the areas.

Cheers!

Eric