All Forum Posts by: Andrés Uribe

Hello BP community.

I need advice on how to approach a hard money lender about switching my loan, from what I was already approved for. I've had the loan for 3 months now, and I might need to switch my strategy since my current contractor is very much behind (2 months) his timeline. This would have been for 2 simultaneous rehabs of two homes. I have a loan for the purchase and the rehab. 

Since I might have to let him go, I am having a hard time finding replacement contractors, and I am now speaking with a modular home builder about tearing it all down and building 3 modular row houses. So...

Current loan is of $500,000 with appraised value of $820,000.

New loan would be $1,179,000 with potential of $1,788,000.

Has anyone had to switch a loan before, if so what would I need to take into consideration? How did you make it work? How were you not able to make it work?

 I have a spreadsheet detailing new costs, current loan, and new construction comps in the neighborhood my properties are in, sold in the past 3 months, new construction, and within a .5 mi radius.
thank you for reading and your time, it is greatly appreciated! And a very Happy New Year!

Andres

@Ryan Hannas Thank you! That would be great please. Worth a conversation with you contact please. Do you see it as doable? Building a garage underneath a house, then finishing a house that is down to the studs in 4 months? I think his crew is of 4-5 guys. But he does have other jobs to finish, unless he gets fired.

I have actually been speaking with a modular home builder that can be a good solution. I think my current guy will keep dragging his feet as long as he can, and I might need to let him go asap. I talked to him today, and told him I want a dedicated crew on my properties, but I know that wont happen, he knows I invest out of state and its hard to keep him accountable, and he has other projects to finish. I do have someone dropping by every two weeks, but it's not enough to keep him accountable.

@Matthew Irish-Jones Good point about the permits, thank you.

Yes there is an architect involved in the drawings. He made exterior elevations and drawings, interior plans are to be submitted by architect next week after they return form holidays.

As a high "I", I hate those "difficult" conversations, but as all of you have said, it is part of the growth and needs to happen, just gotta get my mindset right for it. Thank you all again.

Will have to plan next steps at this point, I've talked to a few contractors but most are obviously busy to jump in a project asap. Best solution I've found so far is a modular builder, tear everything down and build 3 row homes, which will still be very close to the April deadline, but will require a significant change on the loan, homes will sell for a lot more though. Will make a post about that soon!

@Bruce Woodruff Thank you. This is great information to know what to expect, and to keep in mind for next contractor.
No money is owed to him, he actually still needs to submit complete drawings, so we are good on that end. 
I’ll reach out if more questions come up, thanks again!

Thanks everyone! 
No materials purchased yet. Just dumpsters outside and still cleaning up demo. Electricians next in a couple weeks. Will need to find out about mechanic lien! Actively speaking with other contractors to prepare myself in case I do let him go, which is looking that way at the moment. 
To clarify, when I said monthly payments, I meant my monthly interest costs for the hard money loan, contractor was paid for demo, permits, surveys and drawings so far, nothing else. We are on a draw schedule per work completed. 
Lots of lessons learned for sure, specially the paying for what you get with low bid. 
@Bruce Woodruff as a contractor yourself, anything he can use against me if I let him go that I can be ready for? We have no established contract, or anything official, which should have been a red flag at first.

Thanks again!

Hello BP Forums,

If I may pick some of your wonderful brains from your experiences, here is my situation.

I purchased my first two flips in September, demoing right down to the studs and changing the framing layout of each, then building a garage underneath. The two properties are next door to a brand new development of 4 townhomes with garages, which are premium and coveted for the neighborhood.

The contractor I hired is very eager to work on this project, he is excited that his name can be on a nice renovation for a growing neighborhood or Pittsburgh. But, he is slow, very slow, and is very good at making promises and making himself look like he will deliver when we first spoke - 30 years of experience with lots of connections (which checks out after speaking with references). I am having a hard time believing he will deliver because he keeps saying "next week this will happen" and it's been like that for 6-7 weeks now, and barely any progress has been made. On the other hand, his references and reviews are good, architects a developer and designers that have used him for bigger projects than mine have very good things to say. Help is hard to find in Pittsburgh so I am not sure if he got stuck with a much smaller crew than usual, or he took on too many projects (we are having a call about this on Tuesday). I know he is getting fired from two other projects from an investor I know that uses him, because of being behind and the quality of work due to rushing on a project. They are putting pressure and I am putting pressure. Over all, I do think he is a good guy, but just not on his game AT ALL.

So, 3 months of owning the homes and demo is not done, I budgeted for April finish, I know he will not finish two houses in 4 months. His price of rehab was low at $266K, that I am not sure other contractors can work with for the scope of work.

So, my options are to add more time and spend more money on my monthly payments until he finishes. Fire him and hire someone that could be more expensive and could take just as long to finish.

Or! I just spoke with a modular builder, that could tear down two houses and build 3 row homes. But my hard money loan is not for that and not sure how I'd go about adding more to the loan. Refinance or add to hard money loan? we'll see, lots of digging to do.

Doing all this makes me smile though, means I am in it! But $@!*# is it stressful at times.

Have you had any similar situations?  Thank youuuuuu

@Shai Flax Thank you! Yes these two will be flips for nice finishes. I have been all over Houzz ha! And will reach out to a list of about 10 companies I found there, plus some I have found here on BP.
We'll see how it goes. Thanks for the reply :)

Hello Pittsburgh BP crew.

I have two single family homes in Pittsburgh that are undergoing demo. I am considering firing current GC, things are not moving fast enough... 4 months to deadline and demo just finished... it was a complete gut all the way down to the studs, now need to finish up in 4 months.

I know it will not happen on time, so I need to start looking at other options for them to look at the property and see if they can work within the budget. I will have a call with current GC next week to get a feel for their realistic timeline, if they BS again that might be it, then I will start calling others.

Any info would be greatly appreciated! 

Thank you,

Andres

@Steven Ragsdale sent you a DM!

I just bought my first one, and I am in the middle of the process. I invest long distance so I am using a property manager for peace of mind.

This is a 6 unit property with tons of potential, listed on the MLS, bought for $330K. It helped me get my feet wet analyzing a small commercial deal, averaging the income approach and sold comps to get my future property value after rehab and increased rents.

The property is in a really good neighborhood, and some tenants are paying between $350 - $550/mo, which is crazy. Market rents for a 2 bed 1 bath in that area are going for $850/mo. So, plan is to give 30 notices in the new year to existing tenants, put $90K of rehab, then bring in tenants at market rents. Considering neighborhood cap rate of 6%, new income and sold comps, property should be worth around $600K. My plan is to sell it.

It has helped me network with commercial brokers, although a small deal for them, they appreciate an opportunity to sell a property, with these conversations I have started to make relationships with some so they become familiar with my journey and take me seriously when I am ready to buy bigger. 

What I've learned is taking into account holding costs during the holidays, I closed on November and was going to give notices to vacate as soon as I took possession, not taking into account tenants would have had to move during Christmas, or soon after... so my property manager suggested to do it in the new year and I agreed, that added 2.5 months of holding costs, plus delayed rehab start. Also learned due diligence needs to be more detailed on my end, missed a few things and have had to replace one furnace already.

I'm in the middle of it, and I've learned a ton already, to the point where I am no longer thinking about single family BRRRR's anymore, but am zeroed in on buying bigger of these since the potential is great.