All Forum Posts by: Andy Sabisch

Not sure about your area but in areas we have been in permits and approvals and inspections would have been required so hopefully you don't get sideways with the city / township over the conversion.

If you want the change on the tax roll, you will find out for sure if permits were needed.  Your assessment may change as will your tax bill. 

If you just want the increased ft2 to be on a listing, you can list it and buyers can verify in an inspection.

As far as HML's go, they will double check your deal to make sure the numbers work (for both of you) as they are not going to lend on a property that they have not vetted.  If the numbers do not look promising, they will not lend and that tells you something was not figured correctly.  They can help you see where you missed the mark and that will help you screen deals to find the right ones.

It sounds like you have skills that can work to support a JV deal.  Your local REIGs will be a great way to meet fellow flippers and look for those that have experience but may not have the PM skills you do or can't find a deal.  If you bring the missing skills to the table, you both win and you will learn what you feel you are lacking now.

Use the calculators on BP to get you focused on deals and see what works and what does not work.  After a while, you will know just from looking at the listing or a drive by if you are in the ball park.  We run the calculator on multiple properties each week even if we are not actively looking . . . keeps us in tune with the market and you never know when a deal will appear.  

Talk to some HMLs and see what they are offering for rates and terms and what they will do for a deal review that can help you confirm your deal numbers.  A warning however is that all HMLs are not created equal and if you find one that wants money upfront and promised to fund any deal, hang up and keep looking . . . you will see a number of newbies get scammed in this area.

Good luck and feel free to reach out with any questions

We have our rentals under one company and they have done ok in terms of rates but it never hurts to compare to make sure we are insured properly and at the right price.

Can you share who you use for your rentals and have you had any claim experience with them?

Thanks in advance

Congratulations on the college graduation . . . . . curious as to your passion with real estate.

What is it that makes you passionate about it? Do you have experience in remodeling properties that you found invigorating? Do you have family members in the trades? Do you see it as a way to make money based on Internet posts, courses and claims?

Being able to HONESTLY answer the question as to why you feel passionate about the business will help you determine what assistance you are looking for and what you can expect.

If you have not done do, start by looking up your local REIG(s) and meet some local investors . . . they may be open to answering questions and seeing what you can bring to the table. Do you have money that you can bring to a deal and joint-venture with another flipper with experience?

Property management is an area that requires a well-founded skill set that includes understanding property maintenance issues and who to call, tenant screening, rent collection, etc. Even companies that have been in business for a while fail when they can't handle issues that arise.

Not trying to be a Debbie Downer but being passionate for the wrong reason is never the right reason to get into something. As those that have been in this for a while, there is money to be made but just as easily, money to be lost and many of us had made expensive lessons to get where we are. Define what aspect of the business you want to be in, what skills you bring to help make sure you are successful and find people that can mentor you but narrow down your focus to start with.

Congratulations on the college graduation . . . . . curious as to your passion with real estate. 

What is it that makes you passionate about it?  Do you have experience in remodeling properties that you found invigorating?  Do you have family members in the trades?  Do you see it as a way to make money based on Internet posts, courses and claims?

Being able to HONESTLY answer the question as to why you feel passionate about the business will help you determine what assistance you are looking for and what you can expect. 

If you have not done do, start by looking up your local REIG(s) and meet some local investors . . . they may be open to answering questions and seeing what you can bring to the table.  Do you have money that you can bring to a deal and joint-venture with another flipper with experience?

Property management is an area that requires a well-founded skill set that includes understanding property maintenance issues and who to call, tenant screening, rent collection, etc.  Even companies that have been in business for a while fail when they can't handle issues that arise.

Not trying to be a Debbie Downer but being passionate for the wrong reason is never the right reason to get into something.  As those that have been in this for a while, there is money to be made but just as easily, money to be lost and many of us had made expensive lessons to get where we are.  Define what aspect of the business you want to be in, what skills you bring to help make sure you are successful and find people that can mentor you but narrow down your focus to start with.

Threads such as these offer the poster a range of options and that benefits all of us in this endeavor.  However, some of the responses make be question the products being offered for sale in flips.

When you see a post that says "Get it done as cheaply as possible. Will it be good? No. But God's honest truth is that the only way to make a flipped house from 1920 bulletproof is to lose money on the flip. It's a dirty business when you get into this kind of lower-end, hundred-year-old property flip, and this is why", it shows a side of flips that we do not venture onto.

If you are going to buy a house to flip - be it $100K or $2,000,000, the entrance is the same.  What will it cost to put a quality product out the other side that will sell based on comps for the area and net a desired profit with all expenses factored in. 

Every part of the country is different in that some areas you can buy a 2,000 ft2 house for $150K  and in others you can buy a vacant postage stamp lot for twice that.  We have worked in multiple areas where with few exceptions, the properties have been under $200K and in most cases required far more than a cosmetic facelift.  On a home that more than likely has K&T wiring, we factor a rewire into the reno estimates when we are looking at do the numbers make sense.  Areas where damage can result from a poorly done reno are not where we skimp.  LVP vs. hardwood OK but electrical, gas service, roofing, foundation repairs, etc. are areas where the buyer can come back to you if you stretch the truth in filling out the PCDS especially if you did the work without pulling permits.  If you find an electrician that is willing to do a patch job on K&T wiring, I would be looking for a new electrician.  Doing a rewire on an older home can be done quickly and reasonably if you find an electrician that understands how to do it without tearing walls and ceilings out.  We have been fortunate to have found a guy that has decades of experience in doing this and he is worth his weight in gold with the tricks he has shown us.

So the comment about getting into lower-end, 100-year old property struck a nerve with me as there are many areas of the country that contain plenty of "lower end, 100 year old properties" that will turn a profit and can be done with quality.  Not sure where the posters work that made the comments about bandaids versus repairs but this is not there market but for many of us, I know for us it is what we do and what we work with.  We may be an exception but we will not do a project that in the end we would not be willing to live in it and if the numbers do not support doing that, we simply find another property that does.

Doing a cosmetic rehab on a property you know has issues when you are sitting at the closing table is not a feeling we would want . . . . sharpening your pencil upfront ensures you are not on the negative end when you sell.

With the number of people getting into wholesaling expecting easy payoffs, the boom will fall soon . . . . the sellers will demand it and the realtors will support it. It is unfortunate that Internet gurus can promote wholesaling as a simple, no funds required business model and people that can least afford it are jumping into the business. I know this sounds negative but we have talked to sellers that were burned by wholesalers where the property was tied up for a month and the wholesaler brought "partner after partner" through only to back out at the last minute. In the meantime, the seller in some cases was no a month closer to loosing the property and in most cases, the wholesaler walked with their EMD.

Again, put anything in the contract that both sides can agree to and be sure to explain what is in there as many sellers do not fully understand contract terms,

Wholesaling has become a negative term with sellers anymore . . . with the people that care getting into it and not understanding how all the parts need to interact, it sticks the seller with a property that is locked up while the wholesaler hops to find someone to buy it. Either they have no buyer list and start fishing or they over-inflate the ARV while under-estimating the reno cost and can't find a buyer for the contract, more and more sellers are putting the non-assignable clause or at least not assumable without seller approval. The last few properties we sold had non-assumable clauses added and the EMD was more than $100 to show they were serious buyers.

As others have said, you can put anything in a contract that both sides agree to but the assumable clause is becoming a harder sell due to the downside the seller has.

Based on the size of your house, a re-roof will be your best option.  As has been stated, not sure how many layers you have and what the condition of the sheathing might be.  Get a quality roofer and you will be set for decades.

I know that often inspectors work with agents and that is another reason I tend to avoid home inspectors.  If you are bored sometime look into what is needed to be an inspector in your state . . many have minimal requirements and the companies that offer training sell software that prompts them to look at specific things, snap photos and generate a report in an hour or less . . . . often finding fault with items that are of no value and miss the big issues that will cost you.  That disclaimer in the report speaks volumes.  Had you had a roofer look at the house, I think you would have gotten a different picture to discuss with the seller.

Speak to investors in your area and see if they have a roofer that they recommend.  In our area, we have a list of trades that we know we can count on and since we do business with them on a regular basis, they bump us up on the list to get work done.  

Good luck and consider how you inspect homes in the future . . . .

As Scott said, a new roof while not in your budget, will save you problems down the road that patching what you have will cause.  Leaks can manifest themselves into ceiling damage, wall damage and mold which can have health implications. 

As far as your inspector not catching the problem, you will find that all of them have disclaimers saying that they are not responsible for items that they missed . . . which I always feel is a weasel clause and why we do not use them for purchases.  I know what the big hitters are - roofs, foundations, electrical, plumbing and HVAC.  If any of them are suspect, I call a professional instead of having a home inspector miss the issue or tell me to call a professional which I could have done up front.  You could have gotten a roofer to give you an estimate for repairs at no charge within the inspection window . . . and then you would have had something you could have gone back to the seller and renegotiate the purchase price but that is water under the bridge at this point.  Do not expect the inspector to do anything other than say sorry, I missed it.  Did the inspector go up on the roof?  If so, not sure how he did not call out the condition in the report.

As far as the photos, the spots on the rafters are not mold so no worry there.

When you look for a roofer, unless you know someone in the business, get more than one estimate as you will find prices vary and what it includes also varies.  What will they charge per sheet of plywood that needs to be replaced, what about rafters?  What warranty is provided and what does it cover?  Make sure you are comparing apples to apples . . . .

Good luck!