All Forum Posts by: Jared W Smith

Quote from @Michael L.:

Does it have to be an architect local to the state you are rehabbing/building in that would have to sign off on your plans or can any certified architect sign off on your drawings?

As Chris said, the Architect should be licensed in the state they plan to work in. Many work in various states not always the state they have their office in. For example, my office is located in NY, but I take on projects and am licensed in CT as well. Additionally, if an architect has what’s called an NCARB certification, they can obtain their license in other states to expand coverage areas and take on similar projects in new locations. 

Quote from @Nik Moushon:

If you can't muster the money for an architect and engineer for an apartment building you dont need to be doing apartment buildings. Not only will the city laugh you away for trying to submit plans that arent stamped by an architect and engineer, I can guarantee you that your budget is not nearly high enough for what it really is going to cost you to finish out that building. 

One thing to consider though, that most people don't realize, when you higher and pay for an architect/engineer to do drawings you get to count that money spend as improvements to the building when it comes time to get your commercial loan. So that money gets to count towards the collateral needed for the loan. Yes its cash up front but its not wasted. If you can't stomach putting cash up front for building an apartment building you either need to find something smaller to start with or get out of developing. Developing is just a cash hungry profession. No way around it. 

Similar thoughts. For that part of CT, I ball-parked a reno like the image from gutted to finished to be at least $600k on the low side. Probably closer to $750k. Depends on how many units. 10 units? That's at least 10 bathrooms, 10 kitchens with all new plumbing and electrical. probably new hvac too. Rethink your approach and have a realistic construction cost.   

Hello @James McGovern

If you need a set of detailed plans depicting the full scope of work for building department permit(s), then you'll need an Architect regardless. CT requires an Architect (or Engineer) for projects of this nature, especially a building of this age where it's likely there's structural/framing items to address. You will likely need a new Certificate of Occupancy too, which is no small task. 

Always amazes me when a design professional (Architect/Engineer) is required or needed on a project, out of all the costs, that is the one that is needed to be cut or drastically lessened. An Architect, ballpark, would be anywhere from 6-10% of the Construction cost depending on who you get and the deliverables provided. Typically 6% for bare bones permit set and you will have to find the contractor plus project manage it through construction. If Architect/Engineer sign-offs are required, it may be more. Squeezing the architect costs to save a few thousand is pennies as compared to the hundreds of thousands coming by way of costs for construction (materials & labor), filing and inspection fees, etc. A well coordinated and planned construction project due to the professional services yields less headaches, surprises and saves time which overall saves you money.   

Hello @Jorge Lee

As an Architect and Developer for my clients, I will answer the questions I am most familiar with. 

1.) Typically the Zoning Dept./Building Dept. won't do this analysis. Most often this work is done by an Architect or Zoning Attroney, both whom are familiar with that locale. 

2.) The cost difference is something you'll have to run the numbers for between a new build and rehabbing an existing property. Each market/location varies on construction materials and labor costs plus comparable available existing properties to buy.

3.) The amount of permits and how many plans, details and documents is totally under the purview of the Engineer themselves. Any professional (Architect or Engineer) will already know what is required based on their experience in that space. You shouldn't be trying to figure this out yourself nor is it very important. You hire them and they take care of this tasks which includes all the necessary documents and drawings to obtain the permits. 

4.) Based on your questions above and this one, sounds like it would be beneficial for you to have an Architect on your team initially to go over all the processes for your build in your area. If you have no experience building or developing, hiring a GC is a toss up. They may be good or they may be not so good. You will not know if they're doing what they are supposed to be doing. An Architect can look out for your best interest in the project plus can bring all the Engineers necessary for the build (Civil, Structural, MEP, Sprinkler/Fire suppression, etc.)

As far as the build itself, if it's in an established city or town on a tax lot, then you'll need to go through the design and permitting process, gain zoning approval if necessary, and then build up from there. The details and logistics very much depends on what you are trying to build and how large.  

I hope that helps.

As others have said 203k is a hard sell for most contractors. And if this is your first 203k loan, NYC is tough as a starting point not knowing the process. Best to get an Architect on board to help guide you through process and also keep your best interest at hand overall. Switching Contractors during the process is almost unheard of if you’re going to get project done on time and successfully. Also your 203k loan consultant needs to be WELL VERSED at construction in NYC! If they are not then they are doing you a disservice. Their cost will be off and won’t factor NYC regulatory approval and requirements. Do your due diligence and verify everything. @Hogarth Louis

203k Loans are a special type of loan product and require a knowledgeable Contractor but also a knowledgeable team in general. I’ve always advise to have an Architect on your team as well since, especially in NYC, since most construction requires permits and a level expertise dealing with NYC DOB. Plus, being that the Contractor is selected before the loan close you should have your own representative looking after your best interests. I’ve seen a lot of lousy Contractors guide people astray just to get paid and move on. Be careful since you are very new to the process. @Lynette Mcmillan

An Architect could be invaluable in steering you in the right direction on many fronts. We are trained to know various trades/disciplines and code implications. 

However if it’s the actual execution of the construction then you’re best to get a hold of a Contractor that you can work beside and learn. All the best

Quote from @Dave Vona:

Hi @Billy Farley, a bank will determine whether you qualify for an LOC, but there isn't any reason you can't use a business LOC to invest in BRRRR's. I have my own, single-member, LLC with an LOC, and I have a partnership LLC that also has an LOC. I've used both of these LOC's to invest in flips, and I plan to now use them to BRRRR. I completed my first BRRRR earlier this year and had enough cash for the purchase and rehab, but the LOC's are available when I need them.

I'll be performing the BRRRR within the single-member LLC, so that will be my primary LOC. However, I confirmed with my attorney that I can also borrow from the partnership LOC if needed.

I am looking to use my business LLC’s LOC for purchase of buy and hold / BRRRR also! Any tips or pointers?

Quote from @Billy Farley:

I am looking to do my first BRRRR that I do not live in as a primary residence. I have successfully rehabbed two homes and provided over 120k in equity from them. My idea is to form an LLC with my partner to qualify for a 100k business LOC with our credit scores (both 700+), our DTI ration, as well as my equity. Does anyone have experience doing this? I am also a real estate agent now who will be able to buy and list my own properties..

I would like to BRRRR if it makes sense on the refi to pay off the LOC, or sell for a quick turn around.

Thoughts/suggestions?

TYIA!

How did this work out for you @Billy Farley? I am looking to use my business LLC's LOC for purchase of buy and hold / BRRRR.

What you've shown here is not really a cause for concern in my eyes, however I see much worst conditions regularly. They can all be fixed. As others said, overestimate for the repairs. How are the foundation walls, basement/crawlspace framing, HVAC/heating & cooling, roof, windows, elec.? These are the main areas which I would look at closely in an over 100 yr old property. All the best