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All Forum Posts by: Ashly B.

Ashly B. has started 29 posts and replied 125 times.

Post: City permit issue. Should I hire a lawyer?

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

This is going to be long and I wasn't even sure what to search for to see if something similar has been asked but here goes. 

Rental permit was up for re-inspection in March. At the time my 4 plex had 1 renovated unit, 2 I planned to renovate over the summer and 1 that was in decent shape and would be renovated at a later time. They came back with some 40 violations, most of which pertained to the lower 2 units that were about to be gutted - unlevel floors, bad windows, peeling paint, drop ceilings were coming down, toilet always running, etc. Date for everything to be up to code was June. 

When the inspector came back in June all of the violations pertaining to the upper rented units and exterior had been addressed but the lower 2 were just getting started with renovations and were pretty much down to the studs so the issues with those units couldn't be addressed at that time. We were able to get a renovation extension and were given until August to finish up. 

Renovations took longer than expected. Its been my husband and I doing nearly 100% of the work ourselves while working full time jobs. We were there every day after work and every weekend but it wasn't enough time and I couldn't afford to contract the work. The work we did contract always took longer than the contractor said - we got hung up for SIX WEEKS over some plumbing issues which were entirely the fault of the contractor, among other things. Had to go in front of the housing appeals boards and plead my case about why they shouldn't fine me the $5,000 max for my violations. I explained everything above and they gave us until December 7. 

Panic hits a little before thanksgiving when I realize we're SO close but the counters I had ordered Nov. 9 aren't likely going to be in before the inspector comes Dec. 7. I'm summarizing a little here, there were several conversations with the city during this time, threats made by them that they would be sending me to legal for the tenants i have if everything wasn't completed on time because my permit was expired and there were no more extensions. 

Dec. 7 comes and as predicted counters aren't in. Home Depot blamed the holidays and said there's nothing they can do. Decide to do the inspection anyway because if I can at least get all the other violations checked off that looks better and I'm not sure not having counters is a violation anyway. Inspector comes, everything looks great. He says we're good to go except there is an open plumbing permit that needs closed out - says the plumbing inspector probably just forgot to do the paperwork. Call the plumbing inspector and he says he just did a rough walk and still needs to do a final walk through (of course no one told me this - not the company we contracted nor the inspector when he did his first inspection). Says when he was there the in the wall plumbing was done but since walls weren't up there were not fixtures or anything and he needs to see all of that completed. Oh and by the way it has to be done by a licensed plumber and a NEW permit has to be pulled for the "work" being done... which is literally bathroom fixtures and kitchen sinks. Thought this was no big deal, I used a licensed plumber - turns out he's not a journeyman so he can't pull permits. So now I not only have to find a plumber who will pull a permit for work he didn't do, also the counters still aren't in, the sinks can't be plumbed and the inspector won't re-inspect, and since he won't close it out I officially have an illegal tenant. 

Reread the fine print from the city. It says I have 10 days from final re-inspection to either fix the violations or vacate the tenants in order to avoid being referred to legal for illegal occupancy and to potentially have the board rescind or reduce my initial $5k fine. Nevermind that I find it COMPLETELY ridiculous that I would have to evict someone over countertops that are not even in their unit and do not impact their quality of life or living standards, since I still can't get an install date from the counter people, I tell my one tenant she's got to go. Told her if she doesn't want to find a new place permanently that she can just take her essentials and leave the furniture and stuff. She has 5 days and then I need her keys. 

So following Monday inspector calls to check in. Explain the weekend events, plumbing situation and tenant situation. He says he needs to come by and see she has moved out. So today we meet at the apartment. Probably my own fault for not checking what the tenant left behind but it literally looks just as it did last time I was there - there are bananas and bread on the counter, fridge full of food, clothes on the floor, dishes in the sink... I don't blame the inspector for giving me the side eye and saying ya this looks occupied. I mention that I had told him she was moving out temporarily and was leaving her things and he said that was fine so what did I need to do to make it more officially unoccupied. He said move out the bed and the food and if you can show me that's done we'll mark it as vacant. So I spend 2 hours doing that immediately after he leaves (she had A LOT of food). He calls this afternoon and says unfortunately we're going to have to refer it to legal after all. 

FML

I'm at a loss. I have the other 3 units with tenants lined up, I'm paying my ex a weekly fee to put the current tenant up in a spare bedroom because I couldn't throw her on the streets over the holidays, counters are finally going in Wednesday morning and now all of this is going to get hung up in a legal battle. I'm going to lose the tenants I have lined up for the end of the month and all this is over a 2 week delay with counters. I've put everything I've got into this place. It was my first major renovation - it took way longer than expected, its way over budget and I just need to get it rented because come tax time I'm not even going to be able to pay the property taxes on it if it doesn't start cash flowing soon. I don't know if I have a case if I hire a lawyer but it seems so extreme to me to put someone out of their home (over Christmas no less) over a construction delay that was not in my or her control and not harming anyone, and now its in their power to draw this out as long as they want. I guess my question is what's going to be the fastest way to get people back in this place and what should my next steps be?

Post: Tax professional recommendation for real estate investors?

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

We expanded our rental portfolio last year. Historically, I've always done our taxes but this year I came out owing quite a bit and I would kind of like to have someone look them over and make sure I'm not missing any deduction opportunities. I know the timing is terrible 9 days before the deadline but if anyone has any recommendations for someone in the Des Moines area thats knowledgeable about taxes for real estate investors I'd love to hear them.

Post: First rental rehab - before and afters!

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24
Originally posted by @Mike Wood:

@Ashly B. Thanks for the additional info.  I understand why everyone told you not to do the floors yourself.  Last time I did hardwood floors, I only saved $500 after calculating all of the materials and rental equipment.  Totally not worth it (never again for me).

I have learned to use quality paint in the same colors for all of my units.  I have fallen for the allure of cheap paint (Contractor paint at the big home stores) and paint color mix ups.  There are two problems with that.  One is cheap paint required 2-3 coats, which is a waste of labor and really doesn't save anything, and the second is particular to a rental, as you need to be able to match that paint for touch ups. If you buy a color that can not be matched, you will notice any touch ups (even if you get the color computer color match scanned).  When we turn over a unit, I am able to just touch up a walls where needed.

 Good point on paint touch ups. As far as the floors, TBH we never even got as far as quoting it out. We primarily took it on because of time constraints. I started calling around in August and no one could get us in until October and at that point in time we had every intention of having it rented by then so we took it on more out of necessity. No idea what our savings was there.

Post: First rental rehab - before and afters!

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24
Originally posted by @Mike Wood:

@Ashly B. The place looks fantastic.  Could you elaborate on how you did all of this for $10k? I saw that your did it yourselves (so labor was $0), but that looks extensive for that budget.

Kitchen counter are laminate? (they look like stone)

Love the painted door trim, stained trim did make unit look dated.

 I can post the budget breakdown once I calculate it all out but some things we did to save money were:

~$1500 on unfinished wood cabinets from home depot. Handles and pulls came from the restore and were about $1/ea

~Bought all our paint from the restore... it was quite a bit cheaper but didn't cover well so we did a lot of coats. I might splurge for higher end next time to spend less time painting. There was A LOT of wood in this apartment

~Did the floor refinishing ourselves, despite reading a lot of recommendations not it. It was fairly simple and we were able to knock it out in a weekend. Another 3 days for the poly to dry. Its not perfect but its an old house with several far more obvious imperfections. Renting the sander from HD was really inexpensive. We also got the hand sander meant for corners and edges - highly recommend it, saved us a lot of time getting along all the trim

~Found a great deal on appliances. Spent roughly $1500 for both the fridge and stove and they are nicer than what we have at my house! Drawing a blank on whether that was HD or Sears

~yes counters are laminate. we did pay to have those installed since the plaster walls aren't very straight. They did a great job. You can tell they aren't stone in person but they look really slick. I love the look of subway tile but its also very inexpensive. Backsplash cost under $150 for all supplies. 

~bought all lighting on sale. Total cost to replace throughout the apartment was less than $400.

Most expensive fix we had was resizing that kitchen window and also having to replace a couple other windows in the house. Overall spent around $2300 on windows and labor. 

We will at some point need to replace 3 of the 4 furnaces as well. that will be about $12k. We had it estimated and ultimately decided to wait. If the repairs on the other apartments come out to be around the same, we will be $52k in renovations (including furnaces) and we purchased for $90k so overall $142k for an apartment that brings in $3200/mo. Expenses are currently running about $1k a month (with taxes, mortgage, etc). Our final upgrade will be to turn the walk up attic in the unit we just finished into a master suite. Will make that a 2 bed, 2 ba unit and we should be able to rent it for around $1100/mo so that one unit will carry all the expenses.... but thats a ways down the road :) We decided to wait until after it turns over once so we can get the other units going. 

Post: First rental rehab - before and afters!

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

Thanks everyone. @Account Closed its from Home Depot. Think we got it on sale around $1.99/sq ft

Post: First rental rehab - before and afters!

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

Purchased 4 plex June 2015. All units were rented but we had 2 open up at the end of July so we were able to dive in on renovations. Just finished our rehab of the first unit. Work done includes refinishing hardwood floors, all new kitchen, all new bath, exposing original brick (who knew that would be one of the hardest parts! Not sure I'd tackle that again even though I LOVE how it turned out), updating some windows, fixing some old plumbing and electrical, and lots and lots of painting. When we purchased, this 1 bedroom unit was bringing in $475/mo and we just had the first person to look at it after renovation sign a 1 year lease at $800/mo. Renovations cost about $10k (I haven't tallied the final numbers yet) and we did 98% of the work ourselves. 

... if anyone can instruct me on rotating my portrait photos I'd super appreciate it! Kind of loses some effect when you have to look at them sideways haha

Kitchen 

Living room

Hallway

Bedroom

Bathroom

Post: Coin Laundry??

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

Bumping this because I had the same question :)

Post: Kitchen layout help?

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

*****UPDATE****

This reno has drawn out far longer than we ever expected but finally getting close on wrapping up the first apartment. Just thought I'd post a quick photo update with where we landed on the window and layout. We did end up resizing the window to fit above the stove. It cost $600. Got all new cabinets and appliances, refinished the floors. Just need a backsplash, some counters, install the sink, and finish the cabinets with some moulding and a kickboard. Open shelving will finish the wall between the upper cabinets and the window. Bathroom is currently down to the studs and it will take us a few more weeks to wrap that up and then we'll *finally* be ready to rent.... and then we can start on the next unit :/ Definitely planning to contract out more once we're cash flowing so we can turn these next 3 more quickly.

Post: *Non* real estate investing finance question

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

Good call on score! I've worked with them before and they're great.

Feeling so lost on this deal. I know what is a good rate of return on an investment property. How do I know what amount of profit makes a business a good deal? Is $5k a month worth it after all expenses? $10k?...Is there a formula for this?

Post: *Non* real estate investing finance question

Ashly B.Posted
  • Real Estate Investor
  • Des Moines, IA
  • Posts 126
  • Votes 24

I know this is a real estate investing forum but I didn't have any other relevant forums I'm a part of to ask and you're a smart bunch so here goes. 

Summary is DH manages 6 franchise locations of a business for a couple investors in our area. They are interested in selling and approached him about potentially buying them. Before we dive into the books and whether its a good deal (DH roughly knows the finances as that's part of what he oversees, we've just never looked at it from an investment standpoint before) I'm intrigued about whether we could even borrow that amount of money and what our options are for financing the purchase of an existing business. 

I briefly chatted with a traditional bank today. In summary they said no less than 15% down, loan has to be approved by the SBA, current seller has to give 10% backing to ensure they oversee a smooth transition. 10 year loan at 5.5%

We're potentially looking at a $400k purchase price (total ballpark at this time, they said to make them any offer). We have awesome credit scores but just having purchased our latest real estate investment, I don't have anywhere close to 15% down on that kind of loan. 

The current owners did bring up that they would consider financing for us; however, we'd need the means to pay off their existing loan which is around $150k. 

So my question is, are there creative financing options I could be exploring? If we took them up on seller financing, could we potentially borrow that $150k or would the bank never go for it because the other $250k is financed? I could put 15% down on $150k, I'm not working with $0 but I don't have $60k to put into it. 

Secondary question. Who do you turn to to help you evaluate a business investment? This is new territory and I don't feel like its a simple as evaluating a real estate deal. On the one hand I feel like I'm in over my head with this, but on the other, this could be a really great opportunity for us if the numbers make sense.