All Forum Posts by: Lelith Walker

@Alaadin Alhamwi

Flipping is not low risk because

1. You have to get a US contractors license in some jurisdictions to do work on a home.  If dealing with mold, radon, and asbestos you need additional US certificates. 

2.  In some jurisdictions if they catch you or someone unlicensed working they will fine you or demolish the home.   Contact the building dept or get a legal service that will verify what you can and can't do.

3.  Even if you have someone licensed they can fine you or issue a stop work order against you if the contractor committed any violation when it comes to repairing or adding onto the home. 

4.  The neighbors can call the authorities against you if you or your contractors do not dispose of waste properly or mess up their homes. 

5.  People steal.  The copper pipes, toilets, garbage cans, and air conditioning unit, were stolen from my homes. 

6.  You do not know what is behind the walls until they are taken down.  Home inspector/engineers don't check behind closed walls. Some electricians do not know what they are doing. Buildings burnt down due to poor wiring. 

7.  The city inspector can require that something be corrected which may cost you $2000 more to have done.  For example, after the roof has already been put on the inspector now says that my dryer vent may need to be modified so the house does not explode. 

8.  If you do not check to make sure your contractor is licensed he may work under someone elses license.  If he gets deported, so does your money.  Or he could just disappear.  You could sue but collecting from him/her may not be easy.

9.  Some people who may be contractors have alcohol problems.  I know one who is excellent when he is sober.  However, when he gets into the bottle he is awful.

10. As mentioned previously, if you are where there is only one city inspector for the whole city, you could experience delays if he goes on vacation or in the summer when there are a lot of homes he has to review.

11. The materials and parts you need may not be in the store at the time you need them so you have to put an order for them.  Orders are not always fulfilled on time.

12.  You may have to work overtime on the job and when you go home just do not feel like fixing anthing which further delays you getting the property fixed. 

13.  You, the contractor, the inspector could get sick which will delay the process.  Its always good to have three contractors as backup. However, if the city only has one inspector then you can not move forward until they get well.

14.  You could go over budget.

15.  Market could tank.

16.  The water department, tax dept, gas and electric companies do not care if there are delays or your sick. They want their money and will charge late fees and even put a lien on your property if not paid.

17.  There may be other agencies you have to deal with as well that do not care if you get sick.  For example In Riverdale they will fine you if you do not take care of your lawn.  You will have to hire someone to take care of that when you are not well.

Andrew Fielder is right.  The popular cities and states like CA, NY, FL have a lot of people applying for citizenship.  I used to work for the government, in the same building as immigration.  When I got to work at 8am the line was still out the door. People stand long hours in any kind of weather.  Just about everyone in my family who was born abroad, it took them 10 years to be legal.  My brother almost gave up and went to Canada.  It only took him like 2 years to be a citizen there.  This was 15 years ago.

The other thing that I left out are the city inspectors.  The city that I have my properties at, have only one for the whole city and he does a few other areas as well.  When he went on vacation he held up the job.  Why because you can't put up sheetrock until he tells you to.  As a matter of fact he had my former contractor take the roof off because he wanted to see how he had reattached it to the house.  Now he wants something done to the dryer vent which is in the roof.  One of my contractors is so mad they told me they will not do another home in this jurisdiction again.  Additionally, I was told after I bought the properties that because my homes are close to a hospital the regulations are stricter.  These are things none of the gurus, seminars, meetups, etc taught me.   I had to learn on my own.  You have to prepare for the unexpected.  The unexpected will cost you time, money, patience, stress, etc.

Yes a bank foreclosure will accept inspection and appraisal contingencies.  I did this with a Florida property I wanted to buy a few years ago.  I got all my money back because the water  company removed one of the meters after I looked at it.  Water company said it was an illegal 3 family house.  All I did was ask them why there were 2 meters instead of 3.  The lawyer from legal shield told me that "as is" means when you saw it.  Any changes made after you saw it you can choose to opt out and they can give you your money back.  I chose to opt out and got back every cent.

You want to have contingency clauses in your offer.  Contingent upon inspection and its better to get an engineer.  Some contractors will low ball you so that you will hire them to do the job.

The local tax assessors office would show if there is tax liens.  You can do a search for them online or call them and they will walk you through it.  Other locals you may need to speak with the county clerk, dept of buildings or dept. of finance. 

There is a lot of information missing: like how much you owe? the price range you are looking to buy? how long after fixing it up would you sell it?  how much of a profit do you need to make on it?  How much is the job paying you that is going to help you fund these properties?  How much will the income and property tax be?  Do they pay a separate school tax out there?  Flipping houses is not that easy even if you are handy.  The value of time is something that needs to be factored in as well as the money.  I've heard that California homes are rather expensive compared to the rest of the country.   Finding a good team is extremely hard.  I do not see flipping as a low risk idea even if you would be living in the property doing some of the work.  You may spend less money than some but you would be putting in more time.  Would you be doing all the work yourself like electrical, plumbing, sheetrock, flooring, windows, roof, landscaping, foundation (they do have earth quakes in some parts)?  I believe the earthquakes will drive up the insurance rate and if the home is in a flood zone well that's even more money.

To get a rough idea of how much homes are check out

http://www.housevalues.com/, http://www.eppraisal.com/ or http://www.zillow.com

When it comes to loans it depends on which institution you go to bank, credit union, etc.  They look at your credit, how long you have been on the job, how long you have been in your career, how much you make.  They send out their appraisers and they determine how much the home is worth.  A lot of banks will turn you down if the repair cost is half of the purchase price. 

My situation is different than yours but maybe you will learn something from looking at this video of what happened to me when I started out trying to flip. I am not in the video but my homes are and the guy speaking was the property manager. The previous manager who claimed to be in Jamaica during my flip was the former marketing director of the Georgia Real Estate Investors Association who had experience and came with recommendations.

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I do not want to rain on your parade.  I just want you to be careful and prepared.

I am doing a remote rehab in Georgia, and if I were you I would get out of the deal or find people who you trust.  Its better to get a good team before you take the deal.  Listen to your guts.  I didn't listen to mine and I am paying for it dearly.  A lot of things did not go as planned at all.  If 35th is what they told you know that it can turn into 70th.  Dates to complete can be pushed back into the next year.  I am dealing with this now. 

If you are going to have a realtor sell or rent the house out for you then you do not need a project manager.  If you are going to try and rent or sell it yourself remotely, then I would get an experienced project manager that is going to be available to assist you and has good reliable contacts. 

@Kevin Yoo and @Chris Allard

How do you find your local partners?  What questions do you ask?  What do you use to verify them?

Have you been dealing with big banks or small ones? Have you tried credit unions?  or partnering up with someone?  Have you gone to SCORE or SBA?  They could evaluate your business plan.  How about Neighborhood Housing Services?  Your accountant may also be able to advise you.  If you do not have one or the one you have is not familiar with the different real estate strategies that exist then you may want to consider a new one.

Anyways keeping asking because you only need one yes to get started.

@Todd Fithian I do not mean to come down on you but the lease may not be the only thing that needs to be revamped.  You can have a strict lease but if you do not reinforce it and stick to your guns then your tenants may run over you.  You give some people an inch and they will take a yard.

@James DeRoest I value peace of mind over money others might not.  On the otherhand, I guess it also depends on your market and location plus if you still have a job.  I am in NYC and Atlanta.  I do not have a hard time finding tenants.  So far people ask me if I am renting without me even advertising.  I never worry too much about vacancy. 

As to your other statement I was not familiar with the other post and I do not feel that I am hard as nails either. There are going to be times when I have let my tenants slip. For example, several years ago I had one that was an insurance fraud investigator who had to travel for work.  She told me before hand she did not know how long one particular case was going to be for.  She paid the current and the following months rent upfront.  She came on the third month late.  I dropped the late fee on her for the third month.  She was never late again.  It depends on the situation.