All Forum Posts by: Brian Erlich

@Paul Winka,

I painted the basement ceiling black in a home I owned in Michigan.  It basically made the ceiling disappear.  In painting the ceiling we also painted the duct work and everything else.  It gave us a bit more height and was less expensive than other solutions.  The biggest decision point is the standard of the neighborhood.  Would this change be an improvement over other homes?  

If your looking to make an educated guess base your value on the homes that have sol and then add you best guess as to value of the additional land.  it should get you pretty close.  The other issue, depending on where the home is, homes in the million dollar range may be harder to sell.  that may help you to get a discount to its actual value.

@Ben Roberts,

Although I am not sure exactly what steps you should take, what I would suggest is closing the deal with as few steps for your customer as possible.  If a power of attorney is easiest and your attorney thinks that is a good solution, I would go that way.

You may be able to enter the address into realtor.com or Zillow and mark it as a favorite.  When it hits the market you should get an email about it.

If the seller owes $86k and the property will be worth $100k after rehab, you are looking at a very small rehab.  You may be able to purchase the property subject to the current mortgage.  In that case renting may make sense.  A short sale may also be possible.  Those seem to be the best opportunities based on what you have presented.

First you need to determine the after rehab value. The zestimate and tax assessed value can vary from market value a great deal. Look at what comparable homes in the neighborhood sold for. That should help you understand what the ARV may be.

@Jake Larson, I would agree with @John Chapman.  Many times the difference in value is a lot more than the cost of the upgrade.  Most people want a move in ready place and are afraid of the cost of fixing an item.  The fear of the cost and hassle is what drives the difference.  Comps always tell the story better than a guess.  You could try to isolate the central air value by running multiple sets of comps where the only difference is central air.  If you do this in the area of the home, it should give you an idea of the value for central air.  You will likely get a narrow range of prices.

I hope this helps.

To add to what @Charles R Mull said:

70% of After Rehab Value("ARV") - renovation costs = Maximum Acceptable Offer("MAO"). The offers you make must make financial sense for you. Above is the basic formula I see around the Bigger Pockets forums.

I hope this helps

I don't have experience with this, but it sounds like its up to you.  If you have a contract, he owes you the work and materials promised in the agreement.  He may not be able to deliver if he can't pay his employees and you might need to watch out for him not paying subs.  An unpaid sub can get a lien against your property.

It is also possible that this is his tactic or that he isn't a very good manager (it was the middle bid after all).

All in all you need to make sure the job gets done so I would:

• Negotiate with him to get the lowest price you can to get the project completed.  You will probably have to give up some of your expected profit.
• Make sure the subs sign off that they were paid before you pay him.
• Pay him the last third after all work is complete to your satisfaction and don't work with him in the future.  He also needs to sign off that he was paid.

I am sorry you have to deal with this.  Its hard to find good contractors.  When you find them, do what you can to keep them.

@Samuel DeMass, have you looked at using unique refinishers?  They can re-glaze the tile and tub.  I believe that the price is affordable.