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All Forum Posts by: Brit F.

Brit F. has started 7 posts and replied 142 times.

Post: HELP! Buyers want to close all cash bc lender can’t perform

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Richmond Taylor, Your state my have different rules, but here's how things work in my state of TX: 

If buyers are refusing to do amend the contract to reflect a cash purchase, that's a red flag.  There's no good reason to not put it in writing, unless the buyers suspect they can't perform under the new terms.  Sellers are not obligated to extend an executed contract to let the buyer sort out the issues with the lender - especially if Seller has a backup contract.  In a softer market, and if seller wants to be nice, they can extend.  In a hot market, buyer is going to lose their earnest money and the house.

However, most sellers would be happy to have a buyer pay cash, and seller can certainly close without knowing what the outcome/funding source will be for the buyers.  After sellers close, if buyers can't close on the current contract, seller should keep the earnest money and move on to a new buyer.

Typically, the funding change is the other way around, where a buyer initially presents a cash offer, then changes to a financed one, which increases the risk for the seller.  Deals can fall apart quickly here because again the seller is not obligated to allow a change in funding source.

Sellers can't legally choose to not close just because 'buyers are difficult'.  Hypothetically, if sellers choose to not close while buyer is still performing, buyer can sue Seller & Broker, and buyer would have a legal advantage.  On the other hand, as soon as the buyer stops performing, the legal advantage changes to the seller.

Post: Failed concrete subfloor...on 2nd story

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

Here is a completely failed 1.5" thick concrete subfloor on top of 1/2" plywood and 2x10 joists 16" on-center, throughout the entire upstairs of a condo with 3 beds and 2 baths.  The cracks generally run parallel to the joists, clearly demonstrating that the thin plywood underneath lacked the stiffness to support the load.  Interestingly, all of this was original to the home, which is an early 70's build.  (Sidebar: this same builder decided to create a long cantilevered overhang with laughable/dangerously short back span that has also failed and violates all current codes, but I might create a separate thread for that.)

With a little 20lb demolition hammer and a pointy bit, took only 45 mins per room to bust it all up.  I'm still determining the easiest way to haul it out...there's not a good way to make a chute to the dumpster.  I might just make a hole in the subfloor & ceiling below and just push it down to the first floor, then wheelbarrow it out.  Since the whole downstairs is gutted, it's no biggy if we make a mess down there.

Once it's all removed, we'll add 2 layers of 3/4" tongue and groove plywood, glued & screwed.

Post: Texas investment property heloc options

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Eric Johnson, you can absolutely get LOCs on investment property in TX, but they are hard to find.  When I was shopping last year, PenFed could do it in TX, but their requirements may not work for everyone.  The one that sticks out is that they require the borrower to own 4 or fewer properties.  Worth a call to them to get the specifics.

Besides PenFed, you just have to keep calling local banks.

FYI, you'll need to hold title on the property in the name of your business, and the lender will likely want you to keep a business checking account with them.

Post: Bad tile work and deposit on next job.

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Curt Bixel, you'll likely spend a lot of time and money paying the lawyers, and you may not get the outcome you want.  But, if you feel compelled, have a consult with one or more lawyers to see what they think.

I know it stings; there is always an obsessive urge to correct bad faith behavior, and clearly Contractor A was/is acting in bad faith.  Many people here in BP can relate.  Trusted contractors are hard to find.

Spend time and money on actions that advance you to your long-term goals.  If a court case will help with that, then go for it, but if it's a distraction from your long term goals, then let it go.

Post: Bad tile work and deposit on next job.

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Curt Bixel,

Eat the cost and move on.  Consider it an investment in your own education.  My quick read on this is that you need to ratchet up your sense of control.

Alternatively to eating the cost and moving on, and depending on how much you want to burn the bridge with Contractor A, you could ask them if they can issue a full/partial refund based on the pictures and Ditra install requirements, and if they refuse, ask how much do they think a negative review will cost them in lost business - especially since you'll mention Contractor B fixed A's mistakes.  You might also mention that you won't be able to recommend Contractor A to your other investor friends, but you can and will recommend Contractor B.  Deliver this message with kindness in your voice, and if you can muster an empathetic tone (empathy b/c Contractor A might lose future business), it can help.  Ultimately, it doesn't seem like you'll get far with Contractor A, but you never know.  You might feel better after.

And yes, mastic over Ditra is a huge no-no (longtime Schluter fan here).

Here are some of the takeaways...not rookie mistakes, but learning moments aka opportunities for improvement:

-Trust but verify = During any remodel effort, check-in frequently - daily or 2x daily depending on the speed of the work.  Or make sure a trusted person is checking in that often.  You would then ask for written updates from that person after each visit.

-If you're giving the PM that much control, make sure they have incentive to do a good job.  It wasn't clear to me what role the PM was playing during the remodel; if they were acting as the GC, then they should have paid the contractors, and then you pay the PM upon satisfactory completion of the work.  Under this model, you likely wouldn't have paid the PM after noticing the shoddy work.

-Pay deposits to cover the purchase of actual materials.  It seems odd to pay a deposit to the contractor for both sides of the duplex, unless work was happening simultaneously (and that doesn't seem to be the case here).  If they were doing one side then the other, it would make sense to only pay a small deposit for one side at a time.  If their contract required you to pay a substantial amount up front for work that was weeks away, that's a big red flag.

-If you determine a contractor has done an inadequate job, notify them at the time and give them the opportunity to fix it.  If you/another contractor fixes it, you're much less likely to get any sympathy from the original contractor.

Post: Memorandum of Contract for Sale of Real Property

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

Thinking about filing a Memorandum of Contract (MoC) in TX on a property against a seller who is refusing to perform on a contract.  The seller refuses to either 1) make repairs previously specified in the executed contract or 2) Contribute 50% of the estimated cost for those repairs.  Seller's agent claims the seller will terminate the contract soon, which obviously they can't do in good faith. Plus, since the seller's agent touted that "they have 4-5 other buyers lined up", MoC to cloud title looks like our recourse.

Gonna make one last attempt at reasoning with them tomorrow and go from there.

If anyone has a sample MoC in TX, I'd love to see a sample if you can PM me.  We'll have a lawyer draw it up, but I'd still like to look at one if possible.

Post: Question about foundation issues in DFW area

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Dan Pisauro, When you say "Sellers have proof that repairs", does that mean they repaired just the symptom (by re-leveling the house) or did someone also repair the source of the foundation issues?

For example: was it caused by poor grading/drainage, tree roots, post-tension cable failure, water leak, poor moisture management (i.e. no sprinkler)?  Sidebar: Whenever I see foundation repairs (sometimes multiple) on properties without sprinklers, I sigh in sadness/pity...a $3k sprinkler system is typically cheaper than any single foundation repair.  Adding or repairing a sprinkler should be one of the first things you address on a TX property.

Additionally, you really have to think of TX foundations as living creatures, and it doesn't matter if it's slab or pier & beam.  Both will move.  The trick is to keep the moisture level as constant as possible.  Big changes in soil moisture will absolutely cause movement.

That said, I love buying properties with foundation issues; it limits the buyer pool drastically.

Caveat, if the property has cast iron drain pipe, make sure you add into the contract that the house must be able to pass a hydrostatic test (a good idea even if there was no prior foundation repairs).  If the seller's foundation repair company pulled a permit, chances are a hydrostatic test was required to pass inspection, but I'm an untrusting fellow and would rather pay the $150 to a trusted plumber to do the test.  The point is that it might save you a $10k+ repair bill later on.

Post: Renting to a tenant with insurance claim

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Peggy Lindsay, Yes, we just had tenants move out whose home was destroyed by the tornadoes in DFW exactly one year ago.  Tenants' house had to be completely rebuilt.  From our perspective, it worked out great. Insurance offered an initial 6-mo lease.  Similar to the post above, we were able to get above-market rent.  We were fairly certain it would take 9-12 mo's to rebuild their house, and that's exactly how it played out.

From the tenants' perspective, it turned sour b/c insurance stopped paying after 11 mo's even though their new house wasn't ready.  The tenants would have happily paid to extend the lease, but the insurance company stopped paying for furniture rental too.  Tenants moved to a hotel.  We checked in later with them, and the insurance company ended up paying for the hotel until the new house was ready a few weeks later.

We would definitely do business w/insurance co again.

Post: Best way to sell or gift a property to a family member

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Shelby Bybee, chances are the difference between the sales price & FMV would be classified as a gift anyway. If your dad doesn't need or want a lump sum cash payout, he can certainly gift the entire property to you. Unless he's already gifted you several $M, he won't pay taxes for the condo gift. Just read up on the IRS gift tax rules. More than likely, he just needs to document the gift in his tax filing, and as long his total gifts are under the threshold, he'll pay no taxes on it (nor will you - until you sell it).

Another option to explore besides gifting: you and he could set up a seller financed deal, where you pay him a small amount each month/year, which would keep his taxable income lower than if he accepted a lump sum payment.

Double-check the above w/a CPA.

Post: IKEA kitchen cabinets pros & cons

Brit F.Posted
  • Rental Property Investor
  • DFW
  • Posts 143
  • Votes 120

@Jeff Cliff, I've used them a few times.  Assembly is time consuming, and install can be a blessing or a curse.  The legs for the lower cabinets are easy to adjust and eliminate the need for shimming.  Toe-kick and the associated clips are flimsy and feel cheap - no question.  For uppers, shimming can still be required, such as behind the steel support rail if the wall is horizontally wavy, or at the bottom of the cabinet if the plastic spacer they include isn't thick enough.  Or, on the other hand, you might have to shave the plastic spacer if it's too thick.  Galley kitchens are straightforward, but U-shaped kitchens require some extra planning (or creativity/customization during install) because the steel rail used for the uppers pushes the cabinets away from the wall roughly 3/8 to 1/2" (not including shims behind the steel rail if required), reducing your available space on the adjacent wall.  Once the rail is up and shimmed, uppers go in really quickly.

The doors & drawer fronts are solid, and easy to replace if one is damaged.  Hinges & drawer hardware are easy to adjust.

No concerns with durability with either the boxes or doors/drawers.  However, in terms of quality control, I have seen differences with where the mounting brackets attach to the boxes, which makes it difficult to get neighboring boxes perfectly flush at the front edge - like a small lip between 1/32" to 1/16".  Granted, that lip generally will be hidden behind the doors/drawers.

Microwave install can get interesting because the uppers are so deep; the MW may need to be pulled away from the wall to provide clearance for the recirc vents at the top of the MW.

In the end, the Ikea kitchen system works, but install can be complex.  For me, cost savings on the cabinets is offset by the assembly & install time.  Nowadays, we've found other semi-custom cabinet suppliers we prefer over Ikea.  But, each time we do a kitchen, we'll still consider Ikea's options to see if they have something that works better than other options at the time.