All Forum Posts by: Chinmay J.

@Eddie T.  - Yes, I was approved by TD Bank for $20,000 @ 8% pa. It costs me $25 per year to keep it active. It was quick. Took about 3-4 days.

@Russell Brazil  - Well, if he put in a dry wall to make additional room, then shouldn't he have taken permit.  Also, he has a wood stove. 

Here is the PW County list of what requires and what doesn't require permits that I just pulled. Turned out a lot easier than I thought

http://www.pwcgov.org/government/dept/development/bd/pages/permit-work.aspx

Thanks as always for your input. What should one do in this case. That raises the question, what should one do in this case. Does this  even need to get corrected, or a simple request to county can get this fixed.

@Kami S.  - Congrats.. What do the numbers look like?

Went to this house yesterday, and noticed that the house had 3 rooms.  The owner (seller) was yappin' about how he tore down this wall and that wall and made an extra room for himself. I stood there nodded and appeared impressed.

I come home and look at the County's Tax assessor website and the house is recorded with 2 Bed and 2 FB. So my thinking is that either the guy built one (he is in construction) by not pulling the right permits with the authorities or the county website is wrong.

I am planning to use HML with this transaction, so I am not sure this will be problem for me while buying, but is my thinking that this discrepancy can definitely cause issues when I am trying to flip the property, correct, especially when getting it appraised for loan.

How would you experienced flippers move forward in this situation? I am thinking of going back to the realtor and have her go back to the seller and get it corrected on the county website, provided it can be corrected, if not then my offer price should reflect tearing down the wall. 

Please correct me if I am wrong.. Thoughts?

You misspelled my name, so I never got tagged. I don't have anything to add beyond what others have added. If big ticket items were replaced recently, you will have less CAP EX costs upfront. If they were replaced a while ago, you might incur those costs sooner than later. It also depends on your goals with the property. You want to keep it for long term, then you will incur those costs at some point.. If you want to sell it in next 2-3 yrs, you might not, if you are lucky.

Good luck.

@JJ Mayer - Some things to consider...

Your cap rate is about 8% which is not bad.. What are you accounting for in the expenses? If you are just accounting for PITI payments. You also need to consider about 8% of vacancy (1 month) and Cap Ex (big expenses), PM fees if you are having someone manage it.

 Awesome !!! My mom always did that when I was a kid to catch me in a lie. lol

@Jason Hanis - I can see this as potentially getting very complicated. The devil is in the detail and how you structure the joint venture. So three of you are going to act as partners, and one of the partners is a contractor.  If everything is working smoothly, and everyone is in agreement this is a great scenario. In a typical scenario, the contractor is looking out to get paid while the investor will make sure the contractor stays honest - within budget and on schedule. Who is keeping the third guy (contractor + partner) honest, when he himself is one of the partners. 

Yes, as @Ruth Bayang suggested, you need to get it in writing. But it would be worthwhile to give a deep thought as to how you structure it. How involved is the third guy (contractor+partner) going to be in investor decisions. Does he want his GC fee + profits? Is he going to slash his fee and give you discount for using in house service? 

An honest contractor+partner would keep the whole project under budget and ahead of schedule. An unscrupulous one would try to double dip in GC fees and the profits.  So I would say, proceed with caution.

 Stuff that I have heard from podcasts and posts..

• It is not difficult for judges in some cases pierce the veil of LLC, and lot of times a good insurance policy will protect you from lawsuit than LLC.
• If you have mortgage on the property, the note could be called immediately, as you transferring the property to LLC triggers the due on sale clause. Although some people say that they don't know a single instance where this has actually happened, if banks tomorrow decide to call some of the older notes when interest rates do rise (and they are already rising), I won't be surprised.