All Forum Posts by: Christine Kwasny

@Andy Luck:

Yes, you are correct that getting emotional can be your undoing. I really don't get emotional with the properties because...well, I just don't.

And, yes we were lucky. I almost didn't buy the place; my brother is a firefighter who told me all about victorians and their lack of fireblocking and how the fire damage could be extensive and unpredictable. I typically don't even consider a building this old because I don't want to deal with all the old stuff like galvanized pipes, knob n tube, lathe n plaster, lead paint, old windows, etc. We made an exception here since all these things had been modernized, and the building showed no signs of structural compromise despite the severely damaged roof structure - as verified by several structural engineers. After many opinions, it seemed like the fire damage was probably limited to the roof, with little to no damage to the vertical structure. We got lucky, as this was the case, but we were prepared for more extensive damage. In addition, we got a fair purchase price for the risk we were assuming and the neighborhood is hot, hot, hot.

Just replacing the roof (which was about shot anyhow), the underlying roofing structure, engineering, permitting, etc, etc was about $45,000. The damage was old - probably from 1987 when the last fire department response was recorded and the vintage of the interior remodeling and system upgrades (plumbing and electric). I suspect that the owner at the time took the insurance money, upgraded the interiors, plumbing, electric, installed new wood windows, and simply slapped a new roof over the charred structure. At the time, this neighborhood was redlined, and the property had recently been sold from the federal redevelopment agency after completing a nearby freeway and hospital project that bisected and essentially destroyed the historic neighborhood.

The before/afters aren't very interesting unless you call an in-kind roof replacement exciting!

As a follow up to anyone looking at a similar situation:

We did purchase this building, and decided to do a full overhaul right away for various reasons, which in hindsight was the wise decision, although we were a tad bit over our heads

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In regards to replacement of the roof and fire-damaged roof structure, we interviewed and compared quotes from two large fire re-hab companies. Both were very competent and I'm confident either would have done a great job. Basically, it came down to cost and differences in approach. Costs were very close, so that wasn't a big issue. One wanted to do stick frame; the other pre-built trusses. We decided to go the stick frame route due to savings in time, and flexibility to make adjustments as needed once the old structure was removed. There were also serious access issues. As it was, removing the old debris and getting new materials up was challenging enough. I don't see how trusses could have been placed short of helicopter.

In the end, we got lucky; the fire damage was mostly restricted to the roofing structure, although there was fire damage to interior walls from where the fire started, which was minor and not load bearing. Basically, the structure was engineered, plans reviewed and approved by the City, and the work was done. The crew did a great job and and the finished product is great. Now there are no more worries on that end. It could have gotten pretty ugly with fire damage in wall structures that would have required repair/replacement. We were prepared for that, but were fortunate that this part of the project stayed on budget. I should note that this was a very large and messy job. Vacating the building was a necessity; the interior and exterior were full of debris and heavy construction for nearly 4 weeks, a situation no tenant would appreciate and I see as a liability. The contractor was very conscientious, but removing an entire roof and fire damaged material is very messy business that is pretty major construction.

The project as a whole took nearly six months, but the building is fully renovated inside and out, it's beautiful and low maintenance. We have been able to get higher than anticipated rents, and overhead should be low for a long time to come. It took nearly 8 weeks of negotiations with the seller; 6 weeks to select the right fire repair contractor; 6 months of vacancy; and countless incredibly stressful situations, but it's over and done with and I feel we have an great asset added to our portfolio.

Thank you! I will drop her a line.

In the end, I hired Turner Property Management. Many positive references. My contact, Michelle, is amazing. Very responsive with great attention to detail. She got my units filled in 7 days, compared to the 6 weeks prior with only 1 placement. Time will tell, but I'm quite happy so far!

I currently live abroad and need a US CPA. Any recommendations? My properties are in Oregon, but any US CPA would be OK. Thank you!

Thank you! I will drop her a line.

I am looking for a property manager in the Portland Oregon area. I own two houses, a condo, and a 4-plex. I had been managing these myself but recently moved to Switzerland. The first three are on cruise control, but the plex was recently renovated, is vacant, and currently has some plumbing issues. I can be pretty demanding, so I need someone who is responsive and can handle intense investor types. Any recommendations are greatly appreciated.

Yes, the seller got her own opinion. she agrees with our assessment of the roof and roofing structure replacement.

Just got word from the contractor on if ceiling replacement will be required by city: $40k and 4 months. Yikes! City has a lead paint ordinance that requires everything to be contained and disposed of as haz-mat, thus the exorbitant price tag. I am trying to get a better indication from the city if we would be required to do this extensive, and expensive, repair.

We are running into the end of inspection period so I think at this point we may have to mutually agree upon $400k as an allowance for the roof replacement scope covered under the original $35k, and get bother week for inspections. However, we now have addt'l info that leads us to believe things can likely get much more expensive, and we are getting tank locates, sewer, and inspections done next week, we will (hopefully) have a better handle on just how bad things could get, and go back to the seller with a more certain upper limit of what we are willing to spend.

I haven't gotten the worst case scenario bid back yet. Coming later today. I am just ball parking, should these need to be replaced:

Replacement of top unit ceilings and associated vacancy and unit clean up. $10?

Repair of wall structure and siding, and any potentiallly damaged wiring or plumbing. $15?

Potential renovation of top floor-flooring replacement in units and common entry and stairs, paint, kitchen and bath replacement. Approximately 1300 sq ft total. $20?

Potential repair/replacement of front balcony to current safety code, front entry porch, and repair/removal of precarious rear stairwell. $25?

Only the first two items are potentially necessary, but if the units are vacant and messed up, may as well upgrade at that time. I'm planning on doing so sooner or later anyhow. They are ok as is, but the area has gentrified well beyond the current quality of these units. The other items can be deferred but should eventually be addressed for aesthetic and safety reasons.

Does that sound reasonable?

Thank you for the feedback!

Yes, the numbers for repair are high. In reviewing, I see I actually misquoted-the $35k would include a new composite roof, replacement of all the underlying roof framing, gutters, and replacement of decorative detail. I got three estimates - all were $35k +/- 5k, so I feel that is pretty accurate. Those include engineering plans and city permitting. The catch is where the fire damage stops, and how far the city may make us go in repairs. For example, the ceiling structure is damaged. The estimate is for sand blasting and sealing the charred areas, but the city could require replacement, which would require the ceilings to come down, thus making the top one or two units uninhabitable. ugh.

As for the numbers, the seller has agreed to sell at $400. I think the building is worth no more than $475, maybe $450. Cash flow would be good at these prices-with a total cost of $450 ($350 plus $100k in repairs), I'd be getting about a 7 cap, and 9.5% COC. Question is 1) can I get the seller below $400 (she thinks she will be able to get a cash buyer at that price, but I am thinking any cash sale would be closer to $350); 2) can I get permits and keep repairs well under $100k; and 3) would the fire issue be effectively closed after all the repairs when I sell it? That all seems plausible, but what reality holds in store could be quite different!

I am feeling better about this purchase, just want to be sure I'm pleasantly surprised rather than blindsided by any outcomes during renovations, and ultimately when we sell.

Thank you for the advice and encouragement.

I have gotten great feedback from a structural engineer, general contractor, insurance estimator, and my firefighter brother with various opinions ranging from "it's not so scary", to "run and hide". I am hopeful it's not so bad but worried it could be worse than imagined. I guess I either dive in head first or walk away.