All Forum Posts by: Greg Heden

I own and operate a high-end full service remodeling company in the Phoenix metro area.  I recently have purchased a four-plex and single family residential home to add to my RE portfolio.  The challenge that I have is wanting to correct all the DIY and lipstick on a pig improvements that have been done throughout the years.  I have trouble just making them clean and livable and calling it a day. Fortunately I can facilitate all the improvements at cost but is it realistic to think I can draw a higher end renter that is willing to pay above market rent to live in much nicer appointed home?  Has anyone approached their rentals with this mentality? What percentage over local market have you been able to achieve? Thanks in advance!

As a Profesional remodeler, yes they should all be the same color throughout the home unless you have a theme room calling for a different color to conceal or make a statement. As for a kitchen backsplash that has a decorative design, we use under cabinet outlet bars to eliminate them entirely as not to disrupt the design pattern and overall look.

Does the IRS permit a cost segregation analysis on a 4-Plex? I was told since (5) doors or less is considered residential for loan underwriting  and depreciation schedule purposes (27 years vs 39 years) it is dis-allowed. Just seems weird since it’s 100% an investment property.

I chose this option a few years back on my primary residence because I was in a debt reduction mode but wanted to maintain access to my equity. The loan/line was underwritten at a 80% LTV and has a 30 year life. Basically it's in place for 30 years with a small annual fee ($65). Unlike a HELOC that can get reduced or closed (like mine in 2009), the All-in-one mortgage seemed to be a pretty stable access to cash, if needed.

One last thing is that it is connected to a checking account that automatically drafts to the loan nightly.  The intent is to take all your miscellaneous accounts and funnel them there to have your money working for you rather sitting in non-interest paying accounts(circa 2019). Money can easily be transferred back to the checking for upcoming expenses.

I ended up going direct with Merchant bank out of Indiana and saved significant closing costs over a broker initiated quote.

I have a contracting business in the Greater Phoenix and the subject of permits comes up on many projects we undertake. Requirements vary greatly from city to city. I suggest calling the enforcement officer and having a discussion of what work was performed. In our area, a pull and replace does not require a permit, although, running new circuits, gas lines, and rough plumbing changes do. Since the work is complete, I would invite him over for a walk through and explain that all you did was cosmetic upgrade and no structural or mechanical changes were involved. Most likely he will look around and see that it was a nice refresh and dismiss the tag. If there are some things that were done and “discovered” that needed a permit, you can usually pay twice the original permit fee and remedy the situation(as long as it was done to code).  Hope this helps!

 Good to hear someone else sees it that way. I get the positive cash flow stand if it is critical to sustain, but not the only measure of a successful investment!

@Bill B.I was unaware that is was SOP in “Residential” deals to required proof of funds. In that case, I hear you regarding the realtors negligence. Also was unaware of the high cost of a bridge loan but had an innate feeling that was such the case.  Thanks for the input.

@Theresa HarrisGreat advice! Thx-

Alexandra:

Refinishing traditional "Solid" hardwood flooring is much easier and less expensive if done with nothing in the way.  All the rough trades(framing, HVAC, plumbing, electrical,& drywall) should be completed. At that point, you can have the floors refinished. Upon completion, they should be covered(aka. protected with ram board or such) completely during the Trim-out phase (Cabintey, finished trim, plumbing, electrical trim, etc.) until all work is complete.  I would suggest you talk with a few flooring re-finishers to discuss the timing or if you hire a GC, they should understand the timing of things.

@Bill B.She never listed her house for sale. She is to blame for jumping the gun and not planning ahead.  I am confident that her house will sell fast since it is a highly sought-after community with only  80 and so homes, right on the water, (Wickford, RI), zero for sale currently.  The issue is that she will not walk from this deal.  If I leave her to her own, she will end up the victim of someone in order to bridge the gap.  I understand that there is a lot of info behind the scenes that would bore everyone to death, but the facts are I need to facilitate this purchase and the subsequent sale of her home in the best possible manner.  With that being stated. Please hit me up!