All Forum Posts by: Hattie Dizmond

@Lisa Ramos if your numbers are accurate, then investing the money to bring the house in line with the current market makes sense.  I still suggest you go the route of just getting references for 3 solid contractors and getting quotes from them.  Everything from the level of finishes you select to the pitch of your roof can drastically impact costs.  Also, I don't know about AZ, but here in Texas, when you do some things will impact the costs.  For instance, getting your roof replaced here in North Texas can be much cheaper in the winter, because the roofers are not as busy.  Roofers, particularly larger contractors, will often reduce prices in the winter to keep their crews working.  The same thing holds true for A/C work.  Again, I'm not familiar with the AZ market, but there are usually things you can do to bring the cost down.  Also, another piece of advice for dealing with the contractors is to always use milestone payments.  That means the contractor gets his next payment, when he completes a specific milestone.  The final payment should be contingent upon final inspection (code compliance) and a final walk-thru.

@Rich Rodman & @Josane Cumandala just nailed it for you.  And, to put it more simply, adding hand-scraped hardwoods in a linoleum neighborhood will not get you a hand-scraped appraisal.  It's just going to get you pretty floors with linoleum value.

@Lisa Ramos you have a good working list.  Take that list and prioritize it.  Just do a simple ranking of the most to least important items on the list.  Once you get your check and know how much money you actually have to spend, call 3 contractors.  Show them your list (not your check!) and ask them for a quote on the entire job.  When/if it comes back over your budget, start taking things off the list, beginning with the least important, until you get back into a budget range you are comfortable with.  Ask each contractor for 3 references...CALL THE REFERENCES.  Pick the guy you're most comfortable with and get the work done.  

There is no way anyone here can give you any numbers that will be helpful to you.  There are too many possible variants to play that game.  

What I will give you is a piece of advice.  Before you begin any major renovation, figure out what your home's current value is.  Then figure out what your neighborhood will handle, in turns of value.  (i.e.  If you have a home that is currently work $100k, and your neighborhood will only support values up to around $125k, but you're planning to throw $100k in renovations at your house, then understand you may never be able to recoup that value.)  If you plan to live in the house for the next 25 years and not sell it, then you may be fine.  However, one of the worst real estate decisions you can make involving a single family home is to over improve it.  

There is a guy right now, right here on Bigger Pockets trying to figure out why his flip hasn't sold.  He's going to lose money, if he reduces the price any further, but we had to break the news to him that his property is priced too high  He has priced the property based upon the $ he has put into the home, not based upon what his specific market will bare.  Unfortunately, I had to explain to him that he put hand-scraped hardwoods in a linoleum neighborhood.

It can be emotional, when you're talking about your own home, but I would expect you are asking the question on Bigger Pockets because you want real estate advice.

I have never rented anywhere or had a rental situation where a receipt was issued for rent paid by check.  That's ridiculous.  And, unless your lease specifies you will, I would tell them their cancelled check, via their own bank, is their receipt.  I might also give them the option of paying electronically, if they are concerned about the checks.  But, I would certainly not provide them with a receipt each month.

@Scott Decaria a lot of things are different in Texas, and there are - in general - a whole lot few regulations.  I have friends living in 4-plexes here in Dallas that were once single family homes.  They have separately locking egress and ingress points.  Some have separately metered utilities, while others have allocated utilities.  I would imagine utilities and fire separation are going to be the 2 chief concerns, and you're going to have to check with your local code enforcement division or a good, licensed contractor to figure out exactly what you will have to do to rent those spaces separately.

You might give @Brian Gibbons a shout.   Super smart guy, just as nice, and he can teach the heck out of creative financing and take it to the next level.

Originally posted by @Steve B.:

@Hattie Dizmond please don’t fall for that “offsetting tax” scam many politicians push every year.

Here in Oregon we have politicians which emphatically plea every few years for the voters to pass a state sales tax; saying it will offset our property and income tax. That’s a complete fantasy in our local political climate. Most interestingly is that a sales tax is the most “regressive” tax of the three, hitting the poor proportionally harder. And the politicians urging its Implementation are the most “progressive” in our legislature.

We already have a state income tax.  We also have a HUGE problem with illegals.  It is a horrible drain on our educational system, which is a major reason for the rate of our property tax.  Needless to say, the vast majority of illegals are paying no property taxes.  Lowering our property taxes, while pushing more of the burden for school funding to sales tax will force everyone to support public education.  Right now, we are paying private school tuition and property taxes supporting public schools.  I could go on for an hour about the Robin Hood plan and how it gutted funding for the best school districts and sent those funds to poor districts, because everyone should be equal.  Or, about how we have public schools being choked by ESL requirements.  It might not make a lot of sense in OR or some other states, but I'm all for having the people using the services pay their fair share.

Originally posted by @Isaac Black:

@Hattie Dizmond: That I understand, my confusion is the guys who buy and hold for renting who refinance. They say that they pocket 20k after refinancing once improvements have been made.

 It's the same principle as selling.  You refinance, with a higher appraisal value, so you have forced additional equity.  If your original loan was for $50k, and the property now appraises at $175k, you can refinance at 80% of $175k, which means you can pull out  $90k in equity.  Now, if you put $50k into the rehab, you walk away with $40k more in cash than you had, when you started this process.  It isn't pure profit, because you still have a mortgage on the property, but you own a cash flowing (hopefully) property and have $50k more capital ($90k total) to put towards your next investment.

@Rob Murden His agreement with the previous landlord basically transfers with the property, so treat it just like he was on month-to-month with you, because he is. You will have to go through the exact same process as if he had originally signed the lease with you. Send thr 3-day letter. If you don't get a positive response, I would try a cash for keys option, before starting legal proceedings. It's usually cheaper and less hassle.

@Isaac Black it is the entire premise of flipping. You buy a property at a price low enough to allow you to force equity by making improvements. Sometimes the improvements are simply repairs and clean up. Let's say you find a property that has serious foundation issues, deferred maintenance and is outdated. You buy it for $50k, but the comps in the area suggest you should be able to sell it for $175, if it was fully repaired. The repairs cost you $50k. And you sell for $170k. You are into the property for $100k, plus $10k in hard money and holding costs. You walk away with a $60k profit.