All Forum Posts by: Jack B.

I'm going through a similar situation right now, making an offer on a property with a hefty unpermitted addition. The guy who owns the house is a general contractor, and it looks well done, however; on the advice of @Laura Braun I asked my agent to get an inspection clause that is air tight and includes inspection by the city. I want someone to come out and tell me how bad the situation is, will they need me to tear it all open, down, or what? If it looks like a can of worms, I'm out maybe 1K for inspection fees. My home inspector is a guy who used to build houses so he will be my first line of defense.

I was able to pick up properties for Midwest prices with high cash flows AND huge equity plays in the greater Seattle area (King and Pierce Counties). Of course now there are few deals that cash flow well anymore, on the count of interest rates and prices.

I've been considering cash flow only properties in the Midwest lately, but seems like not a good fit for me. Plus I like the total returns I've gained in my local market. HUGE appreciation AND cash flow like crazy. The beauty of it is the work that is now due on one of my rentals will be paid for entirely out of the budget I set aside from the rent payments they pay me to pay for it. Exterior paint, doors, gutters, roof, etc.

But since it is getting super hard to find SFH's in this area that I can do this again with, and I anticipate a market down turn in a couple years, not like the last one but better than nothing, I am wondering if holding a cash position of 50-60% is not a bad idea, so I have capital to work with once opportunities are there. That's largely what I did last time, and when I found a deal, I bought. Repeat 2 years later. Repeat 2 years later and now I have three houses and another under contract (with a sweet location/setup) and am wondering if anyone else is just stacking cash waiting for a buying opportunity.

I was able to get three cash flow positive properties with solid CoC returns during the downturn, and part of the way up, but in the greater Seattle area it is getting harder and harder. Prices are too high relative to rents. Now that the market has recovered, it's damn near impossible to find workable deals in SFH.

So I started looking at Turnkey companies, I looked at Clearwater/Tampa/Jacksonville Florida area and it seems that the 50-75K properties with good cash flow in those areas are in the ghetto.

So given that I'm not interested in paying 20% over market value for a shoddily remodeled turnkey property, where they make money off me again for property management, and buying in the Tampa area and setting up my own team is looking like a crap shoot, where do I buy and set up my own team?

Ohio? Indiana? Nevada? Or just buy a multi family in NC paid in full, and let the PM live there for free, doing all the maintenance as well?

@Russell Brazil

Good point. I went through this ONCE before, and called the county inspectors office and they were very understanding, (it was for an unpermitted partial garage conversion). I ended up not going through with the house not because of that though, at least from what I recall.

@Lynette Braun

That's good advice thank you! I asked my agent to put a clause in there that I want the unpermitted stuff to get inspected by the city before I close escrow. The home inspector I usually use is pretty good, he uses thermal imaging to see things the NAKED eye cannot see, plus he is a former home builder, so he can give me a pretty good idea of how bad it is. Turns out the guy who is selling the place is a licensed contractor. Assuming he did the work himself, it should be OK, but the city inspection clause was a good call, thank you.

House is listed as 1,300sf 2 bed, 1 bath but the description talks about the 900 square foot addition, which is:

-A MIL apartment with full kitchen, living room, dining room, laundry room, and full bath, with separate entry.

-A single car garage converted to a bedroom, with it's own full bath and walk in closet.

The work LOOKS professionally done, but I suspect the additional square footage is not listed in the details, just the description verbiage, because it is unpermitted. So what's the likely scenario buying a house like this and what is the worst case scenario?

I don't think it would be an issue for me to live there or rent it out, but if I try to get it permitted and they want everything redone and it costs a ton of $$$, it could be an issue for me when I sell? Even then, I think for the price the house is worth just the permitted square footage. The MIL apartment, (which again, is totally self contained, even have their own laundry and separate entry) seems like a bonus to me, and judging by the look of it, it seems like I have a good chance of passing inspection with only minor hassle, if any.

Or multi family near Raleigh NC.

Perhaps I should focus on Nevada instead, yikes.

@Mike Wood

Thanks for the info. Clearwater/Tampa area is supposed to be know as one of the best rental markets in the country if you are a landlord. What gives? The rents sure seem fine to me. I would be able to cash flow about 1K a month after all expenses from what I've seen online about the rents for these houses/this area. I would be buying these properties in cash, not financing them.

@Nick C.

So the properties I listed, or properties around 75K are not bad to have as rentals? I have a couple of rentals in the Seattle area ghettos and it's not so bad. I even lived in them myself before renting them out.

Just depends on the level of ghetto though. As long as I can get decent tenants, I would be willing to buy in the Tampa area for rentals. If I need to spend 100K to avoid having my primary residence in the ghetto, that's fine too.

Seeing as to how it seems to vary from neighborhood to neighborhood, block by block, how can I nail down an area before coming to visit it? Or do I just contact a local realtor in the area there and have him pick for me? Is it even necessary to go there in person? I'm hesitant to buy without seeing anything in person, as I've seen some creative listings in Seattle where the listing agent carefully avoids the mold, water damage, and holes in the wall and carpet, etc.

Examples:

59K house

http://www.zillow.com/homedetails/2562-Emerson-Ave-S-Saint-Petersburg-FL-33712/47160090_zpid/

63K house

http://www.zillow.com/homedetails/2410-17th-Ave-S-Saint-Petersburg-FL-33712/47189681_zpid/