All Forum Posts by: Jasmin Mcduffie

@brandon Hall I’m looking for a CPA to help with tax preparation. Jasmin

Does anyone have any experience working with Bay Management in Baltimore. Thank you Jasmin

Christopher Phillips The property is turn key not a rehab project. The items I listed that require repair aren't the type of things that are readily visible during a walk and were identified by the inspector. Unless you're suggesting an inspection type evaluation should be done prior to making an offer on a turn key condition property. I have a feeling the seller (LLC) didn't intend to make the repairs and just stated they would to delay the process and waited this long to "change their mind" to limit my options. I have funds to make the repairs, I'm just trying to evaluate my options for getting the seller to cover these while lowering my out of pocket expenses since getting additional concessions isn't an option. Thanks for your feedback

BP, We are three business days away from our closing date and the seller (4:00pm on a Friday) calls my agent and asks for us to provide a price in lieu of making repairs as originally promised. As an investment property my lender says I can only receive a max of 2% of the sales price for seller concessions so including the repairs in that doesn't help since my closing costs are higher than 2%. My agents says I have two options: 1.Ask for sales price reduction 2. Get a GC to provide a price and have seller make a check out to them that's held in escrow (prepaid). If I had more time option 2 would be preferred since a small reduction in sales price wouldn't change my out of pocket expenses enough to cover the repairs. The repairs that are absolutely necessary (in my mind are): Fix / sister roof rafter that is completely split Replace basement seller door wood enclosure that has rotted and shows termite damage (no new termite activity) Fix electrical GFCI outlets near sinks. Gas flue isn't sloped correctly for combustion air to exhaust properly Remove debris from ductwork (brick/ mirror chucks, etc. seen when vents were removed) which prevented air from circulating. I plan on calling to get estimates today. While none of these are big ticket items there may be a premium to get so little work done by a number a trades if a GC has to do it as part of prepaid escrow. Their O&P alone could pay for the duct cleaning. If I had to guess this work is between 5K-7K not including GC Mark ups / O&P. I'm an architect used to working with commercial contractors maybe residential GC don't have significant markups... What would you do? Any creative ways used to get these paid for upfront without using seller credits? Thank you Jasmin

Definitely agree with getting multiple bids. Very good point. I'm familiar with commercial /institutional construction projects (I'm an architect in DC). Since I like Baltimore as an investment market I'll be getting my license in MD soon. I'm comfortable with establishing the scope of work but not familiar with residential/smaller GC companies and would not sign a contract without an attorney reviewing it. I was talking with my realtor. I told her if the property I was interested were a lot less expensive I may be interested. She suggested we submit a letter of intent (non binding) to gage their interest in the lower number before submitting an offer. I lowered the price 17K and asked for closing cost. This gave me a cash on cash return of 17% with an 8% cap rate (87500 offer) I used a rent rate of 1250. Even if I could only rent it for 1200/mo the Cash on cash return would be 14% and 8% cap rate. Both figures include reserves for maintenance, cap ex, vacancy and PM. This seems like a good return. If I bought a property and rehabbed it for a total 75K-80K. I would need to be able to ask more a month for it to give me a better return since my interest rate on that loan would be higher. I agree with Seth that the turn key would be far less work and there is value to that. Since this would be my first project, having the property basically ready for rent is appealing. I will need to get the lead certificate/ testing done and I would probably paint...but that it's barring anything that would come up in the inspection. What would be good to know is how much more rent you could get with central air in that part of town for the same home. Many of the house ads I look at have comparable homes but they aren't exactly the same. What sells? Is the higher rent due to central air or the extra full bath or the newer kitchen. There is no formula I know. I understand Rich's point about buying below market and adding value as well. p.s when the agent sent the letter of intent they asked for a formal offer...

Thank you all for the feedback. I've spent the last few days researching alternative financing options. Wells Fargo has a purchase + rehab loan that can be used for investment properties. The rates are a bit higher than a conventional loan but the potential savings of controlling the rehab and buying below market value should be worth it. I'll start looking at properties with this new strategy. I did look at that property (google maps) from the hard money lender. The area looks a bit rough (online). It may be different in person and I may give him a call to see if he has any other properties. I really appreciate the the feedback. It inspired me to look at this a bit differently and really explore my options. Do any of you use a General contractor in Baltimore that you trust. If all goes well I'll need one soon Thanks JASMIN

Thank you for the feedback and advice. The comps range from 89K - 120k. Some have CAC, new kitchen/bath and some don't. The price seems more related to location than amenities. While all of the comps are in the same area the actual street the home is on seems to be making the biggest difference. The house is definitely rent ready. The work (with exception of CAC) is cosmetic. Ive seen a lot of homes and some have CAC and some don't. The cost of adding it may not pay back for some time and may not be worth it until the current system need major repair or replacement. I'll need to look into the lead. My realtor said if you don't have the lead free certificate you have to get a test done before you rent the property and each time there is a change in tenant. I doubt the property has the certificate.

I called an HVAC contractor to get an idea of the cost to add central air. The house has a radiant heat system so it would be 12k-14k to add. This doesn't include the cost to enclose the ductwork in drywall. I asked him if it was even worth keeping the radiant system since adding the ducted system could accommodate both heating and cooling. He doesn't typically recommend getting rid of a radiant system but said he'd have to look to see if there's even space and then could provide a more specific recommendation. I asked for the quote to use as a bargaining token when asking for a reduced price. I suspect the owners asking price is perhaps tied to their attachment with a property they have been in for the last 30 years. While it's in decent shape, one bath has the dated finishes and the kitchen has older appliances While they use the basement as a "family room" they only painted the foundation walls and left the wood floor joist and piping exposed...I don't consider that finished. There are other properties in the area that are more finished and updated for less money. If they lower or we can negotiate a price if say 90k I could get about 10% Cash on cash return if it rents for $1250/mo which seemed conservative and appropriate for the decent but not new condition of the bath and basement and the nice location. It would be great to buy a cheap property and rehab it for 40k, but I'm using a conventional loan and would have to buy a property that's in livable condition. Since this would be my first property, I don't want to take on too much rehab.

I'd say class C+/B- This house is on the border between a class B+ /A- neighborhood and a class C. It's on a nice street

I'm looking at a property on Woodstock. It's a block from Clifton GC. Cross street Erdman. THe asking price is 105,000. The current owners have been there for 30y. The property is in good condition but no recent cosmetic upgrades to upstairs bath. No central air and no dishwasher.