All Forum Posts by: Denny Pugh

@Chris L.

Sorry Chris been absent for a few days, no real opinion on areas to avoid. Was just some thoughts on the subject. 

Not really in "the trenches" at the moment, but I will say that their seems to be a lot of multi-family projects under construction. Some are just nice mid-range apartments and some are upper end. Some in town and some on the edge of town. The I-40 corridor from Greensboro to Wilmington seems to be where most of the developers (residential, light industrial, commercial and retail ) have their eyes pointed. Been slow for a while but seems to be picking up steam again, they seem to know something is happening or about to happen.  

The realtors say that they need more inventory, and I notice that their seem to be a lot fewer "For Sale" signs in the upscale neighborhoods. I think prices are a bit slow to rise but improving, most of the foreclosure inventory has been sold off so that should help. What I have noticed in a larger than normal number of property tax foreclosures listed. I think that may be because they have been so reluctant to press the issue until the economy improved though. 

I have not been involved in one for quite a while and the last was a couple of years before the SAFE act enacted. At the time I heard various opinions on how it would effect owner financing. Anything from no effect to ending owner financing altogether and possibly requiring a mortgage broker as a middle man. 

I live in North Carolina. In years past I have had some owner financed sales, but it has been a while. How does the S.A.F.E act play into this or does it ?

Thanks David. Yeah that's the one. I saw that the value of the home when it was offered for sale seemed unusually low yet it did not sell and now was to be sold at auction so that spiked my curiosity. Then I saw the sinkhole info. In researching the repairs method I found information that this was a popular scam at one time so I was unsure if it was the scam or the method of repair that made this such a tough sell. Looked like it may me an interesting niche to investigate. Most likely will just watch this and see what happens and wait for something else to pop up. 

I am not really a long term investor, but for the last few years I have used a couple of homes in Florida as an alternative hedge to the stock market. Still have a pretty fair chunk in the market but it demands constant attention. The homes were bought at the bottom,  have steadily kicked out a monthly "dividend" (rent) and slowly appreciated some as well while the market is just all over the place. Thinking about easing some more out but this house may have a bit to much possible downside due to insurance issues.

I think this all depends on what the contract / agreement says. If he is getting paid for labor and materials plus markup and was under contract for a list of items the owner prepared and he priced, how is he at fault if hidden problems arise not on the list ? If he is getting paid time and material plus markup and included the walls that needed repairs in the original price the final cost would really be the same as it would be if they were added later. If he was including the new HVAC and water heaters under his scope then I agree the electrical might should have been pointed out, however if the owner contracted for these items with someone else I am not sure that the contractor is responsible for electrical deficiencies that arose later.

I think this is the danger in having a time and materials contract and sometimes it works sometimes its does not. In every project someone is taking a gamble. If the GC gives you a hard bid and a hard completion date and promises a code compliant turn key product he is taking the gamble and most likely has some extra $$$ just in case. Sometimes he has more than enough and makes a little extra, sometimes he does not and does not make as much as he would have liked......but that's why its a gamble. I think owners sometimes do not understand that by going T&M they appear to be saving money but they have now become the gambler and sometimes they win, sometimes they lose also. My experience is they are not prepared for the losers and start looking to shift that loss elsewhere. T&M has its place, but if you are inexperienced it can turn ugly quickly.

Looking at a house near Ocala Florida being at auction with tenant in place and I cannot preview so its a wild card. Have seen pictures, they look normal. Not really a sinkhole where the ground collapsed but did have settlement that caused some small cracks in the walls and did require that repairs be made and they do classify this as a sinkhole. It has has been repaired using "compaction chemical grouting method" which is the normal method of repair for these type problems at least from what I find researching it.  The Engineer did not find any structural issues, specified the repairs he felt were needed to stop the settlement and county has checked off on them as being completed as specified.  Home is 7-8 years old 3/2 typical CMU & Stucco Florida home. Nothing special really. Checking with my insurance carrier there now to see what the insurance issues are. 

Lots of homes for sale and lots of foreclosures seem to be still happening so if I buy this one it most likely be at least a hold for several years using a local PM company. Has a long-term tenant in place willing to continue paying reasonable rent. Home has been for sale priced pretty cheaply for a while but did not sell and the owners/property developers are in bankruptcy. I do not plan to make anywhere near a full price offer and may not make an offer at all.

From what I can tell this is a common issue in many areas of Florida and I wondered if anyone makes this a niche they look for ?

OK thought I would report in. After my initial posts my grand-daughter and her new husband, both fresh out of college, asked about buying the condo. We discussed what was needed and what it would cost to make it livable as well as what it would cost to make it really nice and soon it became clear they had the money for neither... but, it was my grand-daughter and I kind of liked the idea myself so I gave them this proposal: We make a deal for an as is value but not actually sell it to them. They would take charge of the renovation and do as much labor as they could themselves or friends and family. I would finance the renovation, pay the taxes HOA fee's etc and when it was complete they would secure a mortgage and repay me for the as is value plus all the expenses during the renovation. Shortly there after they jumped in. 

About 11 months later it was complete and it turned out really nice and we had a new addition, my great-granddaughter was born the week after they moved in. They were really happy to have a new home and I suspect to have it over with, but it was a good experience for them and it made my wife happy so ultimate win/win...LOL

As for the cat odor....I was really worried about that but they decided to go with the "Kilz" suggestion. Demo'd what they wanted out (mainly cabinets & floor coverings) then hired a painter who came in with a sprayer and sprayed everything....I mean everything sub-floor, walls, ceilings, doors.....wow talk about WHITE.....but it worked like a champ.....never a whiff after that. 

Thanks for the help everyone.

No problem there......I had no idea what the tax value was when we started discussing it. the house is a 3/1 1950's brick ranch on about 2.6 acres. Needs some updating in the worst way. It has a huge kitchen with ajoining wall next to master bedroom. As part of that update would be pretty easy to reduce the kitchen and add a 2nd bath in the master. Still have a good size kitchen afterwards.

I have been thinking about this for a while, there are a ton of these old 3/1 ranch homes sitting around but they are hard to move. Everyone wants a 3/2 to buy or rent. Might be a good niche.

JDPugh

I am in North Carolina. I have a chance to purchase a property at 50% of current tax value. Both the owner and I agree that the value it is way to high based on recent comps in the area. Is the county under any obligation to reduce the tax valur based on tha sales price ??

JDPugh