All Forum Posts by: Jeff Zamora

@Aaron McGinnis

Very good point about tenants not reporting the leak.  

@Jeff V.

Thanks for the info on replacement time. 

I am literally on the phone now lining up the plumber to give me pricing on this.  Thanks for the suggestions - my gut was telling me to do this but nice to hear it externally sometimes!

I have a buy and hold that we recently purchased.  We did a light rehab on it which involved paint/carpet/minor kitchen and landscaping work.  House is half galvanized, half copper with some pex sprinkled in here and there under house.

1. During escrow the water was off - finally got seller to turn on about halfway thru escrow and turned out there were three water leaks.  Seller repaired these using licensed plumber.

2. The plumbing was exposed in the garage in two spots and the previous owner stated that repair work was completed but the walls were not closed up.

3. No visible water damage in house

4. Finished rehab, no problems so far.  Have it rented, tenants moving in 4/25, non refundable rental binder in place.

So, I get a call from the water company.  A water leak was reported in my area, took the workers several hours to track it down to my unit.  A pipe under the house had started leaking substantially.  They estimate it had leaked for at least 7 days and had discharged 115K gallons of water!  My crew fixed the leak in about an hour, water is turned off now until tenant moves in.

$1235 in water charges later, I am trying to decide how to proceed.  My existing crew suggests that things are fixed now and they would not bother with replacing anything yet.  I will get a second opinion from plumber who will likely suggest repiping.  The house will be occupied so the odds of another 7 days leak are lowered, but I am worried about some issue in the walls while tenants are there.  I am super lucky the leak wasn't in a wall - 115K gallons running thru a house would not have ended well.

Anyone have experience with this type of now or later decision?  

@Kyle Karges Ideally I would like to buy and hold, could buy via conventional financing or possibly cash depending on price. All properties I have acquired in CA are buy/hold cash flowing properties with a long term view. I have been able to find properties here for around 1% rent/purchase price. These are usually REO that need some rehab. They end up cash flowing relatively well - I'd like to find something similar out there. I can hop on a flight from ONT to PHX via Southwest pretty easily so based on what I find on this trip I'd schedule a longer visit in the next month or so.

@Ed Caldwell Wow that is saying a lot if California is beating out AZ these days.  Thanks for the tip on price ranges, I will check out properties in that price range.  Sounds like California in that you need to look long and hard for deals that have any kind of cash flow.

I am going to be visiting Phoenix area this weekend and thought I'd look around and see what opportunities are still available out there. I am looking for SFR or 1-4 MFR. Anybody have thoughts on areas to look at or avoid?

FWIW I have never actually been out there so would like to see how it compares to the So Cal market.  

Thanks!

@Steve Veen 

How are you liking your investments in the high desert?  Do you think it is still worth looking up there for cash flow deals or are those days over?

Thanks!

Jeff

@Steve Veen 

Here is a link to a discussion about property with some numbers: 

I ended up having to do about 55K in rehab on the property. Initial estimate was 37K. 

http://www.biggerpockets.com/forums/311/topics/132...

Biggest lessons on this project so far:

1. Make sure everything is planned prior to subs arriving. Rushing to start doesn't save money in the long run. I would have been better off waiting a couple weeks after close to plan things thoroughly than just starting demo within the week. I ended up having a couple self imposed delays on things like materials, colors, finish items that could have been avoided by better up-front planning. Also, subs will be very clear on what to do and not do. For example, had some hardscape installed (walkway, drainage control) that is nice but wasn't in the budget, probably contributed to 10% of rehab cost.  

2. This was first project I've done where I am not onsite most of the time. I am doing this as a practice run for an 'out of area' rehab. I am not doing any work at all short of sweeping floor once or twice. #1 above is very important for cost control in this situation.

This was a cash purchase so all cash until 6 month period is over.  I have a mortgage broker stating that I can then do an appraisal and get up to 75% appraised value out of property at that time.

I will be listing the properties in a couple days so should be interesting to see if I get projected rents.  

I am sure I will have a couple more big lessons before I am done with this one!

Hi @Steve Veen 

I ended up passing on the Redlands property. It was in terrible shape. I did end up purchasing a bank owned duplex close to my primary residence for a pretty good price. It required a substantial rehab, including going down to studs in one unit, redoing electrical in that unit and minor plumbing. I am just about done with the rehab at this point (about 45 days in now) and hope to have it rented around 9/1 - 9/15. I'll end up doing delayed financing around January then start looking again for a MFR, including looking out of state.

I agree about contractors.  One reason for working on the property up here is having a set of known contractors.  I think that is probably the major reason we are getting this done so quickly given the amount of work we did.  However, I also learned on this project that timing a rehab for July/August is a sure way to pay a premium for labor.  My regular painter is charging 50% more for labor right now compared to winter rates!

Thanks for reaching out!

Jeff

Update for the curious:  

The bank declined the initial credit request.  We resubmitted a request for reduction in sale price, and included a letter explaining the situation and the fact that it was not disclosed, along with the accepted offer for the adjacent lot.  

The bank ended up reducing the sale price 8K, which we accepted.  Escrow closed yesterday.  Total cost for house and lot was 151K.  This should cash flow at least 100/door and equity is already substantial, so good first deal.

I am in the middle of escrow on a REO duplex property (131K) for buy and hold. Title shows that the property actually has no parking available, only an ingress/egress and driveway access on the neighboring vacant property. There are improvements on the neighboring vacant lot (paving, retaining walls) to facilitate parking. The parking situation/easement issue was not disclosed before offer made/accepted.

I have contacted the vacant lot owner and have a contract in place to purchase the vacant lot pending close of the REO property (26K). I have a seller credit request in place with the bank asking for 20K, which is also much cheaper than putting in a parking area on the REO property to address parking issue. There is no on-street parking nearby.

There is probably a prescriptive easement in place for the parking. I first considered just going with that or getting the owner to execute a parking easement but then it was unclear who would deal with repairs on the vacant lot.

The bank's listing agent said no immediately to the credit but I have not received the decline back from the bank. I am wondering if anyone has tips on dealing with this situation. The request for seller credit didn't leave much room for explanation. Send a more detailed explanation to bank? Any other tips other than just eating it or walking away? The deal cash flowed until this parking issue came up and the 26K extra pushes the envelope on positive cash flow (100/door). FYI it still is a good flip and supposedly will fetch 225-250K as a package deal if I just turn around and sell with minimal rehab.

I am also considering getting a 2 point survey to show clearly the property line. If this is staked out and the line is painted across the parking area they would have to disclose if relisted. Is this a strategy as well?

Thanks for any help on this one.  BTW this is my first deal!  Thanks BP for all the info, advice and encouragement to get me this far!

@David Friedman Welcome to BP! As I am sure you are finding, there is a wealth of information and guidance available on BP.

I am interested in the IE and in working with an investor friendly agent. Feel free to PM me.