All Forum Posts by: Joe Livsey

@Kevin Mahoney

A lesson I learned from my first BRRRR is to understand your source(s) of funding and exactly how those sources translate to holding cost during a rehab. I took on a slightly larger rehab for my first project and, surprise, it ran over the projected rehab period!

Lucky for me I funded the deal with a combination of cash and a lower interest personal loan so it didn’t totally crush my numbers. Had I used a hard money loan I may have left more money in the deal after the refinance.

Always understand what worst case scenario might mean in terms of all cash obligations

@Dwight Simpson Congratulations on your first deal! The numbers and the photos both look stellar. I am a buy and hold investor in downtown Buffalo and its great to see others succeeding in the area.

Are you self managing the property? Were you able to refinance and execute the BRRRR strategy after rehabbing? It would be great to connect to another investor in the area to share success stories.

Good luck moving forward!
 

@Mario Bonner I am an investor new to the Buffalo market with one duplex to date (a BRRRR). I am waiting to hear on a few other offers in the market as well. DM me I am happy to connect and chat any time!

@Matthew Irish-Jones connected with me when I entered the market and I am now using one of his contacts on my BRRRR. Would recommend him as a connection as well!

@Matt Brooks

I was listening to a podcast "the millennial real estate investor" episode #55 '203k rehab loans with BRRRR house hacking' which might be of use for you. It basically allows you to put limited (less than 20%) down and wrap your rehab costs into the mortgage without paying insurance, provided you are living at the residence. I'm not an expert by any means but it might be something worth digging into if the numbers make sense for what you're doing!

@Matthew Irish-Jones

We were able to ask the seller about the permit and got this response "since they were going to live in the property they had a friend, a retired licensed electrician, do all of the work for them". Because they were living in the house they did not need to pull a permit for the work.

We are going to proceed closing on the deal and are in the process of putting together our rehab team!

 @Kerry Baird

Thanks for the comment!

We are negotiating the price down due to the potential risk while also  getting an electrician out to the property to inspect the work for piece of mind. The seller is giving push back to the fact we agreed to buy the house "as is". 

I don't know how it stands legally but I would assume that because the walls are up and the work was done prior to selling that "as is" should be assumed as legitimate work completed up to code. I would be fine re-doing the electrical but this portion of the rehab was not built into our numbers so we would have to cut that cost off the top!

@Joseph Walsh

Thanks for the comment! I will definitely look into having an as-built inspection done. I wonder if this would have to be done after the remainder of the work is completed increasing the risk of having to re-do a significant amount of work?

Hi everyone! I am getting started building a portfolio of single and small multi family apartments using the BRRRR strategy.

I found an older (late 1800s) duplex in the Buffalo, NY area that was significantly rehabbed, then the owner elected not to finish the rehab and sell it to someone else to finish. Upon looking through all the work done it was clear the house was fully re-wired since all the outlets were updated from an old school 2 prong to a grounded outlet and recessed lighting was installed. All the drywall has been put up and the outlets are finished BUT I am finding out that there were no permits pulled for any of the electrical work (there was a permit pulled for the roof replacement).  I understand this poses a significant safety risk and will likely come back to haunt us if we were to try and sell the property at some point in the future. The property inspector (who has been real estate investing since the 1980s) said the electrical work he could see looked very professional but there's no way to verify behind the walls. 

Does anyone have any creative ways to get over this hurdle? Is it possible to get this work inspected with the city even though a proper permit was never obtained? I don't want to walk away from this deal since the numbers are good and I believe I will be able to pull 100% of my capital invested out to find another property.

House Details and my Numbers (also open to comments):

• House Type: Duplex.... 2bed/1bath lower unit, 3bed/1bath upper unit
• Purchase Price: $60,000 all cash
• Estimated Rehab Left: $40,000
• ARV: $140,000
• Rents: $800 lower / $1000 upper
• Expenses and Debt Service: $1335
• Monthly Cash Flow: $465

Thanks in advance for any and all comments and advice!