All Forum Posts by: Jake Saliba

Doesn't high inflation have the ability to raise interest rates, which could dampen price appreciation for primary residences as affordability goes down?

The rehab stuff you listed will cost a lot more than $15k. I guess based on price that you're thinking of doing all the labor yourself? 

Depending which historic district in Phx, a lot of rehabbers and end buyers are targeting pretty nice rehabs to maximize ARV in those areas. I have flipped in historic Phx and I spent anywhere between 50k - 150k rehab on the various flips I have done there! (150k we only kept exterior walls and roof)

I sent you a PM. Curious which neighborhood this is and what is the sq ft / beds / baths?

James Judge is a friend of mine who is a Homesmart agent.  He is not on BP, but he flips homes, stages, and has helped me buy a couple of my own flips.  Tell him Jake shared his info.  

https://homesmart.com/real-estate-agent/arizona/phoenix/40797-james-judge/properties?section=sales

You're in a tough spot. Sounds like this is a retail job where you are quoting contractors you don't have a previous relationship with?  

Right now work is plentiful for contractors and prices are high.  They could go work on a straightforward new build instead of dealing with the headaches of a historic home. Your old historic home has a lot of risk for unknowns. So the bids will include a little extra $ to make it worth it.

The way around this is to get more bids, sub out work yourself, or use someone you have a relationship/history with. I think the work can be done for your budget, but perhaps not at retail through a GC.

Also, if this is not your primary residence, you will have a difficult time finishing a remodel of this large scope in historic phx without a GC and permits. The city doles out red tags like candy.   :)

Hi Catherine,

Sorry for the very late reply.  Hope things are going well with your project.  These can be very challenging.  

I've DM'd you.  Happy to answer a few questions.  

-Jake

If we are talking about the same grant, most of the things you are mentioning are not even covered. 

The intent is to help preserve historic architecture rather than replacing it. 

Is this what you're talking about?

https://www.phoenix.gov/pddsite/Pages/historicince...

(Website states no current funding available)

You definitely need to talk to historic preservation in person.

I agree with Pamela that there is opportunity for rehabs in the historic districts. However, the buyers there are extremely discerning, and have very specific tastes. 

If you start installing wood-look tile (criminal in the historic districts) and painting everything gray, you will not come close to the value of the good remodel comps in the more desirable neighborhoods.

Good luck!

I looked at the process while in the middle of a big historic flip. I didn't follow through because the timeline for reimbursement involved owning for a couple years. Could be a great idea if you will hold it. 

If you intend to use it on things like restoring the original windows, your best savings will come from finding the right person to do the job. There's an enormous range in the prices available. I had one guy quote me $40,000 to restore the original windows LOL! 

Better to find an individual carpenter and pay them hourly. 

As with most things having to do with the city, I would assume the process is slow. Might not work if you need to improve the property quickly. Best bet is to go down to city hall and talk to historic preservation.

@Timur Salikov

The pricing you are citing is about right if you are looking to buy a property that you will then renovate. Studio fourplexes barely exist in any of these areas, but a fourplex of one to two bedrooms that needs renovation might go at that price.

I'm not sure that you are correct that most people use Airbnb in small groups. Airbnb makes a lot of sense economically for large groups or large families who need many beds. I think a property with lots of bedrooms and a pool works getting well for an Airbnb. (Pool is huge in AZ to combat summer vacancy) Revenue goes up faster than mortgage and you have less turnovers to manage.

Wow, @Andrew Postell.  Amazing thread here.  True gold.  

To add to your strategy, I have also found that Freddie Mac allows for no-cash-out refi at 85% LTV for SFR investment homes if you find the right lender with no overlays! This can get to 100% end financing in more expensive markets with smaller ARV discounts....though positive cashflow is a separate issue that must be overcome :)

Question: Is there anything in Freddie/Fannie rules that would prevent me from the scenario below?

Purchase price = $100k

Rehab = $25K

ARV= $170k

1st position purchase loan (private lender) = $85k

2nd position purchase loan (my own LLC) = $40k

I purchase with 1st position loan at 85% LTC ($85k) from private lender. I loan myself 15% downpayment + rehab funds from my own LLC as 2nd position loan at time of purchase ($40k).

After rehab, appraise at $170k and refi out 1st position + 2nd position into 1 single loan at $125k total as a no-cash-out refi.  

I'd like to have enough $ to keep flipping on the side instead of holding in 100% cash until rehab+refi is done.  

1st+2nd is a lot easier sell to my private lender rather than asking to lend >100% cost of purchase in a single 1st position loan.  

I talked with a local lender who said this might work for end financing, but wasn't sure what underwriting would think about the 2nd mortgage.  He recommended to try to get everything into a single 1st position loan - but easier said than done if you're looking for a lender to give you >100% purchase price.  

Thanks for any help you can give! 

Also, please PM if you lend in AZ.  

-Jake

After seeing this post, we just  applied to join  the  early rider pilot program with waymo!