All Forum Posts by: Julie Hassett

Hi BP community! My partner and I just had a deal on a Baltimore (21213) row home fall through on appraised value.

Here's the quick and dirty:

We agreed on a $74K sales price for a recently rehabbed lead-free unit. (I'm the buyer.)

The contract had an appraised value clause of $68K or higher.

Appraisal came in at $60K.

Even though our CoC return would still be somewhere around 15%, that left us with no exit strategy for the next 5 years and we walked from the deal.

My question is... the properties they used to comp were not lead free. Is there any "monetary value" to a lead free rental or no? Lead remediation is SO expensive (and ultimately valuable to a landlord) that I would think that would think it would bump up the appraised value.

My lender says no, but I wanted to hear if you guys have any interesting opinions on the subject.

Thank you!

You can try the form on this page too.

http://publicworks.baltimorecity.gov/Water-Billing...

Will it work? Your guess is as good as mine. But it's another shot in the dark and it might!

Good luck. This city is highly skilled at turning simple transaction into red tape nightmares!

Not only is "unforeseen craziness" a certainty in, so is the first contractor's bid coming in way too high. Here's a Baltimore contractor's bid for $40K (attached) - not including fixtures, cabinets, appliances, lights, fans. And mind you, this is to go lead SAFE, not lead FREE. 

I'm going to speak to him this afternoon, but I already told him "I can't make these numbers work with ARV and cash flow." He responded, "To help you, I can try and get some of the prices down." Ummmmmm, YEAH, that would totally help!

The "doors" and "demo" pricing alone seems outrageously high.

I also sent him a complete scope of work spreadsheet with materials and labor broken down and asked him to fill that in.

Anyway, I won't be shelling out $40K, that's for darn sure.... but I wanted to share this with anyone following along.

Update on my rental property!

1) LEAD - I had an inspector from LeadProbe come out to do a full lead inspection. When he got there, he said "This place is full of lead. It's going to be very expensive to go lead free. And the trim you've got in place right now is in good shape. There's no reason to rip it out. Probably better to go lead safe." So he said he would just do a lead safe inspection. 

He walked around the house and wrote down every place that paint was peeling. Then he asked me for $65. I paid him and said, "Since this going to be a rehab and every inch of the place will be painted over, did I just needlessly pay you $65 to tell me where paint is obviously chipping?"

He said, "Well, it might seem that way, but now you have something to give to your painters to make sure they don't miss anything." Hmmmm, ok. Feel like I wasted $65, but at least it was only $65.

2) MICE - There are mice living in the house, I've seen a couple and the evidence of their existence increases all over the floor everytime I return. i'm setting live traps today to trap and release them into a nearby park. Because a) I clearly want to create more work for myself and b) I think mice are freakin' cute. So, the thought of carrying a box of live mice out to my car with my MAJORLY gives me the willies, but at least I can say "no animals were harmed while rehabbing."

3) MUNICIPAL GARBAGE CANS - If you purchase a property and request a microchipped municipal garbage can from the City of Baltimore, you will likely be informed that they are out. Yeah, OUT. And your $2,000 of annual property taxes isn't going to buy you one. So, I went to Home Depot and bought one for $60. I'm hoping that garbage can theft isn't a huge problem in alleys. But I'm thinking that if municipal garbage cans are microchipped, it probably is a huge problem.

4) CONTRACTOR VS. NO CONTRACTOR - I wasn't going to hire a contractor because I wanted to be in the mix and  manage tradesmen and really get a grasp on how each one works and what they're doing. But, I keep finding myself freezing up and not knowing what comes next. I'm also having a hard time scheduling said tradesmen. So I had a contractor walk the place today. He said he could keep the demo/rehab between $30-$35K barring any unforeseen craziness. So once I get his contract in writing, I may change my mind and get him and his people started ASAP to get this thing in gear. One of the best things he said to me today as we talked through the job and talked pricing was, "Wow, you've really done your homework." Yes, yes I have.

@Tim Youse - sorry to just now be answering your question on cash vs. loan. The wholesaler on this property claimed to have multiple offers and was only interested in a cash deal at the asking price. Since a) it was my first deal b)I didn't really know how much leverage I had and c) I really wanted to secure the property.... I abided by his terms, raised my original $37K offer up to $38,500 and told him I could close within a week! (Which, we didn't.) Next purchase, I'll consider financing but if there is a great deal out there that requires a cash purchase, I would do it again if need be. Thanks!

Update on City Registration - I went downtown Baltimore to 417 E Fayette, Room 101, the one-stop shop and learned some more...

She told me I couldn't have mailed this one in because it's a new registration.

She also didn't bat an eye that I did not have a lead certificate number on Part C.

She then told me that my registration fee has already been paid and that I didn't owe anything until next year. (?)

Then I looked at my registration receipt and it says "Printed on 10/18/2016. Valid until 10/18/2016"

Hmmmm.... hope I did that right!

Diary update regarding insurance, lead and city registration:

1) City registration... I'm reading conflicting information on the BP forum that I'm trying to straighten out...

Opinion #1 - The very first thing you want to do is register the property with Baltimore City. Baltimore City charges a $500 fine if you wait too long after closing to register. 

Opinion #2 - You have to register the property with Maryland but you will need to complete the lead testing first because the lead certificate number is required for "Part C" of the property registration.

Also, the city's website is very non-user-friendly. I'm going out of town and would like to mail the registration with a check attached. Does anyone know if this is ok or do I need to do to the office and do it face to face?

Also, because the unit is not occupied yet, can I send in Part C without a lead inspection number on the bottom?

2) Lead... I registered with Maryland Department of the Environment for Lead Rental. It cost $30 and you need to call them first to get a tracking number. They then email you a log-in and you go online, register your property and pay $30 on the website.

I learned that if I don't occupy the property before January, then this $30 will be wasted, since that is when the renewal fee is due for next year. But, the plan is to have it rented by then if all goes according to plan.

I also learned that you can either have the lead inspection done first OR do this registration first and then get the inspection. As long as both are done before a tenant moves in, you're good.

3) Insurance... I think I've done a big no-no by not insuring the property immediately upon closing. I'm calling Foremost today (BP user recommendation) to put a vacant/rehab policy on it until it's rented.

Thanks to everyone for all the input so far!

@Chris Kirshbaum... I think @Thomas S. for some advice! And my support network of investors with decades of experience here in Baltimore is so awesome, I'm REALLY hoping that by following their hard-won advice I can stay under budget.

@Rich Baer - great advice, thank you. I will definitely be in touch with you. When you say "lead test", is it ok to go with the DIY lead tests you can buy at Home Depot? Or do you have a pro come in and do it? My inspector suggested I should be fine doing it myself with one of the kits. I'd like to do that by tomorrow. A $16K house on Chesterfield! That's a great street. This is on Pelham, one block over. Between Cardenas and BelAir. Also, if any more deals in this neighborhoos cross your way that you don't jump on, send them to me! :) Thank you.

@Ned Carey @Steve Sendldorfer - I checked in on the "triple grounding" issue. My inspector said it's when there is the main grounding connects to the water pipe and there are also an additional two grounds outside attached to 8 foot copper rods.

And, yes, the 1940s boiler in the basement still fires up strong and could maybe last another 30 years, who knows!