All Forum Posts by: Karissa Sampson

Under contract right now on a SFH that will be converted to multifamily. My market suddenly had a dozen sub-500k houses (mostly small 1400 sqft or less SFHs, but some have been nicely renovated) show up in the past two weeks and we haven't had a decent looking sub-500k house on the market for the past 2 years (except for some hellholes) Houses staying on the market for a week or more, some selling for asking, one sold for less than asking, prices getting lowered--- non of which has happened for the past couple years. TBH it makes me nervous considering I'm about to buy a $471k house to BRRRR thru a conversion but I keep looking at my spreadsheets and the math. It works and that's what I keep telling myself as I fall asleep at night, haha

No idea what they mean by new plumbing but in my area, the majority of homes were built in 1950s-1970s. Cast iron drain lines and copper supply lines are the norm. My properties all have this setup and are in good condition. Learning to work with copper pipes isn't hard and new work done on them can be shark-bit into PEX if desired. My 1956 and 1973 houses have/had sewer lines that turn from cast iron into clay about 6 feet out from the house until it ties in with the main. The 1956 has giant old growth trees on either side of the clay pipe so that was replaced while under contract by the seller. The 1973 has no trees near the sewer line and the clay is in perfect condition, save for one section thats offset. I'll be replacing the offset and probably not replacing the entire 57 feet of clay given the expense, the fact this will be a long term hold, and its in good condition-could have another 40 years on it. Maybe I'm wrong to think this way. I'll chat with the sewer company about it. $6900 for the 10 feet of replacement from the offset section-can't imaging what the cost of all 57 feet would be.

Satin is a nice compromise. Semigloss in non-kitchen/bath looks trashy to me. I do satin walls and semi-gloss trim with Behr Ultra premium which truly requires one coat (recommend 2 coats or use a primer with dark colors)

@Trey M. Keep in mind that local jurisdiction may have restrictions on ADUs. In my town, you cannot legally rent out an ADU unless you, owner, live on the property.

Contact your city zoning department and ask them about the property zoning. In regards to what to do with the property-can you rent it out as a single family home? Can you get a ceiling height variance and apply to make it a legal ADU if its not already a legal ADU? You may still find a buyer for it. Lots of people who have heard about ADUs and offsetting their mortgage via renting would want a house with a seperate living space. They may take on the trouble of working with the city or just use it for grandma/adult kids etc. and not care about the ceiling height etc. Your job isnt to tell potential buyers that the ceiling might not be tall enough or that its not zoned correctly. Just like the person who sold it to you. Don't feel bad about it-just list it as it is, a SFR with ADU/potential ADU space and let the buyers do their due diligence on it.

Dont feel too bad-you probably wont lose your *** on this and you will never make this mistake again. I bought a SFR last year thinking I could duplex it but the ceiling was 1" too short (city said they could make that variance work) and zoning is never going to change. Cities typically do not do spot zoning. I knew going into the deal though that we would be living in the basement (for free) as we needed somewhere to live since we were moving out of our live-in BRRRR duplex AND it was in the best neighborhood in town so the property and rent appreciation was fairly dependable. I broke even on the rent each month but now the property appreciated $175,000 in value and $500 in rent in the past year so if you look back at it-it looks like I made a smart decision (when in truth, I was sweating bullets after closing) I was going to sell it bc SFR wasnt part of the plan but am keeping it now due to its current value and the mortgage rate was 2.6% fixed 30yrs.

@Andrew Garcia Thank you for the post. Splitting utilities will prove a bit expensive but manageable and included in the rehab budget. The main panel for the house has to be replaced anyways (wiring is good copper, but its a federal pacific panel which coincidentally I just learned about on a BP video from a flipper in the PNW). Luckily its a large nearly 0.25 acre corner lot with alley access so I could put a ton of on-site parking along 3 sides of the property line and plan to hide most of the parking in the back on the alley to keep a nice appearance on the front two sides of the house. No septic tank. Sewer scope happening tomorrow morning but I know its copper and cast iron drains in the house. Our town moved away from clay pipes from the house to the main in the 1960s but TBD on the scope. If its clay, well, thats fine, we would have needed to dig it up anyways. The roof is good so that saved me like $12k which I had counted on in my budget but can now go towards other items. 

Question: When you have foundation questions, should you call a structural engineer to inspect or a foundation repair company? I'm thinking engineer because they will have the best idea as to what is going on with the house and how to mitigate it without needing to sell me anything other than their time. There is some minor repair on the front of the house that is needed, nothing major it appears.

1. Yes-Almost every municipality will require a permit to add a 2nd kitchen. This permit application is also likely to alert them to the fact you are trying to turn a SFH into a multifamily home, which they will not allow unless you are zoned appropriately for it and you would likely need to make the basement an attached ADU (most places the owner has to live on-site in either the ADU or the rest of the house, not always though) or duplex which requires a lot more permits, time and money than just adding a kitchen.

Of course, you could just add the kitchen without a permit. You do take a risk of being reported (unhappy tenant, neighbor) to the city and the city can have quite a bit of leeway to intervene (fines, make you tear out your new kitchen, etc.). You can get fancy with your lease wording and go with no stove (hot plate/induction top only) to try to improve your odds but you still can get screwed over. The right thing to do is get the proper permits-both for your own protection and protection for your tenants (fire code, egress windows).

2. You should get a structural engineer for egress windows (usually required for the permit) and for doing anything with a load bearing wall. Or if you think you have structural issues. If you are just cutting a hole for a vent-no engineer needed.

3. Go to your city's zoning and permit department website to read up on your local requirements. Get familiar with it. Call them and ask questions. You can decide if you want to give them your name and address or not ("calling for a friend" method) Permit process varies city to city. Time depends on the scope of work. Weeks to months is typical, but it depends.

The break even point is around 3 years and its possible I will hold this mortgage for 3 years. Hopefully not, but there's a decent chance so I went and threw $560 at it for pts. Maybe I'll look back on it and decide I should not have, but its an inexpensive lesson. Hopefully the more I learn for free (ie: forum discussions just like this), the better I can avoid having to pay for lessons in the future.

 I've shopped around to 8 lenders currently. I'll shop around again when it comes time to refi the property. While my goal is to refi in 12 months, it could be longer. Like I mentioned before, a lot depends on the actual time it takes to renovate the property and on the market conditions at the time I am ready to refinance. It might end up taking a long time to renovate the property or the rates may be terrible at the time I am ready. I may end up choosing to wait longer to refinance it (years even). If the renovation goes fast and rates don't rise rapidly, I may refi asap. Its all TBD. 

I have another $220k in equity in another property (well more than that but that's what I can access for the LTV. It was my first attempt at a BRRRR and I forgot the importance of refinancing while its still my primary residence and just decided to move on to the next property-oops, lesson learned). So, if this new property needs to wait a while to refi, I have options. We are currently working on getting that other property's equity out now. My partner and I are both on the mortgage and its relationship to me is currently an investment property so a cash out refi was nearly impossible for me to find and I had two consecutive attempts to HELOC it, but then they both fell through (underwriting's personal dislike for my setup-turns out they don't like you BRRRR'ing even if it is legal, and some overlay issues that the loan officer was oblivious to which wasted everyone's time) Its still my partner's primary residence but he was laid off from his job for a while during COVID19 and is just short of having the 2 years of income and tax returns that everyone wants to see for him to do a primary residence cash out refi. Speaking of, what kind of rate and term difference is there for a cash-out-refi for a primary residence vs. investment property? Does anyone do cashout refi on investment properties? I found one (cant remember their name now) who did it but it was either an issue with the $ amount of cash out that I wanted (not even the LTV, just the actual jumbo sized $ I wanted) and/or the term of the loan was incredibly short which would have eliminated all cash flow from the property.

Its a fixed-rate residential primary residence conventional mortgage amortized over 30 years with a local credit union. I just checked with the loan officer and was told there is no prepayment penalty if I refinance it.