All Forum Posts by: Mike Wood

@Leilah Davis I assume your term NRDRD is the historical commission (HDLC), although I have never seen the term NRDRD used.  If yes, than I agree that it is difficult to get a house demolished if its historically significant (as defined by the HDLC).  But if the house is not defined as historically significant, the HDLC will allow for demolition with approved redevelopment plans. Google 1205 Bartholomew for an example of a non-significant house that the HDLC would allow demolished with redevelopment plans, based on my conversations with HDLC (I was interested in this house 4-5 years ago, but decided to pass on it after my previous experience with HDLC new construction).

I will say that doing work in any HDLC controlled area is a big pain in the butt and definitely increases costs.  I have done one(1) new construction and am in the process of a renovation/addition project.  I actively avoid HDLC controlled area, due to the excesses cost and lack of exterior design options, but if the pricing is right for the PITA factor, I do consider projects.  I highly doubt I would ever do another new construction in an HDLC area, its just not worth it.

@Leilah Davis Several of the local Wholesales in NOLA will often offer up a vacant lot from time to time. While I have not purchased from any of them yet, if the right lot was offered at a reasonable price, I would not hesitate. But as you may now, lot in good area are not cheap and often trade on the MLS. Lately, I have not seen any empty lots worth pursuing, most of them in are less desirable areas.

You may have better luck finding a teardown, as there is less demand for that then vacant land.  Demo costs (assuming its not a slab house) is pretty cheap, but something to consider if buying a teardown for land value only.

@Nabeel Qureshi I agree that you should wait until it fails, unless you have a trusted AC company telling you differently.  If you are convinced about replacement, I would do it before you get a renter in the place, otherwise wait use use it until it is no longer economically repairable.

@Stephanie Johnson We do not have ADU's in Orleans parish, but alot of our housing is zoned for 2 family dwellings, which would allow a single family house to be converted to a duplex without having any issues with zoning. You would obviously need to add the second unit in accordance with current building codes, but it should not be a big deal. Zoning for 3+ units are less prevalent, but you can find them. Due to the age of alot of our housing, most of the existing 3+ unit housing are grandfathered into the current zoning, which means that even though a current and legal 4 plex is operating, the current zoning would not allow it today.

Its pretty easy to find zoning information on the parish websites, if you have the address. 

@Casey Rawlings  I highly doubt that it would make financial sense to do what you are talking about, once you actually dig into the numbers.  If you want a new construction duplex, look for an empty infill lot or a house that is a tear down and start with a blank slate. No sense in trying to complicate things with removing a perfectly good house.

@Patrick M Gordon If you want to keep them in an LLC, you will need a commercial loan for them. Since it is a commercial loan, both properties could be on the same note.

If you want a residential investor loan, then each property will need to be transferred into the owners personal name to allow for the cash out loan (one per property), which will have better rates and longer amortization.

@Scott Brewster I would not be interested in any profit split, given what you have stated.  You and you along are taking the entire financial risk, no one else.  You should be the one taking all the profit.  Your realtor is being paid commission, and such, they should only be paid the commission. You contractor is getting paid for their work and providing no cash.  If you hired a different GC, they would only get their bid price plus change orders, so why would you give your contractor friend any profit?  Answer is you should not.

If you contractor friend had tons of experience and was providing tons of value by managing the flip, maybe you could consider some profit split (definitely not 50/50) as a way to compensate them for that and incentivizing them to keep costs low.  But that does not sound like what is going on. 

I think given what you stated, your going to be much more involved than you think. 

Additionally, any contractor that wants/needs to be paid weekly is likely not good at managing a project like this in my opinion.

@Bryan B.  You should hire an attorney immediately.  If your contractors out of money, there is a real possibility he will walk from the job, you should start to prepare for that.  I would also stop paying him any money immediately.  I also suggest that you talk directly to the subcontractors to see if they have been paid, as my guess is you have alot of subcontractors that have not been paid and can put contractors liens on your house.

It sounds like the scope of work is not written and documented.  If that is the case, you likely have a very difficult road getting the contractor to be responsible for things.

I would put the project on hold and seek legal advise.  Only after you have gotten legal advice, would I meet with the contractor.  I would also suggest getting another contractor to give you an estimated cost to finish the project, that will give you a good idea of how much it will cost you to finish the project.

@Mike Smith  On my new construction duplexes, I prefer side by sides, but due to space constraints, I usually make a small closest for a stackable setup.  Until recently, I would buy separate front loading washer and dryers, and the stacking kit to allow them to stack in the closet.  But on my last build, I purchased the stacked laundry center units as the price for the separate washer and dryers was just too high compared to the stacked laundry center.  

I will say that I dont by the super cheap washer and dryers, which could save you money.  My budget for washer/dryer is $900-1100 per set/laundry center.

Personally, if you already have room for the wide closet (side by side) in your floor plans, I would leave them.  I usually dont, and only can fit a laundry closet 33" W x 42" D for stacked units in my floor plans.

I try to avoid laundry centers, as they are hard to fix and if one section goes, you have to replace the whole thing (say the washer breaks, but the dryer is fine).

@Brandon K.  In order to get a construction loan on a non-owner occupant residential property, any bank or lender will require you to have 20-30% of the total costs in equity (if you own the land outright) or cash down payment.  Additionally, most banks will use the lesser of your purchase price or current appraised value as the value given to it as your equity.

For example, lets say you want to build a SFH on a single piece of land. You own the land that your purchased 2 years ago for $50k and want to build a 1500ft2 house on it. The total construction costs (soft and hard costs) would be $150k. This means that your total cost for the project is $200k. You equity/down payment requirements from the bank would be $40-60k (20-30%). If you bank requires more than 25% down, then you will need additional cash down payment. I would also expect the bank to significantly undervalue the land if you have owned it for a long time, they are trying to minimize their risk and land it not exactly a liquid asset.

Construction loans are risky business for banks.  They are lending on a project that if you default midway thru the build, they are in a lose situation.  I would recommend talking to local banks and credit unions that do commercial loans.  It is very helpful to have a very strong personal financial position with strong W-2 income to give banks a better feeling about the risk.  If you have no experience building and plan on doing it as your primary income, you will likely find it very difficult to get a construction loan without a lot more equity/down payment to minimize the banks risk.