All Forum Posts by: Mike Hasson

Sometimes I wonder why new construction is so riddled with defects. 

Maybe it's because they assume people are skipping inspections? Maybe they are on too steep a timeline to take the care to actually finish their jobs? Doesn't really matter the reason since I'm not going to make up any excuses for them. New construction have some of the most blatantly obvious defects. I've seen appliances not hooked up, insulation missing, shingles not attached, sketchy improvising, improper materials, steps skipped, and the list goes on. 

New construction is not immune to defects and I think it would be wise to get an inspection to make sure everything works satisfactorily prior to move-in.

However, as @Eliott Elias pointed out, you will get a one year warranty, and so many inspectors offer what's called an "11th Month Inspection" to help you itemize and remedy those  items with your builder before the warranty expires. 

This is a great idea! I love the initiative!

I'm a home inspector based in Mansfield, which is a little south of Cleveland, though I do serve area. I'd love the chance to show you some unique features of my reports that investors appreciate. 

I wonder if our schedules will align while you're in town! Ill shoot you a DM

I encountered the same thing. I was trying so hard to improve myself, but the people around me were not only not doing anything to help (which is fine) but when they started to try to bring me back down, is when I realized that more drastic change was nevessary for me to reach my potential, which contributed to my decision to move. 

Part of my relocation plan, knowing that I would need to start over with a new circle, was to immerse myself in real estate and being intentional about creating that new circle.

Next week will mark one year from moving from San Bernardino (hey we were practically neighbors! Lol) to small-town Ohio, and I believe I'm on track with the goal.

I've found myself in a circle where I know the least, and it's pushing me to be better me! 

Meeting fellow investors like @Michael Garrett and getting involved with masterminds, meetups, and mentors, shows that the plan is materializing, and none of it would have happened if I stayed in my comfort zone. 

The struggle is real. I am reminded of a quote by Jim Rohn, something along the lines of: 

"If you want what you've never had before, you have to do what you've never done before"

 I like how thoroughly you think through! This looks like something I'd put together ❤️  lol

I'd make a few adjustments however. i agree with @Austen Mueller that speaking with the lender first is a good idea. I'd even go as far as lime up your refinance loan also, get all pre-approval, and learn about those costs and terms and bake them into your rehab plan from day 1. And that your realtor will be able to provide comps and ARVs, but unless they are also RE investors, I'd take their thoughts on repair budgets with a grain of salt. 

Some good interview questions for your realtor,  might include asking about how many rehabs they've done,  or how many rentals they own. You may be surprised at how many realtors don't understand the investing side,  even if theybare excellent realtors. Finding and negotiating homes for investments vs owner occupied, are completely different beasts, and finding an investor realtor will benefit you greatly.

AlWAYS do your own due diligence - trust but verify.

Then I'd switch 4 and 5. Sending contractors in before anything is under contract sounds like it will rack up tons extra cost (presumably you're paying the contractor for these bids on homes you dont even own?) and may put a strain on those relationships particularly if the homes never make it to contract. 

I would highly advise you to learn how to approximate rehab budgets on your own, which of course will take time and practice, and you may need to fork over the cash to pay contractors for bids to get that knowledge, but I would advise against keeping it as part of your long term strategy.

Thankfully BP has resources that can help! For me, a huge help getting started, was The Book on Estimating Rehab Costs by J Scott. 

There are probably some exceptions, like if you have exclusive or in-house contractors on payroll (most newbies probably dont), or if you're an out of state investor and your contractor is also your property manager, for example.

Also make sure you fully trust your contractor if you are depending on them for your budget and scope of work. I believe that a vast majority are honest, but there's something to be said about bringing in an inspector who is unbiased and not incentivesed by the scope of work.

What I recommend is to hand the inspection report to the contractor and work out scope of work from that, but you will need to be under contract to get that inspection.

However plenty of investors do just fine with no inspection and bringing in the contractor from day 1, but these are likely the seasoned pros and have excellent relationships with their contractors.

In any case, it seems like you have a good overall handle of the steps invovled. 

I once had a home for sale in a bad part of town. Vacant homes in this area were targeted by squatters, copper thieves, and so many other disreputable characters.

 Since the day the for sale sign went up in that yard, the house was cased out multiple times per day. And I knew because I was living in it! After about the 5th day of people looking over my fence, through my windows, and attempting open my doors, I took the for sale sign out of the yard and had all interior pictures taken down. My realtor was not a fan of the idea but understood that safety was obviously priority here.

So we just had the pictures on hand, and gladly sent them to anyone who inquired. This is probably a one-in-a-million situation, but a possible reason why someone might not want to show the inside of their home to the world.

I love this! I bought my first home from my landlord! 

Sure made moving easy lol

Here's a summary of how mine went down:

I was a faithful tenant for many years, and had developed a good working relationship with my landlord. We had discussed investing on multiple occasions, and he shared his story of how/why he bought the house, the challenges with being an OOS owner (he was in military), and future plans. Although I was not in a position to buy yet, as I was still studying Bigger Pockets, RE, etc, so I was renting while I built my small business. But he knew that eventually I wanted to be a landlord too and was a common topic of conversation, including him being open with the challenges he faced. 

So the time came when he decided it no longer made sense for him to own the property, and he chose to sell, I got first dibs. He called me with the news that he was selling, and I made him on offer that was about 25% less than what he expected. 

Thankfully, I had been studying the RE markets and knew what the home was worth. But he was comping it off rehabbed homes, and this home was far from those conditions, so I knew that he was asking way too much. He rejected my offer and proceeded to list the home at his asking price... :-(

I immediately kicked my butt into overdrive to really accelerate savings, credit score, etc,  to get myself into a position to buy - thinking it would be a different home, and that my new landlord would not renew my lease. 

About 6 months went by with only 3 showings and no offers (presumably because he was asking too much, house was in poor condition, and a tenant paying far below market rent). I knew all of this because I had been studying it! I had been preapproved by this point, so I reminded him of my offer price and that it was still on the table if he was interested. He accepted and we went under contract, and the rest is history. 

Some have called me lucky, though I say that luck is what happens when preparedness meets opportunity.

My takeaways from this experiences are having a strong knowledge of market values, ARVs, and rehab costs are key. The other critical factor was the relationship and open communication through the whole thing. Especially when offering what I did, I made sure to do so respectfully and provided justification for how I arrived at the number.

So while while our situations differ in that you want to ask to buy, while I was informed that the home would be sold - if I was in your position, I would simply start the conversation about real estate and your aspirations to become and investor. Who knows, maybe the home is actually a headache for your landlord and they've been wanting to sell? Or they want the cash for something? You'll never know unless you start the conversation!  

Good luck and let us know how it turns out!

A good question, and a very common defect.

You may be able to just install a GFCI at the beginning of the circuit as Bob Stevens suggests, but if you do that, you would also need to label each receptacle in the circuit as "NO EQUIPMENT GROUND" and "GFCI PROTECTED". These stickers should come inside the package with a new GFCI outlet.

Here's some further reading: https://www.howtolookatahouse.... 

I'd reach out to the inspection company first. Then insurance. The inspector should also have insurance. An attorney seems extreme unless you feel the inspector was blatantly negligent or did something criminal. 

Also important to note, that conditions of a home change day to day. I've heard of someone complaining of a leak that occurred years later and wanted to blame the inspector for missing it... Seems they thought everything would last forever. 

That's an extreme example but the point is, are you 100% sure that the issues were present at the time of inspection? 

If course I don't know any of the specifics of your situation, and I'm not defending something I know nothing about, just offering some  alternative perspectives. 

In summary, I'd start with a call to the inspector. 

While Foundation issues can be serious, not all cracks are the same. I'd look closer at the causes if the damage, if any past repairs have been done, and/or the causes have been dealt with, age of the hone, construction materials, etc. 

But in general, some examples could be poor exterior grading, soil types, issues with gutters or drainage, freezing/thaw cycles, poor construction, deteriorated components to name a few. As you can imagine all of these can vary in severity and complexity to deal with. 

Repairs can also vary widely. I'd be wary of any proposed solutions that do not also address the root cause.