All Forum Posts by: Nick Louie

Hi BP Community,

I just offered on a property in Brooklyn, New York that is in the process of going through a full gut renovation and being flipped. The property is a two-family.  It is off-market, so there is no competition. The seller is the renovator, and he is handling the flip personally. We estimate the flip is about 40-60% completed. The seller estimates he will be done in 2-3 months. The property looks promising, but there is still a lot of work to be done. 

I would like to move forward and go under contract soon to lock the property down before other buyers enter the picture. But I also need to manage risk because my understanding is if I go under contract at this point, I would be buying the property "as is." 

One way to manage risk is to create a comprehensive punch list to annex onto the contract, which provides for an itemized list of all renovations to be done. I would think that the seller would have some type of plan or blueprint, but my agent said this type of plan in writing isn't available. To make sure our punch list is comprehensive, we are thinking of organizing two inspections, one before going under contract and another inspection after all renovations are done. Then, in the contract, we would make closing subject to the inspection not uncovering any "material" defects in the house (not sure whether this clause is customary?).  

So my question is: In this situation, what is the best way to manage risk in going under contract on a property that is in the middle of a full gut renovation? 

I want to make sure that if I go under contract while only 50-60% of the renovations are completed that I ultimately get a finished product without any major defects. I also want to limit the seller from cutting corners on the renovation. 

Thoughts? 

Hi Will - So do you feel unsafe like walking around the neighborhood? Like how would you describe the danger of just physically being in there? Is it a situation where if you walk the streets around 9pm, then people literally chase you down in the streets? 

I've literally received all negative reviews on what life is like in the West Bronx...

@Keuris Torres

Keuris - it’s nice to hear your take on things. The question I gotta ask is whether the Bronx has any acceptable neighborhoods to house hack for 1-2 years?

Which neighborhoods do you recommend? Cheers.

@Scott Mac

This is amazing advice! I’ll let you know how know it goes Monday! I will do this.

@Allan Smith

What area of the Bronx are you in?

@Krista Kennedy

Interesting! I think I’m going the same route as you! First property in NYC to convert rental payments into mortgage payments. Then build an outside portfolio. I’m from upstate NY, so I’m thinking Utica, Syracuse, or Buffalo. What’s your connection to Baltimore?

Also, how did you build a team in Baltimore (e.g., lender, agent, etc)?

@Allan Smith

Ohh Mann… based on this advice, I’m thinking about expanding my search to New Jersey!! Haha

@Santiago Marquez

Thanks for your reply. What do you think of Fordham area of the Bronx?

Which neighborhoods do you recommend staying away from?

Krista - I would kill for 3-fam in East Flatbush for 1.2M! My current rent in East Harlem is $2,500/month, which is pretty ridiculous. So, I'm eager to get a 3-family + ADU for around $1m - $1.1m.

So in your single-fam, everybody shares the same kitchen? 

I recently found a killer 3-fam in the Bronx that has great numbers, but my wife doesn't agree with the neighborhood either. And I'm not sure if I agree...

Do you plan on purchasing a second property, and then continuing to rent out your current single family?

So you purchased a 3 family unit. Does that include the basement? Or could the basement be converted into an ADU?

I'm looking for a 3 family + basement that could be converted into a ADU.

I'll send you a DM. Let's chat soon!