All Forum Posts by: Paul Hansen

Curious if anyone could provide rough cost to use when estimating for A/C replacement in Phoenix and Tucson Metros, ideally 3-ton, 4-ton, 5-ton replacement costs to account for varying home sizes. Just the unit plus labor with old unit removal -- no bells and whistles or changes to existing ducting. Thanks! 

In Arizona, if you are not adding structures or appurtenances and you are only improving upon existing structures and appurtenances, then you can use licensed specialty sub-contractors. Unless you are adding structures and appurtenances, you do not have to use a GC to remain lawful. If you need permits, unless it is for plumbing or electrical, you will probably need a GC to pull those.

Otherwise, you can "project manage" the flip and line up licensed specialty subs to complete work (carpenters, roofers, floor installers, painters, etc.), and this is within the AZ law based on my interpretation (I am not a lawyer). To claim the exemption from AZ's contractor license law as an owner/developer, the statute states that licensing info must be included in the sales contract, and I have seen addendums to contracts that include this information. With that said, as a Realtor and and Investor, I haven't seen these addendums often. That doesn't mean it is right. You don't know what you don't know, and ignorance is sometimes bliss until you get caught or placed in a position of liability.

Here is the snippet from AZ Statute 32 regarding who is exempt from being licensed. Here is a link to the whole statute (see Article 2, Section 6): AZ ROC Title 32

"Owners of property who are acting as developers and who build structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor or specialty contractors licensed pursuant to this chapter. To qualify for the exemption under this paragraph, the licensed contractors’ names and license numbers must be included in all sales documents."

Hello BP members,

I was wondering what advice is out there on retaining a residential real estate attorney for Fix & Flips. 

For example, 

Is it important to hire an attorney to set up an LLC?

What aspects of the Fix & Flip process do real estate attorneys benefit? 

Do most investors have an attorney representing them? 

What fees do attorneys charge and when? 

Does the benefit outweigh the cost? 

Thanks for your advice and insights.

-Paul

@Marcus Peck - Congratulations on making your first steps. House hacking will be the way to go since it sounds as though you will be taking out an FHA loan, and you'll be required to make this your primary residence for a minimum of one year. This fits in with your strategy, at least short term. The FHA solution will prevent you from taking on many distressed properties. Depending on what market you are investing in, hopefully you can find a property that has an opportunity to be improved but not disqualified from FHA funding (they'll usually require that the home is in livable condition, meaning all structural and mechanical elements are in tact). There may also be great opportunities for HUD homes (sales of FHA backed homes that have foreclosed). Some of these may be distressed properties that will qualify for a 203k FHA loan, which will allow you to include the cost of repairs in the loan. A fantastic option for your first investment. Conduct some research on this, and then find a great real estate agent/broker in your area that is registered to represent you on HUD home purchases and is knowledgeable of the FHA and 203k programs. I have embedded links to HUD and the 203k program above. Best of luck to you!

@Efraim L. Sure! I have worked with investors in the eastern and central/southern parts of Brooklyn. There are still deals in the eastern sections of Bed-Stuy and Crown Heights (closer to Broadway Junction) around the $1.2mm price point and Sunset Park at the $1.4mm price point. The best have been in central/southern Brooklyn neighborhoods, namely Flatbush & East Flatbush. There has been a tremendous amount of flipping taking place in East Flatbush the past few years, and it’s the one neighborhood in BK where you can still buy a detached home for less than $800k. I know both home owners and investors who have purchased here with great success at various levels of investment. 

@Antonio Cucciniello Yes, it is quite possible to do this depending on where you are interested in living and what budget you have in mind. Many purchasers find great income generating primary homes with rent from a tenant that will offset much of the holding costs such as mortgage interest and property taxes (assuming you purchase a property type with low taxes, such a multi-fam homes in various parts of the city). There are opportunities to buy low and rehab in addition to higher priced turn-key homes. This is all dependent on your criteria and budget, but there are opportunities across the city.

@Paul Shay I would check with the local utility company to get the cost per kwh and the average electricity bill for a property of your size. The risk % could vary depending on location, for example, in markets with higher $/kwh and dramatic swings due to high usage of A/C. You should attempt to estimate the average to remain competitive, and then any overages could be factored into rent or surcharge increases the following year, assuming you were not extremely far off in your estimates. If you don't sub-meter, it may take a bit of trial and error (and time) to optimize this.

I know of a tenant in NYC who received a $250 concession per month from their landlord through the end of July. Probably as a gesture of good faith and also as a way to promote the tenant to continue paying rent. This landlord also allowed the tenant to revert to a month-to-month lease in case the tenant found themselves in a predicament that they could not continue living in New York or afford the apartment. This was after the tenant inquired about anything the landlord could do to support during this time. 

I was recently looking at options here since I am originally from Phoenix and have one investment there. In Phoenix, these days, you will not be able find much of anything on the MLS that would work as a solid investment that provides better returns than you would be able to get from other investments (bonds, stock market, etc.). Many of the deals I see are handovers from other investors at lower cap rates than most investors would be willing to accept so it would be wiser to seek out properties in better markets. If you could find a very distressed property in an area like Maryvale for example, that might be worth looking into. I see some have sold around $100k and flipped for a resale of $225k. If you plan to rehab and hold as a rental, I would plan to pay cash then BRRRR to get the best possible returns; however, this requires a lot of capital for a new investor, and BRRRR may not even possible (or hard to find) in the post COVID-19 economy.

Instead of trying to take on the installation yourself, could you purchase the windows from Lowe's and pay a professional to install them at the same labor rate you received in the original quote? This should allow you to save $1,150 off the materials.