All Forum Posts by: Tony Reale

Recently flipped a large house that had multiple smokers, actually multiple generations of smokers. Every surface in the house was painted, replaced or cleaned! After completion 50% of people walking through complained of a smoke smell! I thought every surface inside was dealt with! Someone suggested having the vents cleaned so I did. One of the small rooms upstairs, after the register was pulled and it was cleaned out with a shop vac, had hundreds of cigarette butts in it. It was as if they used the duct as an ash tray! You have to clean EVERY interior surface if it has been smoked in for a longer period of time. Chalk up another learning experience.

Just did it for a couple of months.

Dust dust dust dust!

No matter how much you mitigate the dust factor on a constructon site you can't eliminate it! At one point I opened a closed closet and looked at what clothes I had hanging and they all looked dirty. By the end of the project you could hit my bed and see a dust cloud rise! I could feel it in my lungs also towards the end. I wouldn't do it long term!

I would put most anything you owned in storage that you didn't want to ruin. It was sort of like camping and in a way fun but it got old quick!

I am looking at what appeared to be a property originally built to be a duplex. Symmetrical layout with what I believe was an unfinished basement at one time. The owner of the house has finished the basement and she and her husband live down there while their daughter lives upstairs in one of the top units that at some point and time had stairs connecting them. They took the stairs out for some privacy between the family.

Utilities are split for a duplex. I have some costs for adding another water and electric meter to make this an actual triplex. They already have 3 air conditioners, 3 laundry rooms, and 3 kitchens. Would need to separate water and electric from the daughter side and downstairs, no problem I can handle this. The family is selling and would be moving out. The renters would like to stay so have time and space to make the transition to get it done correctly.

My question is am I considering all possible problems here? Is zoning an issue or is multi-family multi-family? I know the construction part of the equation just not the city side. Nashville TN if it helps

I'm in Belleview not too far from you.

Of course it has been covered that the 2% rule is somewhat area dependent, So wanting to discuss my area "Nashville TN" Specifically but may be a question others can benefit from.

I seem to have no problem meeting the 2% rule but the houses are low cost, very low income, and not really desirable locations. I do not foresee me enjoying being this type of landlord.

The nicer more stable neighborhoods with the standard 3 br. 2 baths 2% seems to be hard to come by. "Yes I know it isn't impossible" 1.5% does seem attainable fairly regularly.

My question for all of the landlords out there is which of the above 2 scenarios would you prefer. 2% and possibly volatile or less than 2% with "hopefully" less volatility.

Also any native to Nashville that may know more than me please feel free to chime in.

Welcome! I'm in Nashville. Good place for info! Hope you enjoy it and don't be afraid to ask anything!

80/20

Without knowing any of you or your situations, but coming from a contractor's point of view, you need to think like him. I assume he remodels homes. He puts a bid in, does the work, moves on to the next. At 80/20 you are basically giving him a free raise and he should love it. If he doesn't, walk away from him because he is trying to pull one over on you. I would even start at 90/10. You are giving him free money either way.

Seems like all he is doing outside of a normal contractor/investor deal is finding the property. If you are funding 100% of everything why don't you just get a quote from him to do the work and hire him? I wouldn't do this if I were you.

I am a contractor who invests with a partner who funds me, and our arrangement as followed.

We have an LLC formed and buy all the properties under it (which may or may not work for others) in both of our names 50/50. Small bank and he has a great relationship with them.

On a flip he will fund the rehab and take it back upon sale of the house. Everything after that is profit split 50/50. I can write checks for subs but I make no money for any work I do until the house sells. I typically sub out what I can get done cheap and move my efforts to what will save us the most money.

On any buy and holds or flips we buy....if I can't come up with half of the 20% down or whatever it is, he will cover it and I have to pay him back, what I am lacking, at 5% interest on whatever terms I choose. short term, long term, he doesn't really care or hasn't yet. He basically acts as my bank, which I will mostly pay him back lump sum off of a flip within a few months unless we tackle a large project.

other notes if interested

He set up the LLC, I find all of the properties. I manage everything except accounting (his wife is an accountant) Next month I am funding my classes to get my real estate license but he has agreed to pay half of all expenses it costs for me to keep it in the future. We have known each other over 20 years and have a lot of mutual respect and trust.

we try to make our arrangement win/win or loose/loose even if I don't have skin in the game. What you originally posted looks like he can't loose.

Over budget: he gets paid you loose money.

Over time: he gets paid you loose money

I don't like it for you but love it for him! A bit one sided I'm afraid. Hope that helps.

For me especially for the one that has been there for 4 years I would raise it but not that much. Maybe raise it 25 dollars this year and 25 next. Get it to where you want it but do it slow and the "shock" won't be as bad.

Just closed on a flip where my realtor and I estimated the ARV to be about 230K. This was about 3-4 months ago when we started negotiating. Original plan was construction loan with 20% down. At closing the bank told us the appraisal looked good and they just financed the whole deal and told us to hold our funds for the rehab. After looking at the banks appraisal and comps it came back at 263K after being put back together. I called my realtor and he still says no way 240K at best.

Obviously good news either way but have some questions about bank appraisals.

They have the basics of our rehab budget but it was as simple as 1000 dollars for bathroom 1, 2000 dollars for bathroom 2, etc.

Does this just help us on the front end with the financing or are we under value on the house?

If I wanted another opinion should I ask another realtor, pay for another appraiser, or both?

New to this so asking new question. Can the market change this much in 3 months?

Don't want to leave money on the table but also a quick sell would be preferable to top dollar. Enough room in the deal at 230K for a nice profit.