All Forum Posts by: Yader Gomez

It hurts after all the searching and thinking of the possibilities. I've had it happen twice but bailing when the numbers don't make semse will feel a lot better in the long run. I'm still searching as well, good luck on the next one!

Final update! Went to the inspection walk through last Friday. The good news: from what the inspector could tell without tearing the walls open, the unpermitted addition looked good and the plumbing and electrical were fine. There were some small things needed on the house and I would have to get the permit for the addition, egress window, and an addition to make a laundry room. The bad: Everything about the front house was great or easily fixable and would have made permitting a breeze. Then comes the curveball. I met the owner who happened to be there since he let the inspectors look around. Nice guy. Gave me a tour. I had already visited the place but this time with commentary from the guy who owned it for 20 years. This was a bit of good luck for me. Because he started telling me about all the unpermitted additions and work he did. He doesn't like paying and waiting for all the permit stuff so he doesn't do it. Giant red flag. The back house was the complete opposite of the front house. It was in a pretty sorry shape. Lots of parts needed stucco on the outside, some parts of the house and the garage attached had windows borded up lazily with plywood and painted over instead of properly sealed. There were termites, mold, and an unpermitted addition to this house that made it violate the clearance from the back of the property line. I got to see all I needed and pulled out of this deal. Thanks again for all the help here everyone! Time to keep looking.

Thank you all for your help @Michael Hacker @Wes Blackwell @Account Closed

I have an update. We spoke to a few contractors and my agent even called the city of Phoenix but apparently neither general contractors nor the city inspectors can inspect the addition to see if it's up to code once it's already built. They both only do this during construction. 

I did get in contact with the city of Phoenix Planning and Development department and they'll be having a residential code review get in contact with me tomorrow to let me know what I can do. Hopefully it's something reasonably painless and not terribly expensive. 

@Jonathan Taylor I think you gotta trust the gut a little when it's telling you it feels too risky. Is the negative cash flow you're showing with all units rented out or with you living in one? I would be very iffy if it was negative as is. Could you raise rent or add value to them? Even so it sounds really risky.

Welcome @Taunesha Butler ! I'm also in Phoenix and currently under contract for a property with two houses on it. If you don't already have one, get an agent. @Chris Tran has been helpful for advice to me on here but is also an agent with experience in multifamily. You said you're new so I'm not sure how much you've read on here but Brandon Turner's book on real estate investing is a great start. One important chapter shows you how to calculate all your costs to see what a property cash flows if at all. It also depends on your price range. Some of the multifamilies in town aren't in the best areas. But the higher you go in price, you'll find some nicer ones. Just remember that in some cases the sale price of a MFH jumps a lot higher than what the units rent out for so it won't be a good deal. I've seen decent ones around $400k and up. Since you'll owner occupy, you can use an FHA loan and put as low as 3.5% down. You just have to live there a year, the property has to be 4 units or less, and I think there are a few other loan requirements that a lender would be able to explain. Good luck and feel free to ask for some help if you want a second set of eyes on an analysis of a prospective buy.

Thanks for laying out the options pretty clearly @Wes Blackwell! I just went under contract today so the first thing I'll do tomorrow is book a contractor to come out and take a look. If the contractor thinks it's all up to code, should it be relatively painless to have an engineer and city inspector sign off on it? Should I ask the seller if he has any drawings for the addition? I think he may have been the owner it was built under. 

Hello all,

I just went under contract for a great property with two homes on the lot and I plan to owner-occupy for several years. The zoning is in order, separate meters, good neighborhood. But it turns out that the master bed and bath for the main house (where I'll be living) is an unpermitted addition. This helped me get the property at the price I did. 

However, I'm concerned what this means for me going forward. Everything I've read after looking through tons of previous threads suggests that it's not much of a problem if disclosed (which the seller did), not counted in the sq ft of the property when considering the sale price (which they also did correctly), and is also less of a hassle if the property is intended for buy and hold as opposed to a flip (which I plan to buy and hold). 

My main concern is for the distant future when I intend to rent this front house out as well. The master has windows but they're high up and small. So in order for me to get a permit for an egress window, the addition itself needs to be permitted I'm assuming. I'm no professional but at least to my untrained eye the construction looked solid. What are the steps for me to get this permitted? What can I expect the costs to be for best case scenario of hiring an engineer and getting the city to grant a permit? I assume the costs are a nightmare in the worst case scenarios of a either a major rebuild or full teardown of the addition. Any help is appreciated! 

Do you make a decent income on your own? If so, have you considered applying for a loan only in your name? this way you don't have to worry about your fiance's lack of credit. Most lenders are really helpful and could either explain to you the differences between applying alone vs together or they may even do it for you so you make the best choice. With an FHA loan you can out down as little as 3.5% down but it has to be owner occupied with nothing past a fourplex. So 4 units or less. If even this still is a little out of your price range, at least you now know what to shoot for and just take some more time saving up.

Congratulations on your first purchase! I'd definitively be interested in updates if you don't mind sharing along the way. I'm earlier in my journey and already have had one deal under contract but pulled out after the inspection. I hope to find the right deal soon.

Update: I found the property on the county assessor's website but not sure exactly what permits would look like. It has a drawing of the exterior on there and it includes the second building. However, the second building is shown to be a detached carport and workshop. I can't tell if it was the current seller that converted it into a 2/1 and studio or if it's been around this way for longer.