All Forum Posts by: Steve Smith

I would look for an experienced developer or GC in that area who would be willing to partner(finance) the deal. In a perfect scenario you wouldn't have to pay the developer or GC his profit margin or the hard money lender his cut(have to figure in normal finance rates). Figure what total project cost and what is a fair split of profits at the end. And of course the fair value of the land. You should save time, costs, etc. Make sure everything is documented to a T, maybe even form a LLC with clear concise operating instructions. Are you better off just selling your property outright to the developer? What about future living arrangements for you?

@Shawn Holsapple Brilliant strategy. 

Hi Trent,

Welcome. I am in Lowell, IN.  If I can be of any help to you let me know.

Steve

@George Foster Very good article .  If the client has their own financing I am always willing to do a fixed price for their project.  This will undoubtedly save them thousands, how much of course depends on the scope of the project.  I will bid the job in detail as usual, let the client see this, then explain if they are going to fund the project, that I will do it for said fixed price. Payments made based on progression of work.  The job is run as usual. Any changes the client makes during the course of the project are handled just like a regular change order so they can track the added costs and not be surprised at the end.  Documentation, Documentation, Documentation. In my experience, the client ends up saving a significant amount of money and I benefit by not having any of my capital tied up allowing me to increase my work load.

This could be very good.

Thanks Ben. I have been reading a lot of your posts. Lots of good information. I have made a verbal at $80,760.  I am assuming that you are using the current rental income to come up with these numbers. 

Thank you - Steve

Details: Each side is 2 bedroom, 1 bath,1 car garage. One unit also has a 30'x48' pole barn.

Taxes are $2930/year with no exemptions(i.e. Non-owner occupied). I currently have my own home for sale and may eventually move into the side with the pole barn.

Banked owned duplex. Bank is currently renting out the North Side for $800. This tenant is doing the lawn and snow removal maintenance so they discounted his rent to $675. South Side(with pole barn) is being rented for $850/month with a $50 discount if paid before the 5th of the month.  

Current monthly rental income is $1475. Market rents should be $900 and $1000 so $1900 per month income. Lots of room to add value.

Building needs about $15,000 in repairs(safety margin included) but I am using $20,000 because the siding may need to be replaced before the Cap Ex Fund(using 10%) would accumulate enough to cover it.It had snow on the roof, but I could see moss on it from the little bit I could see. I have the cost of a new roof figured in. I don't think it really needs it but better safe then sorry.

Other major factors are it is on well and septic. Of course a septic inspection would be needed which the bank will pay for. A new septic drain field is not figured in rehab costs as of now.  Also pole barn has a floor drain and this tenant works on cars on the side. Inspection needed because if this drains into septic than septic field is almost guaranteed to need replaced because of the oil and other contaminants going into leach field. Building is 30 years old and if the septic has been neglected, well you know. If septic is in need of repair, looking at $12,000 - $15,000 because there is not enough ground for a 100% move over, thus only option might be a mound system, which in my opinion would drastically hurt the future value of the building, even if just cosmetically. But like I said, bank is willing to pay for this inspection and probably all inspections.

Tenants pay own utilities which is all electric, heat, everything. I am assuming I would pay garbage $30/month.

What would you offer? I have run the calculators, but I would like to get others opinions to make sure I am approaching it correctly.

Thank you - Steve

P.S. I have built new homes for 20 plus years and have done some remodels so I am confident about the repair costs but would still get an inspection.