Hello BP fam...I’m about to close on a vacation rental in upstate ny. It’s 3 minutes from a ski resort (gore mtn) in the Adirondacks.
It’s a total fixer upper. It was set up as a mother daughter sort of. There’s no CO or any permits for the extension. The main section of the home is in decent shape and could rent out after a some renovations. However, it’s the second part of the house that needs a complete renovation and has no electrical or plumbing. The square footage is almost the same as the main part of the home.
It was listed as a 4br 1 bath home 1800 sq ft. Not including the extension which is almost the same size in sq footage.
I know they do things very different upstate but I don’t want to make a huge mistake here...
Any advise is appreciated, thank you.
Side note: my plans were to rehab the entire property. Eventually having two spaces to rent to skiers and use for self when not rented. The space could be two separate 4 bedrooms and 2 baths or one entire house rental as an 8 br and 4 bath.
The asking price was 130k and we settled at 80k cash bc of all the renovations needed on the extension.
I planned on getting a renovation loan to do the rehab and then transfer to LLC down the road after the rehab is done.
@Greg Galustian congrats on the deal! Without knowing annual rent potential, rehab costs, or after repair value it’s tough to say whether this was a great deal or not, but if you’re happy with it and ran your numbers then I’m sure it will work out.
What exactly did you need advice on - I didn’t see a question in your post.
Thanks Tim. My question was should I be concerned about the home not having a CO or permit on the extension which was done over 50 years ago most likely and before this current owner bought the home.
The rehab I’m estimating at 100-120k. So All in I’d be at 200k. Similar homes are renting 1k a night approximately and this would be two units potentially.
@Greg Galustian I’m not very well versed in permits, but that would definitely make me nervous. Unfortunately, at this point if you are closing next week your options are probably limited - you should have looked into this during the attorney approval period or home inspection. If it was done multiple owners ago then you are probably fine, but you never know.
I know in Buffalo a CofO is only needed on 3 or more units, but you can check that easily with the town/county without giving them the address - just call and ask what the policy is.
As for your rental numbers, I hope you accounted for seasonality. I just did a quick search on Airbnb for next weekend - there were tons of places available and the highest price I saw was $329/night. But if you are able to get the $1000/night/unit during the ski season and book solid then you should be fine.
Yes my attorney said nothing popped up on the attorney approval letter check with this but they are going to just double check with the town again.
Hopefully I’m all good to go.
Yes the 1k/night was during peak ski season . The ARV has a potential to be at least 350k from what I see as well...🤞
@Greg Galustian then it sounds like you’re all set - congrats!
@Greg Galustian No, you likely don't need to be worried about these. Cities and counties almost always make exceptions for things that were done prior to modernized zoning and permitting requirements. They may ask you to bring it up to code on life safety items. I would engage the responsible jurisdiction building department on this. Tell them what you are looking to do. Generally, they will help find a path forward.
@Chase Fisher thank you! Looking forward to closing on my first rental...and swinging a hammer all summer lol
@Greg Galustian tread carefully here. Adirondack mountains have some of the most restrictive, if not the most restrictive building codes in NY. You should make sure this is a legal addition. If it is not a legal addition you may find yourself having to rip it down, or having to jump through hoops to do anything to improve it.
I would call the local building department pretty much right away and ask what they have on record. After that ask them what permits are needed to do improvements.
Which rehab loan are you considering using:
- FHA 203k
- Fannie Mae Homestyle
- Freddie Mac CHOICERenovation
What is the ARV?
The rehab loan will be with Loan Depot...conventional homestyle loan. That’s what my mortgage guy told me it’s called.
The ARV currently looks like 350-400k
@Matthew Irish-Jones Thanks Matt.
Yes This was my specific concern exactly...so I was on the phone with my attorney yesterday asking her to request specific information in regards to this matter so I’ll have no worries about tearing down the extension and etc.
Still waiting to hear back on this.
LoanDepot has a strong rehab loan division ... just make certain your LO knows what they are doing.
ARV looks amazing ... nice!
@Greg Galustian congrats on your decision to get started in REI!
Yes my LO is very experienced and knowledgeable. He literally moved mountains for me to get into my primary residence last year while I was finalizing my divorce. He took a lot of stress off of me with that loan.
If Anyone needs a good mortgage guy in the Long Island area his name is Steve Tandy with the Garden City Loan Depot Branch.
Congrats on your initiative!!
Now just make sure after you fix it up you have about $20,000 in reserves for when Murphy’s law rears his UGLY head it is not if, but when.
@Michael Swan will do thank you mike
@Greg Galustian you can’t even trust your attorney completely in this situation. The ADKs and NY in general have really old buildings. There can be conflicting data in their internal OARS system and the system brokers and agents use.
Once you go to pull a permit, add an addition, or get a variance the inspectors get involved and start looking into everything. At that point it is your job to bring the entire building up to code. That can be a big problem if you have an illegal addition,
Dated mechanicals, and zoning issues.
I have bought a place with a great attorney and used an architect and still found out the city had different information after. It’s a very costly error
@Matthew Irish-Jones thank you.
Fingers crossed, I’m still waiting to hear back. I guess I should have a plan B in place if it is illegal. Maybe ask for a reduction in price? The asking was $130 and we agreed on $80k.