Single Family rehab project

[Sheila Villacampa]

I have a fixer upper single family house in Chicago. I plan on fixing it with the intention of living in it for 2 years and then rent it out. My questions are: 1. What are the best options for financing the rehab process. I thought about getting a home equity loan of the house I'm living in now that does not have a mortgage but also does not have a lot of equity. 2. I got the house from Wells Fargo, which had existing violations such as mechanicals not being there, problem with garage that is no longer there. I asked the city on how I can clear them, the response I got is to fix up the place and call them for an inspection so they can clear the violations. My question is can I start te rehab process without getting the city permits? 3. What kind of agreement can I make with the General Contractor? I have contacted a Contractor who is a family friend, he is willing to partner with me but basically I don't what kind of agreements are there. Any suggestions are greatly appreciated. The house by the way I paid cash with my retirement funds. Thanks again.

[Tom Lane]

Hi! I was a Chicago contractor for about 25 years. Hated dealing with all the permits/payoffs and out dated codes, so I moved the business 100 miles west. Anyway, this is my take on 'partnering' with a contractor...

You both make a list of what you see as needing repairs/remodeled, then sit down somewhere quiet and discuss materials, estimated time and costs, which ones are doable by him personally, which ones need subs, which ones need permits/inspections and all the rest of the fun stuff. The lists will give you not only a cost basis, but help make sure things get done in the right order. Its easier, for example, to have the new outlet in the wall BEFORE you drywall. Just sayin'.

As to paying the contractor, its the Holidays and winter - the time of year A LOT of guys in the Chicago area will work a little cheaper just to fill their dance card. Others are collecting unemployment and cash is king...I'm not advocating doing anything illegal or immoral, but, "tis the season". 

I did a lot of "flip" jobs in past winters for half pay and a bonus upon sale, and some folks have paid me through PayPal and their credit card, to stretch out their payments and assure I got mine in a timely manner. Its times like this you find out how good a family 'friend' that person really is...

Good luck and let us know how it all works out.