Flipper/Rehabber · Indianapolis, IN · Member since 2019 · 13 posts · 0 votes
We started out just adding a room addition to a house. We're now looking at a $60,000 loss and 9 months to completion.
We got the permits and built the addition. When the contractor started to tie into the existing house he found the foundation was crumbling and the studs were rotting in some parts of the house. He suggested demolishing the house and building new from foundation up. So we gave the go ahead to tear it down but we didn't have a wrecking permit or any building permits to do that.
Obviously we got a stop work order and had to begin the permit process. Now we're facing a variance if we rebuild in the existing footprint of the house and a likelihood they won't approve our proposal.
We're in the house $100,000 total so far. The plan was to build a 1600 sq ft house 3 bed 2 bath. ARV $190,000. We are at least $125,000 away from doing that. We are estimating a $60,000 loss right now after closing, realtors fees holding cost ect..
Does anyone have any suggestions of what we could do to minimize our loss?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
7y
He found that the entire foundation was crumbling, and there was no indication of this prior to your purchase? Did you have an inspection before you purchased? Are you sure the current contractor is being honest with you? Have you had an engineer look at the house?
And if this contractor actually knows what he's doing, how could he possibly think that you could demo a house without a permit?
I'm not convinced this contractor knows what he's doing...perhaps get a second/third opinion?
Flipper/Rehabber · Indianapolis, IN · Member since 2019 · 13 posts · 0 votes
6y
@Mike Cumbie The land needs to be clear and graded to sell it seems which would cost approximately $15k-$20k to accomplish. I don't see anything else around the city that matches the condition the lot is right now so I'm assuming it would need to be in condition for someone to build on.
@Bryan Devitt It turns out we aren't zoned for multi family so a sfr is our only option without a big headache. Yea that's what it seems like. Were just trying to minimize the loss obviously.
What is considered "multi" there? Here you can build a duplex in areas zoned for singles, so they go up everywhere guys are trying to max their profits. That might be worth looking into to try and get closer to break even.
Flipper/Rehabber · Indianapolis, IN · Member since 2019 · 13 posts · 0 votes
6y
@Bryan Devitt I thought it was zoned for single only. But you're right, a duplex would lower our loss. Our permit office is full of megalomaniacs who love to say no. Is there any other way besides calling them to find out what zoning allows?
@Bryan Devitt I thought it was zoned for single only. But you're right, a duplex would lower our loss. Our permit office is full of megalomaniacs who love to say no. Is there any other way besides calling them to find out what zoning allows?
I don't know how your inspections work there. In MA if the locals are being PITA you can just call state officials and ask them. Get a copy of the town zoning laws and see what they say. If they say you can't do it, tell them to show you where it says you can't do it. If it isn't in zoning or the codes in black and white, then you're either good to build or good to sue them to force them to give you permission
@Bryan Devitt I thought it was zoned for single only. But you're right, a duplex would lower our loss. Our permit office is full of megalomaniacs who love to say no. Is there any other way besides calling them to find out what zoning allows?
D5 is only single family unless it’s on a corner lot or the existing was duplex. If it’s D8 you can do duplex.
If you have to build second story, consider doing 5ft knee wall then build roof system to possibly save on costs instead of full height wall system.
Consider building refinancing and holding, but do so with a carriage house above garage so you can rent out and essentially have 2 rental units.