Rough estimates wanted

Rehabbing & House Flipping
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Rough estimates wanted

Matt Blutowski
Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes

I need some advice estimating rehab cost!

I'm buying a duplex in an area that has appreciated quickly over the past 5 years. I had initially anticipated making repairs to the house then holding it as a rental, but am also considering flipping it after rehabbing back to a single family.

I have great recent comps and know a sales price range at about 150% - 200% more than the purchase price. I just don't have enough experience estimating costs. Any rough estimates would be appreciated - what have similar rehabs costs you?

The Property:
Good:
2,500 square feet. Double-wall brick, 3 stories. new roof, great foundation, newer wiring and furnace. Previous owner ran 2nd sewer stack and utilities to 3rd floor. Excellent location with parking and a larger yard. Area for roof top terrace off of the 3rd floor.

Bad:
Bricks need repointed on one corner, two-stall garage has walls but no roof. HVAC doesn't adequately serve the 3rd floor. half of windows are old.

Ugly:
staircase from 1st to 2nd floor ruins the layout and must be moved - this will open the space on first and second floor. New dry wall in 50% of the home, all new hardwood/tile flooring, 2 current bathrooms need complete update. A new master bath would be built. First floor kitchen needs complete update. 1/2 bath installed. New lighting, likely some new wiring needed. Yard is a mess and needs landscaping.

I'm sure many of you have had similar jobs - what did it cost you?? I'm interested in rough estimates and ranges - a place to start. Thanks!

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y

Nobody here can tell you how much this rehab will cost you, as your price is going to depend on a LOT of things:

- What type of contractors will you use?
- How good are you at negotiating prices?
- How big is the house?
- What level of finishes will you use?
- Where will you be buying your materials?
- What quality of work do you want?

I'm guessing you're somewhere in the $30-130K rehab range, but that's a big range, and will depend on all those things above.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Nobody here can tell you how much this rehab will cost you, as your price is going to depend on a LOT of things:

    - What type of contractors will you use?
    - How good are you at negotiating prices?
    - How big is the house?
    - What level of finishes will you use?
    - Where will you be buying your materials?
    - What quality of work do you want?

    I'm guessing you're somewhere in the $30-130K rehab range, but that's a big range, and will depend on all those things above.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    I'd guess higher in J Scott's range rather than lower. Complete kitchen, two complete baths plus a new one, move a staircase (a huge project by itself) and re-rock (tape and paint) half the house? Retail type contractors, like a homeowner would hire, would be well over $100K.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Thanks guys. I appreciate your guesstimates. What would your estimates be if you were doing most of the work?

    The house is 2,500 sq. ft. I'll do most of the work, with the help of a brother, and a mentor for occasional advice. I have 10 weeks this summer to do the work. I'm open to ideas where I can buy materials more cheaply than Home Despot.

    I'll have someone else make and install the new staircase, help with electricity and my HVAC guy will install air. I'll also hire a painter and some cheap labor to help tear down and landscape.

    I think I can go higher end for under $70,000, that includes labor. 14,000 for the kitchen, 14,000 for three baths (two will be lower end), 2,000 for the staircase and so on.

    If I do most of the work myself, do my numbers look like they are feasible?

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  • Don Hines
    Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
    14y

    Do you have a full time job? If so you had better budget closer to a year than 10 weeks with a DYI project of this scope. Three to 6 months if not. Take it from someone trying to reform. Do not start this business thinking you will save money DYI'ing the projects. It was easier for me to quit smoking. I am in the final stages of my first one hiring most of the work out. They didn't do the work as perfect as I would have. But, at least it is done months ahead of where I would be while trying to hold a JOB down.
    Don

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    Makes a difference if you are keeping it a duplex (separating utilities all the way when rehabbing) vs a single family house.

    Sounds like you have forced air, and the AC doesn't get the third floor cool enough in summer. Quite common. Heat probably gets to third floor just fine, if sufficient ductwork exists. If splitting utilities, makes sense to have AC for upper unit to be installed higher up so that cooling is less of an issue.

    Building a staircase off-site and installing it is tricky - are floors level, and every measurement has to be correct. Building on-site might be simpler.

    "What would your estimates be if you were doing most of the work?" - If you don't know the estimate, how do you think you will be doing this yourself? Not a rhetorical question ...

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    Totally agree with Don Hines. I've been there and done that and its really, really tough.

    10 weeks, unless your experienced and have a real crew is not realistic. That 10 weeks will fly by it will be half (or less) done and you'll struggle with it for the next year. If you're determined to do this, camp out in the house. Get up, get to work, work until your unable to move, sleep. Repeat for 70 days. Forget about "the world" and focus on the project.

    In my area, this would require permits, a general contractor to pull the permits (owners can only pull permits for their residence), and licensed subcontractors for key things (electrical, mechanical, structural, and plumbing.) Trying to do this on the sly without permits is a recipe for disaster on a big project like this. Permits require inspections. You're looking at probably 8-10 different inspections in a big project like this. That has a big effect on the order of doing things and you have to stop and wait for an inspection at those points. It requires careful planning to do things in the correct order for the inspections and still have other stuff to work on while waiting for the inspections.

    Cheaper places than Home Depot are tough. The ones I use are small, local companies. I've found them over time, based on word of mouth from local folks. And I actually do buy a lot of stuff at Home Depot. Its convenient, the prices are good, and they have most stuff in stock.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Thanks Jon,
    I always appreciate your advice. Home Depot is certainly the most convenient place, so I'll propably use it a lot even if it isn't the cheapest!

    I don't expect to be able to finish in 10 weeks, but this is the amount of vacation time I will have when I get started. My brother owes me a lot of sweat too.

    Steve wrote:
    "What would your estimates be if you were doing most of the work?" - If you don't know the estimate, how do you think you will be doing this yourself? Not a rhetorical question ..."

    I close on the property in 2 weeks, so I haven't been able to have my mentor take a look. In the mean time, I'm gathering info and considering my options. When I bid on this place I had no intention of flipping it, so I guess I'm trying to run best guesstimates to determine if I can cross this off my list, or keep flipping as an option.

    I'm buying at $110,000, similar rehabbed properties are selling at $250 - $340,000 and rising quickly.

    As for the staircase, I know a local company that will come in, measure, build and install. All I need to do is pull the old one down - which I don't feel is that big a project? I'm confident that the current staircase is not the original - it currently bisects a 20' wide house horizontally.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    With a selling price of $250K, this is not a deal. At $340K its quite a good deal, if you can stick to about $100K for the rehab. What's it really worth? This range is too big to be useful. You need to have a much closer estimate than this.

    You are scaring the pants off me. This is structural work. Maybe this is no big deal. But maybe part of this staircase is structural. This is the sort of project where you start pulling sheet rock down and go "uh oh, we need a beam. And an engineer to design the beam."

    Are you getting permits? If not, you are seriously playing with fire. I funded one deal where the rehabber did not get all the permits they should have. Turns out that city had a program to inspect houses when they went up for sale. No permits - big trouble. The rehabber defaulted, losing about $30,000 in the process. We had to dig up sections of the basement, break open walls, and do a bunch of repairs before the city would sign off.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    "With a selling price of $250K, this is not a deal. At $340K its quite a good deal, if you can stick to about $100K for the rehab. What's it really worth? This range is too big to be useful. You need to have a much closer estimate than this."

    The higher prices are more recent, and I will do more research to determine price differences that I can't currently explain. The most recent comps went for $300 and $340. Neither has curb appeal or the best location, one had siding, both had nicely finished interiors. My agent has asked me to let her know when I can make sense of it. I need another few months of comps and I will figure it out. Some new construction in the high $360 - 380s will be coming to market next summer. My turn of the century victorian 3 story has excellent location, parking and larger yard in a tightly packed area. I feel my number is $320 - 340, but again, I will collect more data between now and my intended start date for the rehab - June, 2013.

    I wrote:
    "As for the staircase, I know a local company that will come in, measure, build and install. All I need to do is pull the old one down - which I don't feel is that big a project? I'm confident that the current staircase is not the original - it currently bisects a 20' wide house horizontally."

    Jon wrote:
    "You are scaring the pants off me. This is structural work. Maybe this is no big deal. But maybe part of this staircase is structural. This is the sort of project where you start pulling sheet rock down and go "uh oh, we need a beam. And an engineer to design the beam."

    I see how what I wrote comes off as dismissive - very fair caution on your part Jon. I have a city architect coming to survey the property and give me some ideas. He isn't coming in an official capacity, but is a friend of a friend. He'll let me know what I can and can't do. Also, my mentor will be there to ensure everything has proper support.

    To my delight, the current owner revealed that she removed a board on the second floor and uncovered the old staircase to the 2nd floor! It's behind the current kitchen on the first floor - it would be wonderful if all I need to do is pull down the current staircase and install a beam.

    "Are you getting permits?"

    I'll have some of the permits. The city doesn't inspect without a reason. But, as an example, I won't pull permits for installation of air conditioning, or plumbing. The areas is too hot for me to get away with much. However I will be filing as the resident of the property.

    My mentors wants me to invite bids for the whole project. If my numbers are close, am I correct that flipping makes sense?

    As a rental, I'll need to put in another $25,000 ($135,000 total) to get $2,200 in rent. If I flip and spend $75,000 ($185,000 total), I can sell at over $300. At what point (price) does it make more sense to flip? If I only get $280k for instance?

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  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    14y

    Everything above is golden advice.. these types of projects are for experienced guys.. I just met a local guy doing something similar in a similar scope of work on a historic house here In Charlotte for his first project.. I told him all of the above advice plus, and he stubbornly argued every point with me.. He sadly is set to lose a lot of money on that house... A few things that I will add... In my area you can pull your own permit as the owner whether it's a primary residence or investment as long as you keep the work to a total of 35k or less.. I can't see any inspector being ok without a Gc and someone to take th liability these days... In these old houses things will come up... Budget for them.. Btw if you're opening up a space, you probably will need some sort of microlam beam.. Again the inspector will want someone to be responsible for the beam.. That will be a stamped engineers letter which is a few hundred bucks... Also, you prob won't be able to use that old staircase... If you end up building everything to code the old staircase maybe too steep or too narrow... As for your mentor, is he a construction expert?? I've rehabbed a lot of old homes, but that doesn't make me an expert. Get a Gc and some subs in there ASAP to give you bids so you can figure out your budget!! Good luck :)

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Wow, there are so many red flags from what the OP has written that I don't know where to start. I see trouble written all over this project if the OP tries to tackle it the way he plans.

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  • Al Vallecilla
    Mesa, AZ · Member since 2012 · 4 posts · 1 vote
    14y

    Hi Matt,

    What sometimes do for a larger project like yours seems to be is the following:

    1. I contact several general contractors that are licensed bonded and insured that are in the perceived middle range of organization size. I don’t call on the small guys who lack the financial capacity and could skip tomorrow. I don’t call the big boys with fancy websites, offices and vehicles.
    2. I ask them all to meet me at the project site collectively, yes all at the same time. So that I can save valuable time and so they realize there is competition of price and ideas to mitigate the properties issues.
    3. Prior to the GC meeting I order an inspection report and I make several copies to hand out to the GCs. I also provide them a sheet of items that I feel would provide the best investment vs. return of improvements for the property. You need to be clear as to what are the must do items and what are optional, so you don’t over improve and break the budget.
    4. I ask the GCs for a one year or more transferable warranty to the end buyer.
    5. I tell them all that I will not be going to home Depot to pick up materials and I will not be their mama or papa holding their hand in this project.
    6. I also ask for a beginning and end of the project. I do add a penalty per diem so they don’t blow me off. I pay on performance after inspections not big upfront deposits.
    7. Once you have all the bids with the optional items itemized then you can negotiate with them and have a better feel for the figures and how that compares with your exist strategy.
    8. Make sure you verify the insurance, licenses and references and all the fine print.

    Good luck!

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  • Brian H.
    Real Estate Investor · Louisville, KY · Member since 2012 · 39 posts · 9 votes
    14y

    Al, just curious how many of these GC's typically show up? And how many lose interest in the first few minutes of listening to your requirements?

    I love your methodology and definitely am taking notes...but in my area and in my experience it's an act of God to even get the GC to show up to bid on the project.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Thanks Al, J and Brian.

    "Wow, there are so many red flags from what the OP has written that I don't know where to start. I see trouble written all over this project if the OP tries to tackle it the way he plans."

    I guess I need to reiterate - I don't have any plans yet. I'm in the initial stages of trying to put together the possibilities. Before I do something I consider all my options. I will probably buy, rent and hold. But before I make a decision I'll consider flipping, and I'll share my ideas and learn. I bet that in the end, I'll hit a home run, or at least a triple on this one. I'll do it by using every resource available, good preparation and hard work.

    "As for your mentor, is he a construction expert??"
    My mentor has 30 years as a GC, building commercial and residential. He was a buy and hold investor with about 30 properties, then sold them all 10 years ago and has been flipping since then. He teaches construction now at a local trade school.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    So why haven't you asked this "mentor" to give you estimates? That is the person who can actually go in person to see things after all ...

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Hi Steve,

    From an earlier post:

    Steve wrote:
    "What would your estimates be if you were doing most of the work?" - If you don't know the estimate, how do you think you will be doing this yourself? Not a rhetorical question ..."

    I close on the property in 2 weeks, so I haven't been able to have my mentor take a look. In the mean time, I'm gathering info and considering my options. When I bid on this place I had no intention of flipping it, so I guess I'm trying to run best guesstimates to determine if I can cross this off my list, or keep flipping as an option.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    If you haven't had this mentor go to the property, and you are already under agreement, then you are not having the mentor doing the job of mentoring. You should make time for the assistance of this mentor since you have this at your disposal.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Matt Blutowski:
    Originally posted by J Scott:

    Wow, there are so many red flags from what the OP has written that I don't know where to start. I see trouble written all over this project if the OP tries to tackle it the way he plans.

    I guess I need to reiterate - I don't have any plans yet. I'm in the initial stages of trying to put together the possibilities. Before I do something I consider all my options.

    Actually, the fact that you don't have any plans yet is a BIG part of the problem, as it sounds like you've already committed to buying the property.

    If you don't yet have rehab numbers, how can you possibly know whether it would make a good flip and/or rental? Perhaps neither exit strategy is very good. Couple this with the fact that you don't have a good grasp of the ARV, and there are LOTS of risks that should have been addressed well before you committed to a purchase.

    Basically, you're buying a property where you don't have a good understanding of:

    - The ARV
    - The rehab costs
    - How the work will get done
    - In what timeframe the work will get done

    On top of that, it sounds like you plan to circumvent at least part of the permitting process, you plan to tackle structural changes without a formal engineering report and you are expecting your mentor (who I assume is not a GC) to tell you what can and can't be done structurally.

    And you plan to do a lot of the work yourself (with your brother) over the course of 10 weeks. I have a large crew of very talented contractors and this job would likely take them 6 weeks...the way you're describing doing it, I would suggesting planning on having it take 6-12 months, at which point any comps you currently have will be meaningless.

    In terms of exit strategy, you haven't mentioned market rents, so it leads me to believe you haven't researched those either, and you don't seem to be concerned that new construction is going up in this area at the top end of your ARV range.

    To top it all off, you have a mentor who you are expecting to give you a rehab estimate, but who hasn't seen the property prior to you committing to purchase. That tells me that either your mentor isn't very good (if he's letting you do this) or you're not willing to listen to your mentor (if he's suggested not doing this, but you've done it anyway). Either way, I don't see much benefit of having this mentor.

    Sorry if this is harsh, but I've seen a lot of new investors come in thinking, "Oh, I'll figure it out as I go along, and it won't be that bad...it will all work out in the end." Sadly, it usually doesn't work out very well. And to be honest, most of them tend to be a bit more prepared than you seem to be.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Thanks J,
    I appreciate your time, and I see your comments as candid, motivated by a bit of ego, but not harsh.

    "In terms of exit strategy, you haven't mentioned market rents, so it leads me to believe you haven't researched those either,"

    As I said before, I contracted this property to hold it as a duplex - that WAS the plan. The numbers work for me. I know market rents, and my estimates are conservative at $2,200/month. At the price I'm buying, I could flip it without touching a thing and make money.

    "To top it all off, you have a mentor who you are expecting to give you a rehab estimate, but who hasn't seen the property prior to you committing to purchase. That tells me that either your mentor isn't very good (if he's letting you do this) or you're not willing to listen to your mentor (if he's suggested not doing this, but you've done it anyway). Either way, I don't see much benefit of having this mentor."

    Again, please read the above.

    "your mentor (who I assume is not a GC)"

    You assume wrong, and again... please read the above.

    "On top of that, it sounds like you plan to circumvent at least part of the permitting process, you plan to tackle structural changes without a formal engineering report and you are expecting your mentor (who I assume is not a GC) to tell you what can and can't be done structurally."

    A city architect has the first look, my mentor the 2nd. I'm sure you get every permit required, but in my city I know that many find work-arounds sometimes. I appreciate that this is a risk.

    "and you don't seem to be concerned that new construction is going up in this area at the top end of your ARV range."

    I am concerned - I mentioned it, and despite all that you missed when you read my post, you caught this. I'm also concerned at the number of high-end rentals coming on line. The area is hot (for a city that doesn't have highs and lows), but I bought at a big discount.

    "Basically, you're buying a property where you don't have a good understanding of:

    - The ARV
    - The rehab costs
    - How the work will get done
    - In what timeframe the work will get done

    Sorry if this is harsh, but I've seen a lot of new investors come in thinking, "Oh, I'll figure it out as I go along, and it won't be that bad...it will all work out in the end." Sadly, it usually doesn't work out very well. And to be honest, most of them tend to be a bit more prepared than you seem to be."

    I am unprepared to flip, but that isn't why I decided to buy the property. It's a buy and hold duplex... unless it isn't. I guess you could say I'm doing a feasibility study? No ARV, no rehab budget... I can't even enter the property for two weeks. But I appreciate kind people like yourself that are willing to take a moment to read, and to share. It's how I learn. For instance - it will take longer than 10 weeks and I need to use subs - understood. So by all means be candid, but please read carefully, then critique.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Matt Blutowski:
    Thanks J,
    I appreciate your time, and I see your comments as candid, motivated by a bit of ego, but not harsh.

    When it comes to real estate, I have very little ego. I have a blog where I capture every mistake I've made over the past 4+ years in this business, and I promise you there have been a lot! In fact, you can go read my most recent post about how I'm about $30K over my original budget on my latest project -- trust me, I don't admit that out of ego... :)

    My posts are motivated by trying to keep new investors from making big, obvious mistakes that I've seen lots of other new investors make, and from making the same mistakes I've made over 40+ projects.


    I know market rents, and my estimates are conservative at $2,200/month.

    If it takes $100K to rehab the property in order to generate $2200/month in gross rent, you're probably looking at about 5% cash-on-cash return if you put 25% down and get conventional financing.

    You're not losing money, but hardly a smoking deal. And that's assuming you keep your rehab costs under $100K.


    At the price I'm buying, I could flip it without touching a thing and make money.

    Have you seriously considered that exit strategy? May not be a bad option.


    I'm sure you get every permit required, but in my city I know that many find work-arounds sometimes. I appreciate that this is a risk.

    You "appreciate" that it's a risk, but you don't care that it's a risk? Do you plan to mitigate the risk of getting a stop-work order? What if negligent work causes the place to burn down and kill a tenant? Do you care about that risk?

    Have you checked the standard Seller's Disclosure document that you'll likely be asked to fill out before selling the property? Does it ask if any required permits weren't pulled? Do you plan to lie on that document?

    If this is what you're licensed GC/mentor is recommending, he doesn't sound like much of a GC *or* much of a mentor.

    Again, sorry if this sounds harsh, but there are a lot of investors who like to cut corners who give the rest of us a really bad name. That only hurts the rest of us.

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  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    "I know market rents, and my estimates are conservative at $2,200/month.
    If it takes $100K to rehab the property in order to generate $2200/month in gross rent, you're probably looking at about 5% cash-on-cash return if you put 25% down and get conventional financing."

    This is a rent estimate for the property without major renovations. My all in to get to this rent, being very liberal, is $135,000 (initial purchase plus needed repairs/replacing appliances). I bet I'll be closer to $125,000.

    I don't feel like I need feedback on this property as a rental, for me these numbers are good.

    "At the price I'm buying, I could flip it without touching a thing and make money.
    Have you seriously considered that exit strategy? May not be a bad option."

    The place cash flows well and has great upside potential. It's a great rental property on the best street, in the fastest growing area, bought at a nice discount. Annual increases recently have been 16.5%. This is the only reason I'm spending even a moment considering a flip - it cost me nothing but a little time to do so.

    "Have you checked the standard Seller's Disclosure document that you'll likely be asked to fill out before selling the property? Does it ask if any required permits weren't pulled? Do you plan to lie on that document?"

    No such requirements.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Good luck with the project!

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Matt Blutowski:
    ...

    "Have you checked the standard Seller's Disclosure document that you'll likely be asked to fill out before selling the property? Does it ask if any required permits weren't pulled? Do you plan to lie on that document?"

    No such requirements.

    Assuming the property is within Pennsylvania (based on your profile) - clearly not well informed. You really should get your mentor's assistance ASAP.

    Here is a link where I presented some info on PA Seller Disclosure:

    http://www.biggerpockets.com/forums/93/topics/76200-do-you-have-the-seller-fill-out-a-seller-disclosure-form?page=1#p448395

    Now that thread pertained mainly to FSBO, and it included the minimum mandatory state disclosures; permits are not explicitly mentioned, although one could argue that they are implicit due to the disclosure of "material defects" being required. Unpermitted, uninspected work is going to be defective to the municipality.

    But here is the disclosure that realtors use in PA - first link is the current form, the link after that is the one supposed to go into effect tomorrow (so expect that one to be what you might see when you have to sell). You'll notice both of those DO make mention of permits. And this is the form you will most likely be expected to complete if the sale will be on the MLS or via a realtor - it's the form the realtors are most familiar with.

    http://www.parealtor.org/clientuploads/StandardForms/Sample_Forms/SPD.pdf

    http://www.parealtor.org/clientuploads/StandardForms/Sample_Forms/SPD%202012.pdf

    Site where those realtor forms originated:
    http://www.parealtor.org/disclosure-forms/

    One other thing not yet brought up has to do with you planning to perform work yourself, on a building that seems to have pre-1978 construction. That concerns the EPA requirements for RRP certified people to perform certain renovation work, to be following "lead safe" practices. Many investors have scoffed at this, but the GC on my current rehab just underwent an EPA audit to examine his records of "lead safe" practices in work he has performed recently. My guess is that you aren't EPA certified, and I wonder if you are even aware of this issue (prior to my mention of it here). Search the web and BP for more on that matter.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Steve Babiak:
    Originally posted by Matt Blutowski:
    ...

    "Have you checked the standard Seller's Disclosure document that you'll likely be asked to fill out before selling the property? Does it ask if any required permits weren't pulled? Do you plan to lie on that document?"

    No such requirements.

    Assuming the property is within Pennsylvania (based on your profile) - clearly not well informed. You really should get your mentor's assistance ASAP.

    Here is a link where I presented some info on PA Seller Disclosure:

    http://www.biggerpockets.com/forums/93/topics/76200-do-you-have-the-seller-fill-out-a-seller-disclosure-form?page=1#p448395

    Steve -

    This is where I gave up when reading the OP's last post. Some people want to worry about "future problems" in the future -- like dealing with disclosures and such. They don't realize that fixing these sorts of problems in the future will be a LOT more costly than just doing the right thing today.

    I guess when the OP gets asked for a Certificate of Occupancy by his end-buyer, he has a plan for dealing with that. Hopefully that plan isn't to actually get a CO -- I'm sure there are plenty of stories from people here about having to go back and rip open walls and floors for inspectors to retroactively do inspections in order to get a CO.

    My biggest wtf is why this so-called "mentor" would put his "GC" license on the line by being involved in this type of project without permits. LIkewise, why a city inspector/architect would voluntarily participate in any capacity knowing structural work is being done without permits.

    Hopefully the OP will keep us updated on the progress...I'm guessing there will be a lot of great lessons...

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    I mentioned I (my business partner and I, actually) funded a fix and flipper on a deal that went bad due to several factors. Key ones were overrunning his budget and lack of proper permits. The inspectors made us dig up with basement and rip open walls after we took the property back. We ended up with a small loss, a few grand, on what turned out to be a 15 month project. The rehabber, we believe, lost about $30K. Some details and pictures are here:

    http://www.biggerpockets.com/forums/67/topics/52780-don-t-mess-with-building-inspectors

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