So the sellers accepted my offer!! This is my first home, and first multi unit property!!!
The short of it is that I am looking for inspectors for mold and sewer pipes for sure, and am contemplating adding in asbestos, lead and an energy audit. The home was built in 1958 and it is very important to me to (slowly) renovate this place to be eco-friendly and energy efficient before I'm done with it. I am also interested in looking into a property manager, or getting your input as to whether that is necessary. I am looking to close ASAP, so if you know inspectors who can come out tomorrow (yes, Memorial day), I would love you forever. I'll already be there in the morning with the home/termite inspector.
If you can offer up referrals based on the above info, post below. If you want more info before posting, keep reading.
It is a duplex in 70118 (Leonidas), and has a converted shed in the back with a kitchen and bath. However, the shed has been used as a tool shed for awhile, so it will need a full renovation. The two main units of the house look great, but just dated enough that I have a lot of potential in increasing the value with minor updates. The owner side is a 3/1 with w/d and the rental side is a 2/1. It will need some subfloor repair in a couple of areas, and the enclosed porch in the back of the rental side does not have a permit. I'll be working to get one for it.
Any advice as I move forward? They accepted the offer today, so I'm trying to stay on top of everything. If I am living in the owner side, is a property manager necessary?
Thanks so much!
Hi @Andrea E. . Congrats on getting the property under contract! Im in NOLA also. I am both an investor and a realtor. Are you buying this property off market, or is it a listed property?
Do you have a realtor helping you? If so, they should be handling most of this for you.
I recommend getting the following inspections done:
1. General home inspection
These companies are very thorough:
Axelrad & Associates, Keypoint, Gurtler Bros (they do structural inspection also), Home Check
2. Termite Inspection
Many home inspection companies will include a termite inspection, but if not using Terminix is fine. I use H & M Pest Control.
3. Video pipe inspection
For this I use Tunnel Vision.
If anything is found in those three that warrant further investigation, the inspector will let you know. The home inspector will be on the lookout for any signs of mold. They will let you know if any components have asbestos. If the home was built before 1978, then it's likely it will have at least some lead based paint. When it comes to asbestos and lead based paint it is fine, until you start messing with it.
As far as an energy audit goes, I can tell you that a house in the Leonidas area built in 1958 is likely to have little insulation, if any. What style of house is it?
A property manager isn't needed for just one unit in my opinion. They typically take about 10% for their services.
Why do you say it will need some subfloor repair? I assume there is some soft spots and/or unevenness... If so, it is likely that there is termite damage. Pretty much every house in New Orleans has at least some termite damage. I have a rehab going on in the neighborhood and the house has a massive amount of termite damage. We had to replace several sections of the sill, and rebuild the entire back wall of the house.
What do you mean by, "the enclosed porch in the back of the rental side does not have a permit"? A permit for what?
HI @Braden Smith , thanks for the reply!
The property was listed. On the market for 20 days. I do have a realtor helping me. I'm not the type of person who takes just one person's advice on something. She has provided her input, and I weigh her recommendations with the other recommendations that I get from other trusted sources.
I got the home inspection done on Monday with House Call. I was very impressed with how thorough my inspector was, in addition to how well he answered all of my questions while I followed him through the crawl space lol.
You are spot on about the lack of insulation. It has ZERO lol. It's a raised shotgun duplex. I don't know much else regarding "style" of home.
After speaking with a few management companies, I agree with you. What are some good systems to put in place if I manage on my own? Should I contract out the maintenance to a management company that offers that service, or build my own team? Paypal/Square/Venmo for rent payment? What about 24hr emergency contact? Any good NOLA recommendations?
There was some water damage in the owner side bathroom. The water issue was fixed, but it left a soft subfloor. I didn't know exactly where this subfloor repair was when I wrote the post. The inspector was able to let me know after the fact. There is some old termite damage that the inspector said can be easily repaired.
Wow, that's definitely a lot of damage repair you're working with! More than I would be comfortable handling right now lol.
The rental side back porch was closed in by the owner. He did not get a permit to enclose the porch area. So I will need to open it back up or get it up to code and get a permit.
I have a pipe video inspection on Thursday, and my contractor coming out to give me an estimate on the work I want to do. My loan officer said we can shoot for a June 15 close date! Wish me luck!
@Andrea E. Curious how this all went for you, successfully I hope. Has the area improved after dark? It seems rough to me still. Also, I am wondering why, assuming you will live in one half of the Duplex, if you considered getting an Accessory License to do an STR (vacation rental). The law allows those who live on site to have unlimited days, or 365 basically. You will blow out your cash flow numbers, and you can have others be primary contact (host) if you really wanted to be hands off.
@Braden Smith Great information, advice. How's yr project going? I like some areas around Oak and upper Leonidas, but it's still pretty transitional, I'm trying to figure out who's your best buyer profile, do you think families are ready to buy there? Successful Millennials?
Hi @Tj , thanks for checking in. It's still going! We had a delay getting final estimates for Reno work, which delayed the appraisal order (I'm doing a 203k streamline loan). I got the appraisal yesterday, so we should be closing thur or Fri next week.
The area my house is in is great! A perfect blend of recently renovated homes and older homes. Most people on my street are older and retired, so it's quiet. I've seen families with young children taking walks around the neighborhood, and I know of a few young professionals who live in the area.
I do want to do STR eventually, but right now, I'd like to get a long term tenant in the house to better assess the STR market. I've been living in Algiers Point for the last 4 yrs, so I'm not very familiar with the ebbs and flows of this part of town.
Also, I want to limit up front, out of pocket costs for now, and an STR would require a lot of cash to furnish the place.
Hey @Tj Jieff . I had a bit of delay on my project, but it is back on track now. Will be getting all the electrical and plumbing done this week and then a close wall inspection. From there we will be trucking along to the finish line!
The area between Leonidas St and Carrolton, and between Claiborne and Leake is a great area. There has been a ton of renovations in the area, with some new construction also. On the East side of Leonidas it is still pretty rough, but there are some rehabs happening on that side too. It is too speculative for me on that side. I think the target buyer in this neighborhood is going to be a younger couple/family, or a successful single individual. I've considered keeping the house Im rehabbing now and moving into it myself! But, I stand to make too much money on it so I wont keep it.
Here is some info on the recent changes with STRs if yall havent seen them:
@Braden Smith I agree about the area to the left of Leonidas (West?), hence working your way to Cow Bell basically, further from Oak it gets pretty sketchy, but maybe its a good time to get in too, it just seems to me that over time this place is turning, I'd be willing to look at opportunities, I guess it just depends who's next to me etc. I do like the area towards Carrolton more, in fact once I see something in my profile (needing some updating but mostly functional) it seems to be 'pending' the same day I see it so I've missed some good prospects. I like that whole border zone, about 2 blocks going East from Leonidas, I've been looking for a Double there, something I can homestead and fix up. Question: do you know of any legit wholesalers working that area?
Thx for the STR update, does not surprise me, and I think local councils are going to start copying Austin's lead with outright bans if they can get away with it. However the 'Accessory' or homestead/sharing is harder to touch politically, and at least in the article you shared not part of this latest ban. For loan purposes, my cash flow numbers have regular rental assumptions, STR cash flow is icing on the cake for me, of course in Nola it can be a whole lot of icing, so it's part of my approach at this point. Good thing is after 2 yrs of seasoning, the STR income is recognized, according to my lender, so that helps me given my current goals.
@Andrea E. Glad to hear it. Do you mind sharing who you did it with, was is a local lender? I'm not familiar with 'streamlined', did you pay a consultant for help with managing the 203K? I've never done one but I've never been able to tell if it's worth navigating without a so called gov sherpa. I think the homestead period is a yr, right?
Re STR, you're right, getting some design/furniture going is a big cost. If you want to blow it out, I've done some research and there are great designers who specifically target the 1% earning rentals, meaning they mimic and draw on design elements from top earning Airbnb's etc, then help you do the same, check out Mercedes Brennan on youtube, or go to 1chicretreat.com
Hey @Braden Smith , would you please share your plumber and electrician contacts? Do you use the same people every time? My contractor has some people he uses but is always open to referrals. I will be starting plumbing and electrical work the week of June 25-29, so I need to nail down my guys this week.
Thanks so much for sharing the updates on the STR changes. How do you keep up with the changing news? Do you read a certain paper every day or subscribe to certain newsletters?
@Tj Jieff I've been working with Movement Mortgage. My realtor and some other people recommended Raul Vasquez, and he has been great. He answered all of my questions, provided recommendations, and has been integral in getting this house closed in 14 business days. It would have been sooner, but the delay was on my end. He actually presented a few loan options for me (like 4-5) and helped me land on the 203k streamline once I found the house, and we ran the numbers.
The streamline is max $35k for renovation work, and no work can be done on the structure of the home. So it's great if you want to upgrade the house and update plumbing and electrical. The streamline does NOT require a HUD consultant, which allows the home to close much faster and with less red tape.
If I recall correctly, I can refi after 6 months in the home. Doing so would allow me to remove the PMI. I probably won't refi for a few years though.
Thanks for the STR suggestions! I will be looking into my STR options after this first year.
Hey @Andrea E. My business partner is a contractor. He has a set of subs he uses and has used for some time. I don't think he'd be willing to share his guys contact info though. He keeps them pretty busy as it is and wouldn't want them off working other jobs taking time away from his jobs.
If your contractor doesn't have solid people already that may be a red flag. Every contractor I know and work with has their go to guys and wouldn't be looking for any referrals. Contractors usually like to stick with their guys once they have crews they like and can trust.
I dont have a specific paper or newsletter that I follow. I am both an investor and a realtor so between the two real estate is my life 24/7. It's all I do and it's my passion so keeping up with the changing news is just part of my daily routine.
@Andrea E. Thx for the heads up on that Loan, good to know. Let me know if I can help on the STR end, I'm no expert just have some research into it. Good luck!
Hey @Braden Smith , so your contractor works with independent contractors and not a plumber or electrician that is part of a larger company?
My contractor does have a team, however, he is always open to recruiting new talent. That's why I like working with him. It keeps everyone honest and competitive. I couldn't imagine working with the same people every time and never looking to see what additional talent is available.
I also couldn't imagine not sending guys you respect more business. Surely they would prioritize your biz partner if they have such a great relationship. What if your clients didn't want to refer anyone your way because they didn't want to share you as their realtor? That's just my opinion. There are plenty of great people in Nola, so I'm sure I'll have my "team" in no time.
Thanks for all the input! :)
My situation is a bit different than many other investors. My contractor is also my business partner and we are also good friends. He has a set of subs that have worked for him for years. As a GC, when you find good subs you keep them. They dont appreciate being bidded out by new people. That's a sure way to lose good subs, and good subs are hard to come by.
Congrats of your new property! I am not sure what you plan to spend on renovations, but because this home is over 50 years old in the location it is in, you may want to consider filing for Louisiana Historic Tax Credits prior to your renovation. You would receive 20% back on all qualified work you perform. Items like appliances and landscaping don't count but new fixtures, plumbing, electrical and drywall all do. You can hire a consultant to help you with this if you do not want to take on this task which is what I do. In addition, you can sell your credits for one lump sum instead of taking them over a couple years. If you would like her information please let me know.
The area between Leonidas St and Carrolton, and between Claiborne and Leake is a great area...
I've owned two doubles and currently live in this area and love it! For those looking for financing options in NOLA, I've had great luck with renovation loans from Gulf Coast Bank...message me if you want specific contact info. They also have a reputation for closing quickly.
I am looking to buy a property to fix and flip with my partner. If you run across one, let me know. Metairie, Kenner, certain parts of New Orleans is a yes:) Thanks much...Mona O
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