Starting rehab on my first flip - FOLLOW ALONG!
I closed on this beauty earlier this month (Dec. 2018) and it has been quite exasperating dealing with the seller and the hard money lender! She's a 3/1, 1,200 sqft home in East Point, GA - a perfect starter home if you ask me.
Being that this is my first purchase, I've learned quite a few lessons already. In retrospect, some seem obvious but you know what they say about hindsight...here are a few take-away's:
1. I bought the home from a well-known company with a pretty large inventory. I knew going in that they are difficult to deal with but I didn't want to pass up on the house so decided to take the risk. It was definitely a challenge especially since it is impossible to get anybody on the phone and emails go unanswered for days. If I decide to deal with them again (which is highly unlikely; I'd say a less than 10% chance) it won't be if I'm using a HML because being on a tight deadline with the seller doesn't mix well with a lender that doesn't care to adhere to previously set deadlines. Lesson learned: tight deadlines given by well-stocked sellers are very hard to manage when you are not experienced and are dealing with a lender who has a lot of requirements of their own but do not manage time efficiently and/or are dishonest with how long their process actually takes.
2. If the seller has "no concessions" as part of the sale, I will run away from that. There are too many houses available in my market for me to get mixed up in something that obviously has major issues with it. Lesson learned: "no concessions" = behind the walls problems
3. Cut electrical wires in the breaker box mean big bucks during rehab. Because of the deadline issues (see #1) I didn't have enough time to have an electrician investigate the depth of the problem before inspection diligence expired so I had to decide whether to take a chance or pass up the property. I decided to take a chance. It was discovered that somebody was highly pi$$ed - likely from not getting paid - and cut every single wire in the house, in the basement and even where power comes in from the power company!! Lesson learned: have MEPS's on your call list willing to do a quick inspection of the different mechanicals if you don't have a regular contractor willing to do a full house inspection so you don't take a $5000 hit to your budget.
4. Contractors. Sigh. My first one disappeared like smoke in the wind right before closing. We'd done several walk-through's, he wrote up an estimate (a couple, in fact) for the lender, had several interactions...a lot of time wasted because when it came time to close he stopped answering my calls & texts. I had a feeling earlier on that he was seeing that he had bit off more than he could chew but I ignored my gut. However, even if that were the case, he didn't have to drop off the face of the earth. A simple response is the respectful thing to do so that you don't burn bridges. Who knows? I may have been able to use him for a different type of job. Lesson learned: be sure the contractor chosen is experienced in the type of work needed. If you need a rehab, get one that does rehabs! If you need one for high-end work, get one who works in high-end markets! Etc...
More to come!