All Forum Posts by: Andy Sabisch

To be honest, prices for material and services change constantly and any book will be outdated as soon as it hits the streets. I have found them to provide a roadmap so to speak and I do my own legwork to get local prices in my area (I am not a virtual investor).  A spreadsheet that contains what you see as the big ticket items in your area will serve you well to dial in what reno costs will be

This is a potential problem with doing business with friends . . . if things go south, what do you do?  It is a shame that he is having a personal issue but that is not your problem.  If he is a professional he would have discussed the impact the issue had on the project and discussed options to keep on track.  The fact that he is ghosting you speaks to how he sees the job with you.  We have had similar issues over the years and while they were lessons, we needed to see the project as our job and as such, moved on and completed it with other professionals.  There would have to be a lot of explaining to consider using him in the future so start a list of people that are dependable (network with other investors and see who they would use and just as importantly would not use) so you have a team that you can reach out to for reliable work.  Best of luck . . . welcome to the club of those of us that have learned the hard way when it comes to contractors

As others have posted, this is not a deal to cut your teeth on.  Fire damage often requires a total gut due to the smoke / water damage which is often not visible.  You will find yourself with a property that has a lingering smoke smell once you have finished the reno and wind up redoing the work.  Having the city inspectors already involved will ensure you are held to every little requirement they feel like dishing out.  If you are set on proceeding, you need to have a contractor that has done fire damaged properties before and can give you an accurate estimate.  Doing the work that is needed for your 70% target is a non-starter . . . . you will have way more into it than you think you will.

We use before and after photos for our portfolios we provide to agents, investors and contractors but do not post them online especially with the prices paid and sold and reno costs . . . . not sure what that would do other than have people question the profits and what we made

We have been using our insurance company for all of our rentals but just had an issue which is making us rethink that commitment and see what other options we have.  Can you share who you use for rentals and how the company has been for service and support?

Thanks

We have dealt with these issues on properties in the Jackson, MS area and learned more than we wanted to know :)

It sounds like yuo will need to get a company that deals with foundation issues.  These are usually companies that do just that type of repair (RamJack and others).  There are a few ways that they can repair the settling issues.  First is that the company will cut holes in the interior floors at specific locations so they can get under the house and install piers to support the house.  The other is to actually dig trenches from the outside so that the workers can get under the house and install the pier supports.  Another option is to install supports on the outside wall where supports are driven down until they hit soil / rock that will provide the needed support.

What we found is that the repairs are possible but they are costly . . . one property we looked at called for $35K in repairs making the deal a non-starter.

For houses on concrete slabs, there are similar repairs but the key is to get someone that knows the issues and solutions.  We bought one that we had an engineer evaluate the property and provide recommended solutions - best $500 we spent.

Feel free to reach out to me for any other questions

If done right and the area supports that type of living accommodation (permitted and acceptance), it can work but most people will see it as a converted garage (hence the done right part) and rentability will be impacted.

We have looked at doing that on a few properties or building and ADU to boost cash flow but the numbers did not work so we passed and found something else.  Since most garages (stand alone) do not have water, sewer or sufficient power, there is more to the project than just the remodeling.

See if there are any in the area you are looking at as that will tell you if it is something that makes sense to others or has been discounted by others before you.

You can use a PML or HML for funding the purchase but again, as Jaron said, you really need to be sure of the numbers to see if it makes sense as some markets are paying over value due to limited supply

Experience (number of successful projects) helps drive what HMLs will lend but with no skin in the game on your part (money not equity which is based on some arbitrary value) is a non-starter for almost all HMLs.  If you are buying a property below what you think is the actual value, great deal for you and more cash out the other end but lenders need to see you are vested in the property especially with limited experience.

The project sounds very ambitious and cost prohibitive. If you have not done full gut projects before, this does not sound like one to start learning on.  What was the cause of the water damage?  Is it in a flood zone that requires remediation and insurance?  Mold throughout the house will require a total gut to remove the hazard as there are people that bought mold homes that were not properly remediated, had medical issues and sued the seller and won.

Raising the roof and adding a second story for most cases is not a move that adds value especially in a city that requires permits and plans for almost anything.

I see you are probably passing on this property which is a good decision.  If you want to to look at total gut projects, try to line up a few contractors that have tackled these kind of projects before so when you find another property you have local experts that can quote you on the scope of work needed.