All Forum Posts by: Andy Sabisch

If this is your first flip, I would double and triple check the reno numbers and the timeline you are expecting to complete it in.  Material is still hit and miss depending on what you are looking for and a delay in one item can impact the entire timeline.  We are dealing with that very issue now on a project and are looking at options to bypass the problem and keep moving.  Remember the reno cost includes the financing and holding costs as has been mentioned so a week here and a week there can impact your bottom line.  

Be careful about the dated percentages . . . . if the deal works number-wise, then the percentage may be closer to 80% . . . see a lot of posts where people are tied on the old percentages that do not take into consideration current projects

Quote from @Crystal Smith:

Here's a link to the Cook County RTLO:  https://www.cookcountyil.gov/r.... You are not obligated to disclose to tenants the permit status of the building.   

While there is no obligation to disclose permit status (never had a tenant ask) but the bigger issue is that he may be subject to a liability suit of there is an issue and when he sells, he may be stuck with a huge repair bill to come up to code if the work was done without permits . . . permits are there for a reason (may be just to pad their pockets) but at least the city is on the hook for ensuring the work was done to code

I can sympathize with your challenges with the city.  We lived in a town just outside Detroit a few years ago and the permitting process got so frustrating that we sold our primary residence and other properties and moved 5 miles outside of town and found the county process way easier and less restrictive in terms of what they wanted and what they actually knew if they showed up.  Most of the time we paid the fee, they issued the permit and when we asked about getting the inspection, they asked if the work was done to code and if so, proceed . . in other words, simply pay the fees and we will come by if the coffee pot is empty.  The county was 180 degrees apart.  They were helpful, worked with us not against us and supported our schedule . . . projects went smoothly and far less frustrating.

With that being said, if you have done work that bypassed permits, you have two potential liability areas.  The first is if there is a problem and the city finds that the work was done without permits . . . you may find your insurance will not pay off leaving you open to liability claims.  The other is if and when you sell and the buyer finds that work was done without permits resulting in the same problems.  It sounds like you are willing to roll the dice but keep the downsides on your next project . . . and assess if Chicago is the right location for your renos.

Are you planning on house hacking the property?  Options at low down available for that option.

The HML option is one but the recent interest rates make for razor thin margins so we sure you have good reno and ARV numbers to see if the loan cost makes it a non-starter.

A HELOC if you own a property now is another option that can save you money on the loan portion as you only pay on what you need.

Your statement "looks to be 30% undervalued" raises a red flag.  What are you basing  that estimate on?  If you are not sure what the reno will cost or what the ARV actually will be, the 30% undervalued is a SWAG (scientific wild-*** guess) at best.  

As Eliott said in the previous reply, you need to be sure of what you are looking for in order to know if you have found it when you come across a property.  We come across good deals on a regular basis but to be honest, many are simply not in our wheel house and not what we want to add to our portfolio (flip or rent).  But we know what our model is and look for those deals.  The rest we pass on and often contact fellow investors that are looking for specific deals as well and it fits what they want . . . we all help each other as our models are different but well-defined.

You did not mention where you are, what type of property it is and is it on on or off market property.  Without at least that information, it will be hard for any of us to provide any kind of input as to what type of deal you might be looking at.

While not in Henderson, we have bought a number of foreclosure properties over the years in different areas of the country.  Have you looked at any of the auction sites that typically list bank owned properties?

Auction.com lists 21 properties in Henderson and more in the county
Hubzu.com does not show any now but you can sign up for notification when any are listed

The VA, FHA and other agencies list homes that are on their books that they want to sell.  Check them out and sign up for notifications.

Both Realtor and Zillow allow you to search for foreclosure listings that are on-market.

Let us know if this is the type of information that can get you started.

As Matt said, it is doubtful that the room / area was permitted and if you plan on enclosing it to make it usable square footage especially in CA, you will more than likely need to demo it and build the space out per code and per zoning restrictions.  Are you at a point where you can re-negotiate the price based on what you have is not what was advertised?  Not sure what square footage is going for in your area but I would assume at least $100 / ft2 which puts you at $30,000 without any finishing touches.  Hopefully that was in your budget (or at least contingency) and does not tip the scale in terms of the overall deal.  If possible, go back to the seller and see if you can come to some agreement . . . was it an on-market property - if so, the agent has some culpability as well.

Foundation work can be a major expense which can get higher depending on what they find or how it is done.  I have seen foundation repairs go badly resulting in cracking of interior walls and even roof damage following the jacking that is needed.  Jackson, MS (where we just moved from) had a large problem with slab homes settling and foundation repairs were common place (and expensive).  This is one area where cheaper is often the most expensive option.  We lived in Rock Hill just up the interstate from you but it has been several years and contacts are probably dated. 

Doing a Google search, several companies that do these repairs in your area came up with good reviews.  I would give them a call and see where you are price-wise.  They will be insured and have the expertise to do what appears to be a major repair.  Hopefully you factored that into the purchase price offer.  We looked at a property here in PA a few months back that needed foundation repair under one part of the property and were quoted around $20K by two different companies - we opted to pass. 

Good luck . . . it sounds like a challenging first property but you will be the one posting answers to foundation questions once you are done.

It looks like you are doing this long distance - is that correct?  Greenville is not that far from Charlotte but are you at the job site or doing it remotely?

What is the status of the project and what are the areas you are still in need of getting done?  If you can be specific as to what has been done, what you need done and what your time line is (I assume you have a HML), others  on BP should be able to assist you.