All Forum Posts by: Andy Sabisch

They range from $5,000 to $25,000+ and many of the people that sign up do not have the money to invest let alone pay for the training. There are some basic rules and tools that will help ensure you are making smart deals and most are available right here on BP. Ask questions and you will get FREE help. Join a local REIG and you will FREE help for your area. Pay for a course that is a one size fits all and you will find that many of the "tips" do not work in your area and now you have yet another bill that needs tending.Once you find a niche, focus on that and master it . . . a lot of these gurus preach do it all to generate money and you find yourself being a jack of all and master of none . . making expensive mistakes and draining reserves. Many preach wholesaling to get started and generate cash but for every success story they tout, your have 100 that made zero. I have called a number of the bandit signs to see who's behind the curtain and in only one case did the person know what he was doing (although his ARV numbers were inflated and reno costs under estimated . . . for those that wanted to flip and did not do due diligence, they would lose big time). The other bandit sign owners seemed shocked that someone called and froze when asking them questions. Investing is not a sprint . . .it is a marathon and learning takes time. These claimed "instant success courses" are just that . . . for the one selling the course. One perspective but one that has come from personal experiences and talking to a number of others that did in fact go that route and regretted it.

Updating but not over updating . . . . see what the area is expecting and target that for your rennovation.  Finding a property that is stuck in time that an update will boost value and marketability is key.  But not spending money for upgrades that are out of place for the focused market it is in will not add the value people often think it would. We recently did a flip where we used marble looking countertops and even the appriaser said for the area, that was a great choice . . . $200 verus $4,000.  The value went way up with what we did but in talking to agents and teh appriaser, going with higher end finishes would not have gained us what we spent.

Quote from @Chris Martin:

Be very careful when dealing with items that will require permits and inspections, especially in Raleigh and the greater Raleigh area. The post here would not pass a Raleigh inspection. Talk to a licensed electrician or the inspection department on what you need to do to ensure compliance. 

Chris, not sure what post or what part of a post you are referring to but if it is the way to rewire an old knob-&-tube property by running wires behinds baseboards / molding, I would disagree with your statement about not passing an inspection.  We have had wiring done this way inspected in some strict municipalities and have never had an issue .. in fact they comments have been "professionally done, and no damage to the structure."  They sell wire protector metal pieces if that is your concern.  Cutting into lathe and plaster is a sure fire way to create bigger problems as the lathe breaks free from the plaster.  Doing a 3,000 ft2 house built in the mid 1800s with no patching required is not an easy task but with some pre-planning and the right electrician (and simply having experience doing wiring but none in older homes is not the right electrician), a total rewire can be done with little or no damage to the walls or ceilings.  

Personally, we ALWAYS rewire a house that has any knob-&-tube wiring because you never know what is behind the walls and factor the cost and difficulty into the rehab estimates.

We buy in central PA and the Jackson-Vicksburg, MS areas and are seeing activity slow and prices being cut which 6 months ago they were selling over list.  This is a time when buying right is imperative to avoid getting caught upside down.  There is one property that is a flip where the flippers overpaid and then over renovated and cut corners on the outside curb appeal . . . turned down an offer just under they had it listed for (the offer was the appraised value) and now 100+ days and 4 price cuts later it is still on the market with another interest rate hike coming.

We are also seeing that MFRs are now available at under list prices with positive cash flow from day one . . . fear on the seller's part works for us . . . we have picked up three properties generating around $1,000/month positive in the last 2 months.  They would have been hard priced to do that at the prices they were selling for earlier this year.

We have done a number of pre-1900 homes with knob-&-tube wiring.

As far as a mortgage goes, they will typically not ask but since you have a mortgage, you will need insurance and that is where the issue will come into play.  Many companies will NOT insure that type of wire due to the liability it poses.

As far as it being safe, depends on what you plug in and what was done to the circuits since it was installed.  Many homes we have done had butcher jobs inside the walls and were lucky it did not burn down.  Regardless of insurance requirements, we simply plan on a full rewire when we find knob and tube period.

As far as doing a rewire while maintaining the integrity of the walls, be very careful about hiring most electricians that have not done what you are asking for.  Knocking holes into walls is the easy solution but you are stuck with the mess or a big bill to repair.  We have done the last few ourselves and to be honest, it was quite simple if you lay out the runs on paper beforehand.  Then here is a trick that an older electrician share with me several years ago.  Pull the baseboards and cut a slit along the floor level and run the wires there and the with a snake, pull them up to the switches or up into the next floor using the same technique.  When you have them in place, simply put the baseboards back up and no damage to the walls.  For overhead lights, find out the way the floor joists run and run the wire down between two joists.  I would be happy to discuss this with you further if you are interested.

Hope this helps

Ryan, Welcome to BP . . . it will be a great resource for you . . . make use of the information and tools it offers.

Remember the old adage which holds true . . . you make your money when you buy not when you sell.  Make sure you have the right budget getting into a flip as something will always go wrong and always take longer than you thought it would.  A contractor gets tied up somewhere else, your cabinet shows up damaged and the replacement is 4 weeks out, the appliance you needed is back ordered . . . it happens to all of us.  

If you go the hard money route, especially on your first flip, be prepared for expensive money with the carrying costs being a chunk of your budget.  Four or more points plus a higher interest rate plus required down payment can give yuo sticker shock.  But a word of advice, start calling HMLs and local banks BEFORE you start looking fr properties becuase if you find a great deal you will have to work fast and if you do not have the financing contacts, you will loose the deal (believe me I know).  Call around, see who can do what for you being new to the flip game and then have then ready to process a deal when you find it so you can lock it up.

See if there is a REIG in the area that you can attend and pick up contacts for your business.  Being established as a painter, you will find that others there will seek you out for help on their flips which will be a win-win to get started.  They will be helpful and make use of the contacts . .

Most importantly, use the BP family as a resource to ask questions and leverage our experience.

Good luck

Great post and I am interested in the responses.  There is a house near us that is a flip . . . . the inside was well done but not to the level I would have expected in terms of finishes (gaps at baseboards, vanities that are not set against the wall but rather the baseboard, no door stops which has dented walls, missing or miscolored wall plates. . . . again, the finishes).  They listed it 130+ days ago with an ambitious price but amazingly they got a full price offer . . . but it did not appraise and the buyers asked for a $5,000 reduction.  The seller refused and it went back on the market.  Over then next new months it went under contract and back on the market 3 times for various reasons and the price has been dropped 4 times - down a total of $30K.  So they had an offer that would have been $25K more than the list price now and without the additional holding costs . . and with interest rates going up the pool of buyers is going down and in this case, they missed a few buyers being hard headed on the price.  Got the backstory from an agent that was holding an open house and we had stopped in.  You are right, price it correctly and it will often sell over list (our last one using a straight flat fee agent) . . . expect a price that is not supported especially as the market shifts, the story has a different ending

Watch Unsellable Homes where the two women do just that . . . . they come up with an ARV target, put in their money, then get it back at the sale and the difference between what the property was trying to be sold for but didn't plus the renovation costs  is the profit that is split 50/50.

So if the property has been listed for say $200K and you put in $50K and it sells for $300, you would get your $50K back plus half of the $50K difference

There are two parts to your question . . . . licensed vs. unlicensed and  permits vs. no permits

We would never use a contractor that is not licensed and insured . . . too much sue-mentality and having someone insured is a requirement anymore.

On the other hand we have had licensed, insured contractors quote us two prices  . . . one getting permits and one without due to the hurdles that come with permits.  It really comes  down to your area if the city / county requires inspections on sale or to get a CO to rent it out.  Some areas do not require permits for much of the work . . . check with the office that covers your area and see what they require.  Exterior work is harder to color outside the lines so to speak due to the visibility . . . even interior work will raise flags when the dumpster is sitting outside.

To start with . . . sorry for such a bad start to a real estate journey . . . . it sounds like you clearly picked the wrong partner to start with.

1) Since you started an LLC together, how much did each of you invest THROUGH the LLC?  

2) What does the LLC state as far as liability of each party and who is responsible for what?  Did you have a contract stating he would do the rehab after you bought the house?  Hopefully you bought it through the LLC.

3) At this point, you need to stop putting any of your personal funds into the LLC.

4) Is he a state licensed contractor?  If so, the fact that he tore out walls and did other things without a permit would be grounds to file with the State and the Builders Group (do you need the details on what this entails in NC?)

5) At this point, selling the property to another flipper might be the best option but again, stop all work and payments

6) You should contact a real estate attorney in your area - there may be one here that can help you or at least now what they can do and what the cost is.

Feel free to post details on the property and see if the group here can look at it and see what the numbers look like.