All Forum Posts by: Bonnie Low

Is the zoning the problem or are there just not enough comparable properties for the appraiser to support what you think the market value should be? You might make a call to your local planning or building department to find out if your property is zoned correctly. Local jurisdictions tend to be very friendly towards mother in law units or ADUs  nowadays because they either want to encourage infill or because of the lack of affordable housing, or both. So it's possible the unit was added prior to changes in zoning that are more accommodating to ADUs and that's what the appraiser is going off of. Of course, it's also possible it was added without a permit...so there's that risk. Anyway, I'd at least spend a few minutes on the phone asking what the rules are. If it's all legit, it seems the appraiser should be taking that sq. footage and bedroom/bath into consideration so the problem may be that it just doesn't comp as high as you were hoping. 

Find a Real Estate Investors Association (REIA) group in your tri state area. There are always Realtors in those groups and you're far more likely to find one with experience working with investors if you go that route. You'll also find other investors who can share who they are working with.

Hi @Kelsey Gabhart! I'm not a wholesaler, but I am an investor who sometimes buys from wholesalers so I can offer you my perspective, which might be helpful. I have yet to meet a wholesaler who understands renovation costs, and I am 100% ok with that. In fact, even if someone did present me with their estimated costs I wouldn't pay any attention to them. We always do our own estimating. Hard stop. So, what I'm saying is that I don't expect you to be able to analyze a deal - that's my job. What I AM looking for in a wholesaler is someone who has the time to find off market deals, and the patience and the tact to develop a relationship with the seller. I don't want to knock on doors. But I'm willing to pay someone who is. I want to know that the seller is being treated professionally and with respect and that the wholesaler is trying to help that seller solve their problem by connecting them to me. In other words, I don't want to get involved with a seller who feels they're being pressured or taken advantage of. We typically buy really distressed properties and will take the time to sit down with a wholesaler and tell them what we're looking for. After looking at a few properties together, they start to get a feel for what we're looking for. So maybe you want to start by creating a buyer's list and developing a relationship with potential buyers. I don't expect a wholesaler to bring me a house they have under contract for a set $ amount - sometimes it works that way, but not always. What I really want comes before that happens. A house I would be interested in, a seller who is motivated, a ballpark range on the acquisition costs, a willingness to be flexible on their expected fee, then we can finalize all the details. We've walked through potential acquisitions with wholesalers and explained what we would and would not do and roughly how we would price it to give them some parameters. It's time well spent so the wholesaler can start to become part of the deal funnel. I hope this is helpful to you!

The Book on Estimating Rehab Costs by J Scott was pivotal when we were starting out. Before we got our first flip under our belt, we had looked at probably 50 houses and made offers on about 30. We have a great Realtor so we were really confident in the ARV she would give us, but calculating our repair costs was a total guessing game until we read that book. It allowed us to create a template for doing our walk throughs to make sure we don't miss anything important and really served as a guide to what metrics to use (like calculating square footage for flooring and linear footage for counter tops, for example). It pointed out things we might not have considered, like making sure we're adding in the cost of disposal of old roofing materials as well as the cost of installing the new one and that a double layer tear off is going to cost more than a single layer and comp shingles are more costly to dispose of than shake. It also gave us some idea of where to look to find reliable pricing in our market. We can now do this all fairly easily, but our methods are based on the lessons we learned in this book. I can't recommend it enough for anyone doing flips or rehabs, particularly if you don't have the background of having worked in construction.

We've never put them in a rental unit, but we're focused on SFR and duplexes for now so it's not as relevant. I can share a personal story from my childhood, though. My folks thought it would be a good idea to buy a laundromat (it was NOT). We spent evenings and weekends cleaning them because we couldn't get reliable cleaners. Let me tell you....you cannot imagine the things people put in appliances that they do not own! I'm talking dirty diapers, greasy rags from car repairs, floor mats from cars, lots of horse blankets (where we live), and they constantly overfill them with laundry soap or worse - dish soap! We would have to clean the machines (unbelievably gross job) every single night. And people constantly broke into our coin exchange machines, the soap dispensing vendors and the machines themselves. I realize I have a very jaded view of the coin op laundry world, but there you have it. The cost to repair all of that constantly ate up any scant profit my parents ever could have hoped for. I just would not do it.

I think some people legitimately do enjoy managing their own rentals, but I tend to agree with you. We always use PMs and have been incredibly lucky to work with good ones. I would much rather leave the hassle of advertising, vetting tenants, managing complaints and repair requests, evictions and inspections to someone who has the time to do it and the systems to do it properly. To me, it's money well spent. That said, I do know people who own rental in towns where there are no property managers or there are no good ones. So sometimes you just gotta' do what you gotta' do (and it could be an opportunity to start a PM company I suppose!)

Very nice! I love to see quality renovations.

Yes. Always buy title insurance. I can't think of a single instance in which I wouldn't do that - even if I was buying from someone in my own family. You just never know what is owed on the property or who else has claim to it. And in the off chance you get into a situation where there IS a claim or a problem with title, it will cost you far more than the title insurance cost to fix it.

I second your recommendation that you need to walk the site with them (or have someone you delegate this to who really understands your plans) and put in writing your expectations. I am constantly surprised at the number of instructions I thought were clearly communicated that get screwed up. For example, we had a contractor install tile back splash and brackets for open shelving in the kitchen and bath recently. We walked it through with him and showed him what we wanted and where. The day he did the actual install, though, we weren't there. Sure enough, He did not install the back splash as high as I asked him to (it was supposed to go right up to the under side of the shelves) and he somehow managed to install two different size brackets so the shelf on the right of the vent hood is shorter than the one on the left. All of the brackets were the same size, except for the one for the bathroom, and yet he installed that longer one in the kitchen and told me "I thought it looked better this way." I could have asked him to change it, but it would've left a hole in the drywall that had to be patched and that would've been more work and more of a delay so we decided to leave it as is. But it was very frustrating because we showed him what was supposed to be installed where. We just didn't write it down. Lesson learned. It doesn't seem like you should have to be that detailed, but 9/10 you do. 

We just completed THE most awful refinance we've ever experienced and it was through a large lender with a national presence. So size does not necessarily equate to professionalism or success. The lesson I learned from this experience is that I'll never again use a lender who doesn't have an office nearby that I can go into when I need help or need to escalate a situation for resolution. Ask around this forum to see what experience others have had working with the lender you're considering using. If you don't get any answers, very few answers, or the information is dated more than a year or two ago, I wouldn't use them.