All Forum Posts by: Brian Tome

@Jarrett Shippen

Welcome to BP Jarrett!  You have found an awesome place to connect and get advice.  In box me if you want to get together for coffee and talk real estate.  I live and work very nearby (ie. Elkton, MD - Wilmington, DE).

@Mario M.

I am an attorney who specializes in general liability work.  This is not legal advice and I am not your attorney.  This does not constitute an attorney client communication or relationship.  This is general counsel I would write in a blog post to anyone regardless of their circumstances should an issue like this occur.

Your LLC will almost certainly be named in a lawsuit for this. You may want to consult with your personal attorney right now, but you should definitely notify your liability insurance carrier immediately and they should assign an attorney to the case (thought it may take some time for that to happen). In an instance where a code violation is at issue, you could be named personally also. If that happens, get your own attorney (other than the LLC/insurance carrier's counsel) post haste.

Do not talk to anyone about this incident other than to say "it is very sad and the family has our thoughts/prayers/condolences, etc."  Do not give a statement to anyone who calls.  Do not comment on the condition or status of the property.  Do not reach out to the tenants or the family of the child who died. 

If your policy limits are more than the total value of property in the LLC (which they always should be) you will probably be released when the case settles. Your policy might go up. Also, ask your attorney about recommendations for improving the security around the pool. Do not ask anyone else because your conversations with anyone else are not protected. If your attorney recommends that you make any changes, make them.

Also, if the family who is renting wants out of the lease, bend over backwards to let them out and help them (ie. don't be picky about their security deposit, etc.).  You do not want them walking away from your unit with any animus toward you.  They will be going through the stages of grief and will probably have periods of feeling anger toward you anyway.  They are just looking for someone else to blame so they can cope with their hurt.  If they are rude, accuse you of not caring, etc., take the high road.  Just let them say what they will and remain calm.  Thank God you are not in their shoes and be as compassionate as you can.  Your only response should be something like "I am sorry for your loss.  I understand you are hurting and I will do whatever I can to help you through this."  Never admit that you had a responsibility in this accident or that you have done anything improper or unwise.

My prayers are for them and for you as you work through this tragedy.

@Robert Crozier

I would recommend talking to a good agent and getting his input.  My partner is a builder so he has a general liability/builders risk policy and our agent advised us to get a homeowner's policy for a vacant house.

If you don't have a broker, call Barry Winstead at 410-398-6700.  He is not local to you, but he is a Maryland Broker and sells a good quality product at great rates.  On top of that, he is a terrific guy.

@Bill Gulley- Respectfully, protecting your right to back out of a contract in the event you are unable to finance or the property has problems is neither "weasel language" nor deceptive and courts will most certainly follow the language of a contract if it is drafted correctly and signed by the party against whom it is being enforced.  I litigate them regularly.

I am not and would not encourage @Harlan Cox to deceive anyone.  That was the reason for my advice in the first place.  I would encourage him to get the advice of a contracts attorney in his area and deal fairly with everyone he works with.

@John Thedford raises a valid point.  Setting your sellers expectations goes a long way toward building a good reputation.  Sellers who know what to expect up front are more likely to be understanding even if the deal falls apart. 

@Harlan Cox

Welcome to BP!  You are in the right place to learn wholesaling.

Yours is a great question and the answer is yes.  You should put some "wiggle" language in your contract that allows you to back out if there is a serious problem or you are unable to find investors.  It could be as simple as a financing, inspection, or feasibility study contingency, or you could just limit any recovery for actions in breach to the value of your earnest money deposit, meaning you would surrender that deposit if you back out.

That being said, I would encourage you to position yourself to make the deal work before putting a house under contract.  Get your financing lined up in advance.  Have the money available whether it is your cash, a private lender, or a bank contact.  Then look for the devalued properties that you can add value to.  

While getting a property under contract and then shopping it around to wholesalers requires very little risk, it is also a sure fire way to develop a bad reputation.  If you waste investors' time by shopping them properties that are overpriced, they will not take you seriously and dismiss your future deals without consideration.  If you cause the property owner a delay and don't help them with the problem they are trying solve by entering into a contract with you, they will dislike you and probably give you a bad recommendation/review.

My advice is be careful and be patient.  Do your homework and find a property that will be a winner to start with.  That will make it much easier to get your second deal at the right price.

Good luck!   

@NA Jonesshould consider putting you guys on their next 'Newbie Success Stories' podcast!

@Breion Riddick

Welcome to BP!  I am in the middle of my first flip.  You can follow a post about our experience here.

@Daniel Bear

Welcome to BP and the Delaware area!

Best of luck!

Play by play continued (Entry 2)

Shortly after we acquired the property, we determined that subdividing it would not be part of our plan.  Land prices in our area are depressed because no one is building houses.  The process would take about a year to get approved.  Because the costs of engineering and holding, combined with the diminished value of the existing property would exceed any profit realized from splitting the lot up.

We decided to focus on a remodel that would add a nice first floor master suite, open concept and brand new mechanicals.  We removed the walls between the kitchen, dining room and living room and opened the whole space up into one large room.  My partner is a timber framer (specialty builder who uses oversized pieces of lumber to build houses, barns, etc. - think old world castle builder) so he cut some 9" x 9" posts and a beam out of Douglas Fir to replace the load bearing wall.  The difference is incredible!  It went from being a dinky little house with small rooms to being a warm, inviting space perfect for entertaining.

For our first floor master suite we removed a closet from the fourth (very small) bedroom that left a door into the larger bedroom on the other side of the load bearing wall.  We initially discussed moving that wall, but decided the space it would add to the bedroom would be minimal, and since our plan is turn that smaller bedroom into a master bath, we just added the space to that bath.  We also modified the footprint of our already existing first floor bath to work as a powder room for the main living area.  The end result will be a 3 bed, 2 1/2 bath cape with a master suite on the first floor and two dormered bedrooms on the second floor.

We are modifying the closet under the stairs to accommodate a side by side washer and dryer, so they will be on the first floor just outside the master suite.  We are going to refurbish the hardwood floors on the first floor, stairs and landing upstairs.  The upstairs bedrooms will be carpeted and the kitchen and bathrooms will be tile.

We are removing the baseboard, boiler fed heat and installing a new dual fuel heat pump complete with ducting and multiple zone controls.  The aged white oak floors will be natural finished with a few coats of poly.  We will add larger baseboard and paint the baseboard, balusters, window trim, and mantle semi gloss white.  We will use some off white/muted grey wall colors, grey tile, white cabinets, and light grey granite countertops in the kitchen and baths.

On the exterior, we are planning to replace the roofs on all buildings with 40 year architectural shingles and paint the exterior a complimentary color which will be create a sense of place and setting in the woods surrounding the home.

The most challenging part of this flip will be removing the trees around the house.  There are 16 large trees that should come down for safety and ease of maintenance.  Many of them are so close to the home and the power lines that they will cost extra to take down piece by piece.  We compared the cost of working around the power line to burying it from the road and decided to spend the few hundred extra bucks and have the line buried before the trees come down.  I say a "few hundred" because after the scope of work done by the tree removal guys is reduced by not having to work around the lines, the costs of removal and line burying will be just a few hundred dollars more.

I will continue describing our experience in later posts.  Follow this thread and give us a vote for updates.  In the meantime, here are a few short videos that will give you a feel for the new open concept living area. 

https://youtu.be/YwWZuyBQsUs

https://youtu.be/6AINRm_mQgo