All Forum Posts by: Derreck Wells

You're welcome Steph! Glad you'll get some use out of it.

@Matthew Menning Welcome. If you need assistance on the construction end of things, let me know, I can help you out.

I second Ann, the commute would be horrible. Hopefully you can telecommute or get a new job in ME. Either way, good luck!

Also, in the future, you should check the zoning BEFORE you buy the property! Could have saved a bundle in renovations and time!

You need to apply for a "variance" and the town board would vote on it at the next town meeting. Where you're close to the required lot size, you might get it.

The abutters will get to speak at the town meeting, either against you or for you. You should talk to them and tell them that the town is already allowing you to go with a "low income 3 unit" but that you want to get better tenants, so you're trying to get them to allow you a "regular 3 unit". I'm sure that if the neighborhood is decent (and with a 4800 sq ft SF, it probably is) that your neighbors would rather you have nicer tenant then the "low income" ones.

You getting the point here? Stress to the neighbors that they have a choice, but it's not whether you go 2 or 3 units, but rather whether you go "low income", (use words like section 8 and welfare) or regular tenants. Make sure they understand that it's going to be a 3 unit, but they have some say in the quality of people living there.

And as an added benefit, around here, a homeowner can do almost anything on their own house. You don't need to be a licensed plumber to work on your own plumbing. You can save a fortune in labor if you know what you're doing! (And it just so happens, I do!)

Thanks. I can't come up with a more fair arrangement.

The absolute worst case scenario is that the house doesn't sell. In which case I still got paid for my labor, and the investor has a fully rehabbed house to sell or rent. I'd have the house originally priced $10,000 or so below comps for a quick sale. If I had to drop off the deed, just cutting my half the profit off the price would put it $30,000 to $40,000 below comps. I can't see it not getting sold quick at that point. Technically, at that point they could lower the price on the example house by $40,000 and still make a $15,000 profit, so really, I can't see a way that anyone loses.

I've been looking for an investor in MA or NH to set up a similar scenario. Here's the arrangement I came up with...

Investor funds the flip and rehab. I find the deal and rehab it and get it sold. Basically the investor only has to put up the money. I'll do the rest.

The house goes into both of our names with the clause that if I don't have the house rehabbed and sold in 6 months, my name comes off the deed.

I draw a check for labor weekly, but the total paid to me during the rehab gets deducted from my half of the profits (see below). I have a family to support and can't go a month without getting a check. I'm a single dad with custody of 2 kids, they have to eat! If I'm not getting paid on this house, I'd have to be taking on other projects and speed and quality of the flip would suffer.

It looks like this...

Acquisition: $100,000

Rehab (including my salary, say $6000): $50,000

Sale: $225,000

Investor gets $150,000 back (all out of pocket expenses). For round numbers, lets say $25,000 in holding costs, Realtor commissions, taxes, etc. which leaves $50,000 profit. Investor gets $31,000 and I get $19,000. (My $25,000 of a 50/50 split, less the $6,000 I already got paid.)

This way, the investor (you know that person I can't do this without) actually makes more money then I do. $6000 more in this example. Plus, if I can't get it sold in the alloted time, yes, I still get paid for the work I did on their house (my kids still get to eat), but the investor still gets the finished product. By removing my name from the deed, the sale price can be immediately dropped by $25,000 and the investor won't lose a dime on the sale, they'll still make $31,000 profit!

So with all that being said, if there are any locals that would want to get in on it, I'm listening and looking for work! :)

Welcome!

I never knew that. That's why I come on here... to learn new things!