All Forum Posts by: Garrett Hogan

looking forward to the conference and connecting with some awesome investors all over the country!

What does the assessor's database have it listed as? Also when you wrote your offer/P&S did you describe the property as a two family dwelling?

@Cassidy Burns yes you can def rent as a single fam during the process. That’s what I did with mine!

oh in that case, I'm very surprised as well. Are you sure the person you spoke to just didnt misunderstand you or give you incorrect info? Ive heard of people quitclaiming into LLC's with the banks permission but thats very rare too

Have you researched the process to convert a single family home to a duplex in your municipality? I would start at the building department and then contact a zoning attorney for more info. 

In my market in Boston, converting a single family to a 2 family requires a 6-9 month zoning process, community meetings, many thousands of dollars in attorneys and architect/engineering fees all with no guarantee that it will actually happen. There are many regulations that you may need to comply with, lot size, parking requirements, egress etc. 

I just recently went thru this process to convert a 2 family into a 3 family. It took 7 months and cost about $15-16k. 

Also in regards to the resale value, I would go with whatever potential buyers in that neighborhood would value more. If the answer is duplex and its soley a rental property, then future investor buyers are just going to cap it out to determine the value. Aside from that, a retail buyer could do a house hack with a duplex and that could increase the value. 

As the old saying goes... You either pay for it now or pay twice as much later. For me this a no brainer, I would replace the pipe. As a developer in Boston, I rip out cast iron pipes out of almost every property I rehab. 

If you're in the process of remodeling the first floor unit, the last thing you want is the pipe to start leaking again in 6 months and then you have to rip a newly remodeled unit apart to fix something you could have easily fixed now. 

my 2 cents

What kind of feedback are you getting from your prospects as to why they decided not to rent? 

More often than not this means that the monthly rent is too high and they are getting better rates elsewhere. Also, are there any fundamental flaws with the property? What kind of condition is it in? Does the price reflect that condition? What are your lease terms? Are you requiring too much money up front that is not in line with what others are charging? For example in Boston, you can charge 1st, last, security and brokers fee upfront. However, if I were to venture out of the city, ut would only be customary to do 1st and security up front and the owner pays the broker fee. 

What is stipulated in your lease agreement? Typically there is a penalty or lease break fee written right in the lease agreement. The lease break fee is intended to cover your costs of rerenting it. 

Ive talked to atleast 5 or 6 local bank and credit unions in my market that do commercial lending and they all provide funding to LLC's. Naturally, the manager of the LLC would still need to sign the note. I'm surprised that this is difficult to find in your market as id imagine the overwhelming majority of borrowers for rehabs would be LLCs.

Perhaps its different with larger banking institutions like a BOA or Citi but most credit union and local banks shoud do this. 

What I typically do is run a high-level analysis with my  deal analysis spreadsheet to see if the deal even makes sense. For this I will estimate a rehab cost per sf, holding costs based on however many months I think it should take to complete and sell and lastly any soft costs. If it seems to make sense, then I will visit the property take pics, measurements, etc. Then I will look thru my numbers again and adjust accordingly due to the actual condition of the property. Then ill make the offer. If it is difficult to get into the house, I typically just make a conservative offer anyways and let the seller know that ill need to get in in order to confirm or adjust my offer. 

J Scott's book on estimating rehab costs is a good starting point, but youll really want to figure out what your unit costs are in your area. Things like price per plumbing fixture, flooring install cost, tile, kitchen remodel, bath remodel, etc. 

Hope this helps!