All Forum Posts by: James Mc Ree

It may be common for a home of that age to have a failed sewer lateral, but that doesn't mean you have to accept it. Usual and customary usually refers to outdated but working components, such as old ducts in a house that do not support central air well for lack of returns. That wouldn't be a defect because the house was built before central air existed according to normal and customary designs of the time. The ducts work, they just aren't modern. Your failed sewer is clearly not that.

You discovered a material defect in the property and have an out if you want it. You can take the property with the defect if you have a great deal, but the deal is less great now. You can negotiate with the seller if they are willing. You can walk away. A point of leverage is the seller is now aware of a material defect and must disclose it to future prospects on the seller's disclosure. That will impact any future offer prices.

I bought a townhome with a broken lateral that was a short distance to the main. My seller disagreed with the first scope result and hired 4 more companies to scope it. All reported the same. The seller's basement was dug up, they tunneled under most of the front lawn, the sidewalk, curb and road were partially disturbed. The total cost to the seller was $27,500 in PA 2-3 years ago.

It helped in my case that a U&O certificate required a passing sewer inspection. If that is the case in your town, you will have to fix it if Seller doesn't, so make that a negotiating point since one of you has to fix it.

Interior disturbance is likely from your soil line out to the main. That may cause you some restoration work if it is going through a finished basement. You will want to discuss this with Seller if they are going to fix the lateral.

It would be reasonable for the seller to compromise with you. Seller wasn't offering a property with a new sewer lateral, but you weren't buying one with a failed lateral. You could agree to raise the property price by some percentage of the repair and finance it into your mortgage to avoid taking the financial hit in cash if you are financing the purchase.

What is the floor rate for the ARM?

Your best approach is to model the fixed rate and ARM for 5 years. Be sure to include closing costs, mortgage recording, title insurance, etc. Guess at how much rates might move over the next 5 years. They may go down another point or so in the coming year and they may go up 2 points in the next 2-4 years (who knows).

A model like that will give you an idea of how the ARM will perform against the certainty of the fixed rate. The difference tells you how much you care.

You will definitely have more wear and tear.

Do these applicants pass your screening criteria? If they do, be very careful in denying them because they are too large. That could run afoul of discrimination on family status. If you don't want to accept them, you could tell them you are waiting to see if you have other applications to make a final decision so as not to turn down the only qualified application you have, then risk a lawsuit.

Here are some ideas to check:

- Does the town limit the number of unrelated people living together? Are they unrelated? You could deny based on zoning limitations.

- Can the 10 people reasonably fit into the 4 bedrooms?

- How many cars do they have? Do they fit in available parking? You could have furious neighbors if you need to park 12 cars. This may lead to a lease limitation so you don't have them parking inappropriately.

My guess is you are a victim of analysis paralysis. Keep in mind you are looking for 1 investment property. Any of those places will yield that. It would be different if you were looking to buy 50 and the demographics really mattered.

In terms of the purchase, it's all about location, location, location first. Drive these places and get to know them. You will get comments here that steer you towards A class properties - or C class. What are you looking for? Getting to know the towns, neighborhoods, streets and actual properties is essential and far more important than just one town name versus another.

At this point, you don't know anything about your future tenant, so I wouldn't assume they are trying to get to the city. Closeness to transportation is always better, but that is a tradeoff too. It could mean closer to traffic, noise and crime which is always worse. You may get retirees, tenants who work locally to those towns, airline pilots who are rarely home, etc. Don't focus on that, but rather what would be attractive to generic tenants for those properties.

I have 12 3BR SFRs and 1 2BR SFR in Delaware County, suburbs of Philadelphia. All have worked out well. Some are retirees, some work in Philly and NJ, some work locally and some just don't work. My 3BR rents range from $1,425 to $2,000 which shows why it is almost impossible to give you meaningful rent data without you being more specific.

At this point, I wouldn't discount the online systems such as Zillow so much. Don't focus on the ZEstimate, for example. Focus instead on actual asking prices for sales and rentals. That will give you a good idea of where the market is for the areas you are interested in.

I use HD's Lifeproof LVP for all of my rooms except bathrooms. It is easy to install. Each piece locks together to its neighbors. I refinish steps to get close to the LVP finish. That makes the steps look nice, but they do stand out as different.

I prefer tile for bathrooms since they are more at risk of getting wet and having sitting water. Lifeproof's core is PVC, so it's not going to warp or anything. The plank-to-plank connections are tight and seem to resist liquids well, but I don't want to push it in the bathroom.

Trail Oak has been my favorite of the Lifeproof LVPs. I've used other variations of their wood looks as well. I like the thicker and wider planks that became available in the last year or two.

Without knowing anything else than what is here, my guess is your obstacles are either zoning or prohibited basement habitation. The "sneaky duplex" phrase sounds to me just like "sneaky tax evasion" - it's great to get something illegally until you are caught.

The screaming obvious action for you here is to call your town and ask about the property. We can give you lots of thoughts on what might be happening, but you don't want to invest based on that. Call the town's zoning officer. Here is some context on the two possible obstacles I see:

Zoning - The area is legally limited to single family homes, as in 1 and only 1. You can try to get a use variance, but I don't see how that would ever be successful since you would have to show the property cannot be used for the currently allowed uses (single family home). You can usually get the zoning destination with the property listing, then look that designation up in the town's zoning code to see which uses are allowed there.

Basement habitation - There is a concern that limited egress, fire and CO are major risks to bedrooms and habitation in general of basements. In PA, basement habitation is not allowed if any basement wall is below grade or if the basement exit door to the outside is below grade (PA 6400.81). Local governments may have tighter restrictions. That doesn't stop them from existing. It just means landlords and tenants play the game of making the bedroom look not like a bedroom during an inspection. Sometimes they get away with it, sometimes not.

I think building a whole suite in the basement will be much more noticeable than just a bedroom and they will probably call you on it if it is not permitted. Permits will also be required for your plumbing and electrical work.

So, what if they catch you? You can get fined and ordered to undo your changes. That's no big deal if it's just a room being used as a bedroom, but imagine ripping out that nice kitchen and bathroom you put in! If the local government doesn't catch you during rental inspections, they have a great opportunity to catch you on sale of the property if they do an interior U&O inspection and find the house is a duplex. In that case, they can block the sale and your buyer may have legal recourse against you for misrepresenting the property if you did.

The title search shows the liens currently recorded against the property. It doesn't mean there aren't more to come. Title insurance protects you against anything missed by the attorney or something not yet filed. There are very few claims against title insurance, but this might be the kind of property that could generate one.

The sheriff sale should extinguish all of the liens. You buy all the liens with the property if you buy it traditionally. You can contact the bankruptcy court to learn the current state of the case to see if buying it is feasible. Most likely, their plan is the sheriff sale to get maximum value.

The lender will bid the amount owed to either have the debt satisfied or take the property. Others may bid above that and end up owning it. The lender will auction the property off if they take it. My experience with these auctions is they are normally slow and inefficient because the new owner had inflated price expectations. I've talked with auction.com and another company about rediculous reserve prices on some properties. They just defer to the owner, provide no contact info for to negotiate and just told me that's their price, but it may come down if it doesn't sell. Others may be more successful than I was. I only bought 2 with auction.com in NJ.

I have SFR rentals in Delaware County, but not in Philly. I know Philly at a very high level, but not the details to talk about neighborhoods.

My initial reaction is "none of your business." Stay out of it.

The risk I see is your new tenant shared info with you that you blabbed to her ex. Regardless of her relationship with him, you could breach her trust. You don't want to screw up your relationship with her before she even moves in.

There is a risk she is lying. I don't think you would want to dive into the details and get in the middle of it. Instead, you might want to focus on the legality of it. Maybe you could ask her to sign a lease addendum advising her that her ex lives in the building and asking her to certify there are no restraining orders and such limitations on either on either of them to her knowledge. You would want to run this by an attorney to get the right wording. I wouldn't do anything with him, but maybe setup an easy and legal kill switch on the lease if there is a problem.

You probably need a lawyer and to investigate the current state of the bankruptcy proceedings. You may be able to buy the properties through the bankruptcy proceeding versus after a lender foreclosure. Time to acquisition is important for an 85% complete property depending on what is missing.