All Forum Posts by: Mike Wood

@Tim Phillips You need to check with your local city/county department.  In some cities, you will automatically lose any grandfathered status if the property is not continuously operated.  In this case, the is no longer being used as a residence, and would have lost its ability to use it as a residence, it it not up to code.  In my city, if its not used for 6 months, any grandfathered status is lost.

I have personally contacted all of my tenants (11 units) and asked them to contact me if they have any job related closures that effect their ability to pay rent.  I also told them if their ability to pay rent was affected, we will work out arrangements on the rents.  Currently no tenants are having issues, but if they do, I intend to allow for partial rent deferments until our city and their individual jobs stabilize and return to normal.  This will not be rent forgiveness, but a delayed payment plan during these times.   That is my personal plan.  It is worth noting that effective this past Sunday, the Mayor of my city has halted all evictions, so I am not in a position that allows me to threat eviction due to lack of rent payment.

In New Orleans, the Mayor cancelled eviction court over the weekend, and eviction court will not be hearing any cases until after the Mayor determines the COVID-19 emergency is over.  Based on what she has been saying, this halt in evictions will likely last a month, if not longer.  I am glad I don't have any deadbeats in my properties (just had to evict one in February)

@Slava Golubov  I am not sure I would agree with everything your management company is telling you.  If the roof is old and past its useful life, I would seriously think about getting it replaced.  Tenants do not always inform managers/owners of problems (alot don't like to be disturbed and thus will not report what they think a minor problems). If your roof starts to leak, there will be damages inside that could far exceed the cost of a roof replacement now.

As for the other items, they appear to be cosmetic. If your competition has similar finishes (old appliances, no central AC, etc), then you manager is right to tell you to keep.  But if your competition is way better than you, then expect to get sub-par rental rates.

Your manager saying it would be easier to rent with old stuff must be thinking that the rental rate would be cheaper (you would obviously want higher rent if everything was new), but if the rent was the same, the newer appearing unit will rent faster and to better tenants.

@Ben Crosby You can cross New Orleans off you list, as $60k would not likely buy a teardown or full gut renovation project around here.

@David W. If your not an experienced developer or have built homes in the past, I would sell and take the easy money.  Building a house isn't easy or quick.  

@Maurice Stewart  Cooper Contracting is how I am using for the second meter on my current project.  As stated, I already had the plumber for the renovation work (gut job) going on.

@Leilah Davis All of my new construction builds have used construction loan financing, so as part of the finance package, the bank does a pre-construction appraisal.  They use the building plans and specifications to develop an appraisal based on the available comps.  I think it pretty standard for new construction loans, so the bank knows the project will not be upside down when completed.  Since your not using financing, not something you need to worry about. 

@Ryan Kennedy I am not sure that architectural plans provide any value to future land owners.  Its highly unlikely that someone would want to build what you design. 

If you intend to split the lot, and its allowed, I would start on that first.  It can be a lengthy process.

Since you own the land, you should be able to use the value of the land as the part of or all of the required capital needed to obtain a construction loan (typically 20-25% of total costs). If you use this first build as your primary, you may be able to significantly reduce your required capital.  Once you finish the first and occupy it, you could use the land plus the equity to build the second spec house and sell it, again using a construction loan.

@Leilah Davis Having built several new construction houses in "fringe" areas as described by Braden, I am pretty tuned into the appraisal process and comps.  I dont sell most of my projects, but do focus alot of attention to comps so that I can ensure that the project will value out correctly to justify the construction costs.  If you find gut renovation and new construction comps, I dont think the adjusted value will be that far off between the two, if they are similar in trim and size.  

As for you question about the three options, I am not sure they are great comps, unless you fully understand the required adjustments needed to suit the location.  I personally would only look a few blocks from a house in these "fringe" area's.  Otherwise, you really start to compare apples and oranges.  

I assume that you looking at this to see what your spec build your planning will comp out as.  If that is the case, it might be worthwhile to contact an appraiser and pay for new construction appraisal, this assumes you have some idea what your building.  That value will likely come in a bit low (~5-10% low) based on my pre-construction vs post construction appraisals, but should give you an idea of what comps would/could be used and how they would be adjusted.  I will say, the appraiser will have a hard time finding new construction comps and will likely use several gut renovation comps, they always do with my projects (I am not building in Lakeview or any other part of the city with a large amount of new construction comps).