All Forum Posts by: Andy Thompson

@Camden Fischer Also, next time pull permits so you can sleep at night. Kudos for having a strong conscience.

@Camden Fischer

Then you'll have an illegal rental on top of illegal rehab. And you're already sweating the illegal rehab, so i doubt you have the stomach for an illegal rental too.

In reality, would you get caught? Consider what the rental inspection includes. It's probably just making sure you have egress in bedrooms and aren't running a slum. Maybe they count the bedrooms and the bathroom and sign off on a certain tenant capacity. It's unlikely that they'll go into forensics comparing existing conditions vs. permitted scope of work, tracking every corner of the house from initial construction to now.

Now if you arent supposed to have a "kitchen" in your basement because of zoning restrictions (kitchens often make it a duplex or ADU) maybe you'll have a problem. But if you just have a "wet bar" down there, maybe everything is cool. When I'm going through building inspections for basement finishing, I stay away from using any word that sounds like "kitchen" just to not trigger some crusty inspector or plan reviewer.

If you don't have a full oven down there just tell them it's a wet bar. Or it came with the house. Check your regs ahead of time and don't draw attention to it. You'll probably be fine.

@LaMiracle Schaefer if you do the bare minimum legally required, your tenants will notice. I talked to a guy yesterday who is renting the front house while I'm building in back; my customer is his landlord. He praised her as he very best landlord in Denver. She always responds quickly to concerns and even knocked $200 off rent for the inconvenience of the construction project in the back yard. After his first year renting, he was so happy with her as a landlord that he was willing to re-lease the whole house (5bed - close to $3k/mo) and find other roommates himself. Now he's been there 5 years. When my scope is completed, he's likely going to help find the new tenants there too.

How will your handling of this flooring concern contribute to the relationship you have with these tenants?

@James Devoe my understanding is that you would want to have a couple hard money lender options before making the offer. Kinda like a bank's pre-approval, you would talk to a few hard money lenders and give them an idea of your experience and what you're looking for to start building a relationship. Then when your offer is accepted, you go back to them with the deal specifics and get the money. Thing is, they usually want you to have some of your own money in the deal, or significant equity, so if you flake out they can just take the house and sell it to mitigate their losses. Your task now is to figure out how this is both a low risk deal and has great upside for the lender. Lead with that when you start the next conversation.

Another option would be to bring in another more experienced investor and accept smaller profit while tapping in to their resources and experience. If it comes down to it, would you rather lose the whole deal or maybe find a mentor and learn to do it right next time?

@Steve Sauro there was another post recently asking how to handle a similar deal, except the contractor wasn't family. The contractor ended up bringing receipts at the end of the project that were $40k in excess of the $80k they had budgeted for rehab (so he said rehab cost $120k). They'd had an agreement, don't know if it was written down, which required a PO prior to overages but they didn't get the PO's...so now they're in a sticky situation. All this to say that with fluctuating material costs and lead times it's reasonable to set the expectation early on that he should be reporting costs and submitting change orders--and also what will happen if it isn't handled correctly. Tell your brother that any investor will expect some amount of reporting during the rehab, and you're helping him learn to do the additional administration required to be a partner in a deal. That will hopefully remove the strain from your personal relationship and help keep an air of professionalism to the project.

@Gregg Romig

If you want to stay in the higher view investor role of big picture influence, then hire it out to a GC. If you need to run it yourself in order to make your first couple deals work, then there is nothing wrong with doing it yourself. Just realize that GC's must work today to earn today's income which isn't the passive lifestyle that attracts people to real estate investing. Do you want to be an investor who leverages their money for increased income, or are you ok with buying yourself a 2nd job?

@Peter Hansen

You don't need an agent to buy this house. The agent's job is to pair up buyers and sellers and you've already done that. The title company can process the legal transaction for you. The money will be saved by not using an agent.

@Greg Scott

How is it treated differently if i use my cash or a hard money lender's cash to buy a property? What aspect of the hard money lender's agreement makes it more favorable for a bank to write a mortgage on sooner?

@Patricia Aragon

I've installed lots of tile, often the grout colors most used are what is available on the shelves at HD. If you have a tile supplier near you, you can usually select from any of these Custom (brand) colors. From what I'm gathering, you might want to have a rule of thumb to help you select grout colors so you aren't mired in analysis paralysis in this process. These colors below work with a wide array of tile, and these seem to be the go-to grout colors for many home owners based on the desired grout's color family and shade.

Off-white, light: Antique White

Off-white, medium: Bone

Gray scale, light:. Platinum

Gray scale, medium: Delorean gray

Gray scale, dark: Dove Gray

Beige scale, light: Linen

Beige scale, medium: Haystack

Beige scale, dark: never had it happen, actually.

As far as stain prevention goes, just use an additive when mixing it up. Surface sealer used after install isn't as good, though it won't hurt. Some associates at home depot may recommend the "polyblend plus" (has orange coloration on the bag) because it has additive mixed in to the powder already and you don't have to buy separate liquid additive. But it isn't always DIY friendly as it sets up quickly and pretty hard, leaving a thick haze that can be difficult to remove, especially with rough textured tiles. A liquid additive like the following might be just the ticket:

https://www.homedepot.com/p/Custom-Building-Products-StainBlocker-32-oz-Stain-Resisting-Admixture-Additive-for-Grout-SBG32/202525433

If you're looking for an off-white grout, I would feel confident recommending either Antique White or Bone with the above liquid additive. Good luck.

@Supada L.

Are they good tenants?

This sounds like less of a driveway problem (it certainly needs replacement) and more of a tenant relationship opportunity. Being a good landlord means maintaining the professional relationship with the tenant.

If they're good tenants, do the repair now. Time lost to vacancy to find another equally good tenant might not be worth rolling the dice. Be thankful that they care to notify you of items needing repair so you can keep up your investment. Bad tenants might have let the driveway, and other items you don't know about, continue to degrade and you'll get shocked with even greater costs on any number of undisclosed problems when you finally find out. If these are potentially long term renters, maintain the relationship as if you want them to stay for a long time. You might find that this gesture is the beginning of a long (and profitable!) agreement.

If they aren't documented as excellent tenants (late payments, petty maintenance requests, etc), don't replace the driveway yet. Do listen to their complaints and maybe grind down the high spots for $500 and ride it out till they leave, while budgeting for the repair. Then, while looking for better tenants, replace the driveway and see if you can push rent to cover the costs.

Or, if their lease is up soon and you want them to stay, replace the driveway now and push rent to cover when they renew.