All Forum Posts by: Peter Mckernan

Yes, ask your broker how they would like you to do it. Also, some states E.O. could be voided doing this, just for info. I would look into that too. Make sure you know all the implications.

Hey Maddison, 

great deal it sounds like.. A couple things:

1. Repiping is going to be 13k-15K alone depending on the size of the house in OC, we just got a 2000sf house quotes for 13,000 in North OC

2. The rehab depending on the size again may be more like 200K with repiping, I did a remodel last year 1500sf, and needed a roof, panel, all siding, full interior redo and permits it cost us 218K

3. For rehab costs I would really suggest doing the rehab with your own cash.. But the other options are Hard Money Lender, second on a house, personal line of credit, private money from an investor, or PM from a family/friend.

These loans are good for live in flips... That is an option, the interest rate is higher just a heads up, and if you use it as a live in flip you can make it so you do not have payments for the mortgage for the first 6 months of the loan due to construction! Just for info, and a great way to keep the costs for living expenses low while doing the remodel.

**just be aware the payments not paid will be added to the loan balance, so once you go to pay it off/sell it you will be in more money**

I would first look at not doing a flip at all until your cash reserves are saved up more. Flipping is not an easy and quick task that can be done with a little amount of money. There is a lot of calculations, market conditions, money, strategy, and more that go into each deal. I would save more prior to jumping in, even if it is a primary residence, this is because the rehab is always more than you calculated. 

You can use an FHA 203K loan and the conventional construction loan to do your rehab, these take longer than you expect as well. Sometimes these purchases, or refinances take 2 times the length you would think, and sometimes 3-4 times. I have a client that did a conventional construction refi and it took him 7-8 months due to the city permits and all. You really need to have your ducks in a row when you do this because you are not only answering to a contractor, your HML, or you bank account by pulling funds out. These loans are more time consuming, challenging on documentation, and other red tape than you can think of to be honest.

I am 100% in on advocating for doing more rehabs and leveraging Fannie and Freddie guidelines to do it, but you need a lot more stuff on these loans that will take you longer to do that is out of the ordinary for rehab/flip. 

I would start to look for another contractor in that area with references as soon as possible, this sounds like even with a clear define plan, the contractor will do more of the same. I would be sure to document the slow progress and continue to monitor for the next week, but if it is the same by the end of this week I would have 2-3 quotes from other contractors ready to finish the job. 

Biggest advice I would give would be to jump in with an open mind, and also I would look to join a team if I were you. I did not do this and looking back I would have done it to get more experience and gain the knowledge quicker. You can get leads, get training/mentorship, and fast forward a lot of success by joining a team on your first brokerage you join.  

I sent over a PM to you about this one Stephen. 

Great post!! This is huge, and the thing I would say if there are delays after well preparation or lack of communication, there should be a line in the sand when to pull the plug on a contractor and get someone else in the project to finish the job! 

All the stuff I do, and to add to it.. I bring a list of the offers (if you have multiple offers), this gives you the base to tell the appraiser if it does not sell to this buyer other people think/want the house at this price too.

Also, bring permits for anything that has been done. For example, just sold a house with a half bath added 5 years ago and no other models had it.. I added the permits to support the appraisers/list/contract price. 

Check the above toolbar, 4 in it shows property managers, this will get you a few and you can request their information.