All Forum Posts by: Russell Holmes

@Joe Villeneuve I'd venture to guess it would also drive the subs nuts on top of slowing things down. I could see it working if a single homeowner (no spouse roommate, or kids) who worked a bunch and said "look, I know it's a work site, I'll crash over here in the corner at night like I'm camping and make due with whatever is working but I'm gone 7:00-6:00 daily". I've got kids and there is no way in hell I'd wish their excitement level on any contractor trying to work...haha.

@Jessica Devlin typically with a fix and flip home, it is bought purely as an investment.  In other words, the buyer never plans to move in.  For example, I just closed on a small 3 bedroom home with a client.  His GC has given him a $38k rehab estimate and 6-8 week timeline.  The house sits empty the whole time while work is done and then I'll list it for him when complete to sell to a buyer who will move in.  The next buyers get a fresh, never lived in home.  While the house sits empty, you do still have to pay any sort of debt service (mortgage, loan, line of credit, etc), electric, water, sewer, property taxes, insurance etc.  This is all referred to as 'holding costs' or the costs of having a house you are responsible for that doesn't bring in any income.  100% of the profit on a flip comes at the sale of the property and that is where you make up for the expenses along the way (hopefully!)  It doesn't serve to bring in income or be a place to live while being rehabbed.

However, there is one type of flipping where you do live in it, not surprisingly called a "live-in flip".  These are typically the properties that aren't awful and you can move right in, more so cosmetically dated and in need of cosmetic rehab and/or items like a roof or AC system that are easily handled by you, the owner, calling one company to come take care of it.  The items needing rehab as you live there are things like cabinets, flooring, fixtures, painting, etc.  You live in and around the work, do some of it yourself, and if you hold the property over 2 years, you can sell without paying any tax on capital gains up to $250k single or $500k married.   To get that tax benefit of zero capital gains tax (up to the limits) you have to have physically lived there for two years.  So everyone who is flipping houses in shorter timeframes of 6 months or so are paying taxes on that profit as if it were normal job income (flipping is very much like a job since its immediate payment without longterm growth).  Live in flips aren't necessarily a way to make a lot of consistent money due to the two year requirement but rather a 'side hustle' you can do to build tax-free wealth while doing other more active things.

@Christopher Waddington would your father consider "holding the note" while you fund rehab and you both then split profits? You'd have to agree to a hypothetical "price" now with which to compute profits later. If he's not in a rush for the capital, it could be a win/win and be a lower risk first flip. Still analyze it like any other flip, but splitting profits with very low holding costs could come in close to hassling with lending on the short term purchase to keep profits yourself. If your Dad isn't interested in the flip aspect, explain that simply "holding" the property IS his input to earn half profits (plus full equity payoff of the initial agreed value). You run the rehab with your capital (less than his equity "invested") and earn your half profits handling all the management. Just an idea to leverage the family home as the "lending partner" as your dad could make it very smooth.

@Patrick Philip I know right where that is! Small world! I live just off Vick Rd maybe 5 mins from the park you managed.

@Patrick Philip I'm West of Sanford about 40 mins. I'm familiar with the area, but not enough to know differences by neighborhood looking at a map of Sanford. Going off of your mention of 17-92 being the split of historic district, It is difficult to find comps, especially rehabbed comps, right around your house on Avocado. I think that a combination of starting well over $200k (listing history looks like it was $229k at one point) and the time of year has further cut down on interest. It would take a much more in depth CMA to determine whether you are on point or not, but I think the lack of showings and offers is pointing to that. Maybe ask your Realtor to run another CMA to see if things have changed since listing.

Here are the two closest and most comparable homes I found, both smaller than yours:

1016 OLIVE AVE, SANFORD, FL 32771 (rehabbed 1285sf 3/2) sold for $119k back in March, or $92/sf

1005 S PERSIMMON AVE, SANFORD, FL 32771 (rehabbed 1400sf 4/2) sold in April for $163k or $116/sf

Those prices aren't bad, but they are from last spring.  I would venture to guess demand will pick up again this spring, but whether that will be at or above last years prices remains to be seen.  I think you're getting much closer to market value than you were when up over 220k, but you may need to decrease more if determined to sell this year.  Full disclosure, I don't have a buyer specifically looking for a house like yours. So while in the same market, my advice is not to try and influence your price strategy for any personal gain.  Just simply a personal opinion.

Oftentimes looking only at price per square foot can be deceiving when comparing homes with the same number of bedrooms.  Picture two 4/2 homes that each have living rooms, kitchens, dining room, etc.  One is 1500sf and the other is 1800sf, but no extra separate rooms.  If priced at an even $100/sf, would it really be worth a full $30,000 to a buyer to have the same number of rooms but all 20% larger?  Oftentimes when the number of rooms and amenities are the same and the square footage is within 20%, difference in total price ends up being only around 25-30% of the unrealistic difference found by multiplying the smaller home's price per square foot by the larger home's size.

Regardless, your Realtor doesn't have a whole lot of comps to compare to as we all see the same sold data, so it isn't entirely his fault for not picking a perfect price, but rather a missed interpretation of adjustments somewhere. If he listed it at $160k and sold it tomorrow you may have never known if it could have sold at $185k. There's nothing wrong with calling him to ask him to run a new current CMA and suggest a price he thinks it would sell today at. You may not be willing to drop to that number, but it will open communication.

If all else fails, would it cash flow as a rental if you held on to it?

@Alyssa Kroeker you've gotten some great responses here, and some great insight from experienced brokers. I'm a fairly new Realtor (under a year) but have mentorship from a broker with decades of experience (how much I haven't asked, she started young and it's too close to the same as asking age! I'm 33 and she's older than me, that all I know ;-)). In my market (Central FL), the "listing" side of a rental is usually 30-50% of a months rent while the "tenant" agent gets scraps. Our MLS requires some co-op payment, but it's usually only $50-150. Although I'm a new Realtor, I have run a service business for 11 years that has gotten to the point that time is the resource I'm shortest on. In transition to RE, I'm making sure my time is put into things that earn at least what I made before if not more, and so I turn down tenants looking for rentals. I would list a rental for a client if I represented the purchase and they were going to self manage. Otherwise I'd rather the PM find the tenant since it'll be them to deal with issues. I can go make $150 in 2-3 hours in my other business, so I'm not going to take a whole weekend to maybe find a suitable rental to make the same. Along the same lines, I see it as something Realtors can do to help their friends and family find rentals for nearly free so it shouldn't upset the realtor over what amounts to about 3-5% or less of a home sale commission. All of that being said, rentals aren't all bad for Realtors... my broker mentor who was independent before joining exp in '16, got her start in rentals. She had no income and met someone who needed a rental. She found them one in a privately owned condo building and then found the bulletin board where all rentals are posted. She called them all and got 4-5 rental listings which built her tenant list which in turn grew her rental listings. Covering both sides she'd make about $500 per rental placed and economies of scale helped since she focused on one desirable building. Eventually she sold several condos there before getting into houses. She doesn't do rentals or PM at all now and sells 7-8 figure mansions in the most exclusive area nearby, Windermere FL. She'd never get out of bed for $150 now but is sure to humble herself and let us all know to find what works. Be polite but don't feel obligated to pay for something you never offered on the rental listing. Maybe offer $50 out of generosity, but you aren't being a jerk to pay nothing.

@Troy Biggs that sounds like a great house. Smallest house in a neighborhood of larger homes is ideal. Building a master suite is pricey, but if it puts you right in line with the larger homes in the community you could see great value add. However, be cautious of those larger homes are going for $100/SF as most new construction including bathroom plumbing like that would be in the neighborhood of $125+/SF. So consider the cost to build, the value after addition, and if the rent increases at least as much as your value has proportionally. Adding 50% more square footage also brings in issues of larger or second air conditioning needed, larger water heater, etc. If I were you, my first two avenues of research would be to talk to some contractors to get cost estimates and a local Realtor to tell you what it's worth now compared to if you added a master suite with bathroom. If the numbers work, it'll fit right in the neighborhood sqft wise.

@Eli James you may be able to make some money here without a loan, just some legwork and patience. talk to some builders to see if any would be interested in partnering on the lot. If your Mom would be OK waiting on the $50k, you may approach the builders with a more market-value price of the lot. I have no idea, but local comments sound as if $50k is low. Say it's worth $100k, ask for that from the builders at close of sale, or a slight discount with a down payment you give to mom. An even less involved method would be to find a builder who 'could' build a house there, and work with them and a local realtor to list a to-be-built home. Our MLS allows it but some don't. Building the home yourself is a huge hurdle to take on, but you may be able to squeeze some profit out by marketing the buildable lot with a picture of what "could be" from a builder who can do it rather than just vacant, or let them build the house with a contract to pay at sale or in X amount of time after certificate of occupancy. Involve a lawyer in any of this, I am not one.

@Jonathan Landry I hadn't realized it would still be considered a SIP without insulation or inner skin (or any skin on inner walls), but regardless it was an impressive system!  I was about 100 yards away but watched them build it like a kid watching bull dozers dig. 

I actually have detailed pictures of my house before drywall so I remember where they put the blocking and nailers on block to more easily find it later. I put a deposit down before any groundwork, but permits had been pulled so I basically bought a spec home before construction and watched it be built.  I was in 3-4 times a week to watch progress despite it not being my 'project' until closing.  For as much as large builders cut cost corners, they used plenty of blocking behind cabinets and even for medicine cabinets in the bathrooms regardless of if they were ordered. It does make sense with roof structure being 24 spacing typically.  I'd imagine the R-value would increase incrementally as well with more insulation and less wood connecting inner and outer.

 When you say the say siding not connected to studs, is that because siding still requires 16" fastener spacing?  Does it then just connect to the sheathing that connects to studs, or is there an additional layer of stringers or something required to make up for the fastener spacing? I hadn't thought about that aspect of changing spacing.  Either increment works with drywall sizes.

Also, I've been looking into the difference of 16OC and 24OC studs. My Dad was a custom cabinetmaker and a framer in the 70s before that. In all my time learning from him, I thought all studs were 16OC until I bought my DR Horton house and found some walls to be 24. Turns out if you line up 24oc studs with loads from above in an engineered design, and make up for wall flex with thicker drywall, you can build a house the engineer says is as strong as 16OC with less wood. Some even use brackets instead of Jack studs to lessen wood in openings. I'm not an engineer but understand the idea of strength where needed. However it seems to be an area the savings wouldn't be worth it and my Dad always taught me to over-build everything...because you might as well while you're at it.