Property Rehab: Fixer-Upper and Construction Talk

Hi. I'm an investor in the Philadelphia Market. Any rehabbers interested in connecting?

I have attached the simplest max offer price calculator I have seen kicking around. Give it a try and let me know what you think?

Calculating Offer Price
Based on property with: ARV = $200,000, Repairs = $10,000
Scenario#1 - Buyer says they want 30% equity after Rehab expenses for fix and flip.
After Repair Value $200,000
Required Investor Profit = -(30% ARV) -($60,000)
Rehab -($10,000)
Your Profits -($10,000)
Max offer price if not REO or Short Sale $120,000
If REO or Short sale = -(.03 *120,000) for transactional funding and AB closing costs -($3,600)
Wiggle Room -($1,400)
Max offer price if REO of Short Sale $115,000

Scenario#2 - Buyer says they want to make $25,000 after Rehab expenses for fix and flip.

The IRS likes to stay 1 step ahead of investors …. Correction, let’s make that 12 steps ahead!
Ever since I began investing there have been headaches when dealing with the IRS and the short term & long term deductions that are available. I was foolish when I started real estate thinking that I could do my own taxes and I’m still foolish in other areas of my life. But I smartened up pretty quickly as I was doing more deals and realized I need a real estate CPA!
Since then I haven’t looked back and Mark has done a phenomenal job for me and my business entities.

Stephen Fishman recently wrote an article for Inman News (http://www.inman.com/2013/09/30/good-news-for-owners-of-smaller-resident...)

Does any know the estimated cost of changing from a septic tank to the city sewer? I understand that you have to pay to get a line to the street....but what ball park costs are involved?

This is coming up because I might have a deal to wholesale, but the property is still on septic. I'm not sure if people are turned off by that fact and I want to be able to estimate cost to change it over in the future if they want.

I have a property that I am rehabbing in a little less than desirable neighborhood. One thing that I've learned from my own projects and from my Investor friends is to extend a friendly "Hello" to the neighbors. It is amazing how a simple "Hello" or brief conversation with the neighbors can help protect your investment.

The neighbors know what is going on in that neighborhood and also feel more of a connection to you if you are kind and show a genuine interest in them and the area.

I have made and effort to say "Hi" to the neighbors of my rehab house and also "smile & wave" when I drive by. I'm a "familiar" and "friendly" face to them now. They are happy to know who I am and what I'm doing there. Most importantly that I'm there improving an "eye sore" in their neighborhood.

Curb appeal is the equivalent of charisma in a home.
It's that quality that makes you say "wow," when you first see it. You feel good when you pull into the driveway. You want to walk in the front door. Whether the home is yours or one that you're considering, curb appeal can make a big difference in how you feel about the property.
If your home has that star quality, you not only won't have any trouble getting more for it than similar homes in the same neighborhood. It also means you won't have any trouble getting potential buyers into the home.

There are ways to minimize the amount of money that we pay for winter utilities. Here are a few tips and tricks to cut down your utility bills in the winter.

Make Small Improvements
Homeowners have until December 31 to winterize their homes and get tax credits for it, the IRS has said. Items like high-efficiency heaters, water heaters and stoves all qualify for a 30 percent tax credit, up to $1,500. The catch is that the $1,500 ceiling is for 2009 and 2010 combined. If you used it up last year, you're done.

Make Big Improvements:

Here are a few great ideas to work on when you are rehabbing properties. Remember keep it simple to get the most bang for your buck.
Add the Perfect Touch with Paint. Paint will always clean up dirty walls and give a room a better image. Although dark colors can be stylish, go for lighter shades to brighten things up in warmer seasons. Smart color selections can make a small or cramped room appear dramatically larger. In the foyer, make a good first impression with similar tones mixed at different strengths.

Flooring

I would highly recommend getting carbon monoxide alarms in several areas of your house. Especially close to any rooms where children may be sleeping. Some smoke alarms that you purchase that go in the ceiling have carbon monoxide sensors in them. I have done research on this and found that by getting the sensors that plug into the outlets in your walls many times can work better, and can alarm you quicker of any dangerous fumes that may be harming you and your family. Carbon monoxide gasses actually go to the low points of the rooms first. Many gasses rise, but not Carbon Monoxide. So if you have your sensors plugged into the walls where the outlets are usually around 18” above the ground. They can notify you quicker than the ones that are mounted on the ceiling.

I've seen a few properties for sale that have had additions done but the seller never secured the proper permits. How difficult is it to get the require permits and how much expensive are those permits? One house in particular had an addition done (I'm not sure what, it didn't say on the MLS) but never received the correct permits. According to the MLS they have the paperwork needed but never got the permit. Thanks in advance.