Challenging A Point Of Sale
This coming Thursday (27th) my partner and i are meeting with a building inpector to challenge a point of sale violation on a house we are looking to buy. The POS says that the basement needs to be replaced requiring 7k be put into escrow. My partner and i feel that the basement is in good enough shape. Is it perfect, no, but it certanly does not need to be replaced. Anybody have an experience with this type of situation? Anything we can do instead to convince the inspector?The house was built in 1925
I had a similar situation on an unpermitted room I wanted to permit and rebuild. The inspector who inspected the site stated in his preliminary report that he wanted proof of previous permit or wanted me to demolish to original. This would have meant that I would have had to demo the founation as well which would have been very costly. My contention was that there was a continuos footing and the foundation was fine.
After numerous attempts over several months to get this resolved, I chose to pay an architect to do a visual inspection and state, in writing, that the foundation had continuos footing and was built to code. This costed a few hundred dollars as opposed to an engineering firm doing it at several thousand. Once I had the letter from the architect, I went to the Senior Inspector with it and he approved of the letter and issued a permit.
I would check into it as this may work in your situation. Good Luck.
Dave
[addsig]
I was to lazy to read all of happys home tying, if he didnt say this, try new windwos. New windows can save near like 30% of heating and ac costs or somthings in that area. What condition are your windows ?
I do not have enough info to advise if this is a good deal or not; one thing though; I would not spend the money on a carport if you are just going to sell. Make the house clean, habitable, and attractive; let the new owners decide if they want a carport as some might not care.
Thanks reward for the advice. What further info would you need to make an educated guess. What do you think the deal looks like if I do 90% financing verses doing 100%?
That arithmetic is a little flawed.
ARV is the average resale value... the price you should expect to be able to sell the home for once you have rehabbed it. Buying a property for 60% of ARV is just a very general rule of thumb on what might constitute a good deal for a rehab candidate. But, much depends on how much work a property actually needs to bring it up to par and what your current market conditions are like. Sometimes 80% ARV is a great deal.
Using this basic rule of thumb is useless IMO because there are too many variables and each property is unique. I like to do just a straight cost approach.
I use 4 variables. A basic formula for the most you should pay is:
ARV minus Rehab, acquisition/disposition costs, holding costs and desired profits. In your example (rounded):
ARV = 300k
acq/disp = 30k
Rehab = 50k
holding = 21k
Profit = 30k
In this case, the most you should be willing to pay is 169k. This is assuming 10% of ARV to pay bankers and brokers their facilitation fees for you to buy and sell. Of course, if you pay cash and FSBO, you can get it down to 3-5%. Holding costs assume a 12mo timeframe from purchase to sale. In this example I use 7% of ARV for PITI, utilities and incedentals for a 1yr rehab.
These 4 variables are, well... highly variable. You should break each one down into more detail and refine them depending on the property under analysis and your financial situation.
As in most rehab/flips, the brokers and bankers stand to make as much as you do for all your hard work.
Thank you for the insight. This is very helpful. I feel like my next step must be to fully understand the financing asspect of a deal. I am a visual person and need to see it worked out (i.e. 6months of mortgage, Utilities, broker fees) . What else am I missing?
Thanks again for the help.
Jason.