First time flip

[RCMMZ]

I would like some help on a deal I am working on.  The home was originally listed for $1.9 M the contractor was unable to get a CO on the property and eventually lost it.  the asking price is $350  it will need aprox $100 in repairs (possibly caissons under the home, it is settling)  I need an engineers report to be sure.  My realtor has informed me that once it is repaired, we can list it at no less than $600, and that is a very conservative number.   I will probably offer in the ballpark of $250- $290, depending on the reports.  Does this sound like a good deal?

Any and all comments, suggestions or advise would be GREATLY appreciated.

Thanks,
Susan

[MichaelQuarles]

While looking at the reports find out who the land developer was, typically there had to be a clearance and some engineer is liable I would think.... There may be a huge insurance claim... If so lock up the thing with exclusive rights to that claim... Paydays like that are too few and far between...

Remember what you know typically has to be disclosed so understand that when accepting an offer from a buyer....

God house hunting

Michael

[Gold River]

Hi RCMMZ,

                The realities of Builder defects loss mitigation is that the recognized statute of limitations is 10 years virtually nationwide!

Now in residential construction a single lot may sit for 20 or 30 years before a buyer comes along to make a purchase especially in area's where there are still significant infill projects still occuring.

When single family homes are built as a single custom home, very few government entities required a soils report or soils testing, most governing building departments would have a recognized standard for footings and structural foundations.

An architect or draftsman would follow the counties or cities code standards for depth, width, height, appropriate for the size of the structure!

Generally speaking a architect can stamp the plans as being in compliance and submit for a permit.

If you go file any builder defects litigation you will not be able to sell the property until the case is settled, the average time for settlement of a builders defect lawsuit is probable 6 to 9 years and there is no guarantee you would ever get paid. (Disclosure of pending litigation and unresolved structural issues or a judges court order prohibiting a sale pending forensic analysis.)

A lawsuit like this could easily cost 150k to 250k over 6 to 12 years.

Typically these cases settle for about ten cents on the dollar and are lacking in satisfying the cost of litigation much less making actual repairs.

A field may have been backfilled with garbage and debris 50 years before but without an actual soils test (Core Drilling) for compaction (Soil Pressure) and soil type (Clay, Sand, Schist, Decomposing Granite, etc.) a builder or archetect would probable not be liable if the county or city issues permits without a requirement for a soils report.

You will have to disclose the litigation if any and the repairs and engineering if you buy and repair this property!

Good luck,

                        GR

[RCMMZ]

Thank you for your feedback.  a little more info:   The home was built in 2004.  Also having previously been in a relationship with a general contractor I know for a fact that the cities / counties in the area require engineered soil samples, and perk tests.

 

[JohnSchroeder]

I would find another investor that has experience with these types of deals and solicit there help.

Don't worry about the profit so much as getting the actual deal completed.

Might be a deal but it might also be a mess.

DO NOT close on that property unless you are 100% bullet proof convinced that you can fix it and get it recertified.

I would go as far as to getting a letter from an engineer stating what they would be able to do for you.

[ReCoachDennis]

Hi Susan,

With something potentiall this big and involved, if you don't have much experience with it yourself, you'll have to lock it up and flip it out.

Properties such as these maylook like a $100k job, but can easily cost much more. Holding costs are another concern.

If you don't have much in the way of reserves, I would not go into this yourself.

Lock it up with a long term option and market it to your local REI group that focuses on larger more expensive properties such as this.

Use your creativity and you can get paid up front and on the back end with an option.

Dennis