Feb 1 • Forum
Almost done!
I have to be honest with everyone. Over the past few months, I've been focused on finishing up my guide booklet for the Stock Market roadmap for beginners AND my own real estate endeavors.
Here is what happened and things to learn from my endeavors. I had a property under contract in November/December that turned out to have unknown issues. That single property had two houses on it. I thought it would be a goldmine and prepared my rehab budget. When the inspector came, he told me that the previous owner had replaced the electrical panel (therefore my contractors and I thought the electric had been updated). The inspector found that the electrical was still knob and tube! That's bad. What that means is that the whole electrical system has to be replaced.
Let me tell you a bit about replacing electrical. When the electrician comes out, if the walls are still covered with drywall, then they have to "fish" all wires through the studs behind the drywall. This usually means that they will cut out small portions of the drywall in multiple places/rooms in order to do this. Those will need to be patched and repainted (will the paint match existing wall color?). This method is long and tedious, and electricians may not tell you, but they hate doing it this way. It takes much more time. So, you as the consumer will pay them more for the extra hours and days.
The other method to replace an entire electrical system is to rip out all the drywall from the house. This makes it much easier and quicker for the electrical to be "fished" and replaced with new wiring. For you, this means added costs to have workers demo all the drywall, pay for dumpsters, and clean up because it's very dirty work. Once the electrician is done, you must buy all new drywall (very expensive), have it installed, mudded, sanded, prepped, primed, and painted. These are significant extra costs for materials and labor in addition to the electrician work.
Because of this, I backed out of that deal.
Property #2. I was very excited about another property that had an addition on the back with its own full bathroom and kitchen. The possibility of renting out both the house and the addition were enticing. I did go under contract for that in the middle of December. The first issue was the foundation. It was original to the house, built in 1933, and was clearly "homemade" with some poor repairs over the years. I got 3 separate quotes to repair the foundation: $55,700, $44,800, and $8,900. Even I was confused as to what was the fair price! I had a structural engineer come out to inspect the foundation. He told me that the crawlspace was completely dry and there was no water/moisture damage under there. Do you know that the two highest estimates included the cost of waterproofing and a moisture pump? You've got to understand that foundation companies want to charge top dollar since everyone knows that foundations cost a lot to repair, right? Well, they were trying to charge me for a fix that wasn't even needed. The structural engineer went over the work stated on my $8,900 quote and said that was fine for what needed to be done.
The second major setback came when I had a GC check the addition. Firstly, it was unpermitted work. It did not meet the setback requirement of the county. That might or might not be a huge problem as variances and grandfathering are possible. However, my GC said that nothing had been built up to code. The concrete slab foundation wasn't 6 inches, the walls were uninsulated particle board, the electric was only 100 amp, and more. My GC estimated that getting it up to code would be almost as bad as rebuilding and would probably cost $70,000 or more. That price exceeded my budget. Again, I backed out of that contract during my due diligence period.
For now I am returning my attention to populating this community with the all of the modules. The next one that I will post is the roadmap for beginners to get familiar with the stock market.
Thanks for reading! I hope this helps you by learning from my challenges.
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Almost done!
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