Rehabbing Houses - Posted by Chris Winder

import · December 15, 1999, 4:40pm

Posted by Rich on December 15, 1999 at 18:12:14:

I guess it depends on what city you live in, how strict their rules are regarding renovation and how extensive the renovation is. Most areas require some types of inspection so that the improvements are up to code. You don’t want to renovate and have it burn down because of faulty wiring. As far as a other renovations, like plastering, painting, and other details, as long as it’s done in a tasteful manner (no purple Venus De Milos attatched to the facia), so that the property is sellable or rentable when finished, I don’t think the city should have anything to say. As far as using licensed over unlicensed, I’ve had both do different types of work. As long as your insurance covers the unlicensed workers, go with whoever will do the job right…and cheapest.

import · December 15, 1999, 4:40pm

Posted by Chris Winder on December 15, 1999 at 17:40:41:

For those of you who rehab houses, do you get liscenced workers or the (less exspensive) non-liscened workers. I am about to rehab my first house and I have a guy who is non-liscenced and is doing most of the work. I have heard that the city can really come down on you if they find out. Is this true? Will it be risky to have a dumpster in the driveway, or any other sign that might indicate to the city that I am having work done? Thanks.

import · December 17, 1999, 3:30pm

Re: Rehabbing Houses - Posted by Nicole (AZ)

Posted by Nicole (AZ) on December 17, 1999 at 16:30:50:

Also keep in mind that you are usually able to negotiate prices. I worked for a company that did insurance repairs to foreclosed HUD properties. When the insurance companies gave us $15K to do a repair job, we could almost always get it done for less than $10K by negotiating with our contractors (all licensed and insured). Much of this was because they knew they would get more business from us, but I know they jack their prices way up. These were all general contractors also. This increased their price because they had to sub contract. Each person needed to get their profit on the job.
Another thing to keep in mind, when an inspector is not happy with a job site, they often alert the code enforcement officials. Then you can have a mess on your hands. There are some cities (in CA and FL) that tack on absurd violations when they are not happy. I have seen that it was a violation not to have a towel rack in the bathroom! Many times, though, when you meet with the code enforcement officer, you can explain what you are trying to do and get a lot of the items removed. The codes are very sketchy and are left to the interpretation of the officer.

import · December 16, 1999, 4:20pm

Make money on the front end or loose a whole bunch of money on the back end. - Posted by Shawn M. Cawford

Posted by Shawn M. Cawford on December 16, 1999 at 17:20:28:

Chris,

Say you hire a guy who walks up to your house and asks for work. Any type of work. He does a great job and you pay him and he starts to walk off that lovely new porch that is going to help sell the house and falls and hits his head…

and ends up in the emergency room…

and stays in the hospital for almost two months…

and he suddenly has a 100,000.00 hospital bill…

and he can’t pay…

and he is sitting at home one night watching late night tv…

and sees an ad for an attorney who will take cases without charging for an intial consulation…

and the attorney calls you to let you know you are on the hook for his hospital bill…

and his disability for the rest of his life…

and punitive damages for you having an unsafe work site…

but you did have a safe work site…

prove it to a judge and jury…

Could happen…it has happened to me…Except that I have workers comp. and liability and a Lic. My insurance co. defended me to the hilt and used pictures and my daily job site log to defend the suit…Oh yeah and my insurance co. had the bldg inspector testify on my behalf.

I will disagree with anybody who says save the money and hire some guy who (although he does a great job) dosen’t have a lic. or workers comp and liability.

And Chris… I just sent in my gifts to the building deprtment for the holidays. They know me and trust me. If I have a 1000.00 job I still pull a permit(12.00). They love to come by if they have the chance and talk to me at the job and I have never missed a closing because an inspector didn’t pass my work.

I hope this has helped.

Shawn

import · December 15, 1999, 6:13pm

Re: Rehabbing Houses - Posted by Carmen_FL

Posted by Carmen_FL on December 15, 1999 at 19:13:18:

Not much to add, just that in some cities inspectors are real pains, and WILL stop you if you try to work without the required permits. In one city, we worked for weeks, dumpsters and all - no problem, no permits. In another, we barely started to replace some wood outside, and there was the inspector. It took us over a week to get each permit, but they were pretty cheap (about $50). Any outside work (except painting) required permits, including additions, outside doors, windows, etc. Inside work generally did not. I think, in all, better safe than sorry - it takes longer if they catch you, and time is money. We didn’t get fined, but we could have.

I suggest that you ALWAYS get a licensed electrician. Expensive, but worth it - the last thing you need is a fire. We make sure to tell them that the house has to pass inspection - if not he/she gets the pleasure of coming back until it does. Also, for obvious reasons, roof work.

As for other work, it is not necessary to use licensed contractors, as long as you have the permits. It does provide you with some security, and they are insured in case anything goes wrong. You can also put a claim against the Contractor’s Board if he happens to be licensed and runs out without finishing the work or does a shoddy job. We use mostly unlicensed, because it is cheaper, but we know and trust the guys, and have insurance on the property in case they get hurt. The price difference - we got a quote for $5,100 from licensed contractors; we will have spent less than $2,000 with the unlicensed guys.

Tip: We are getting a bit of “barter” labor based on our willingness to help some of these people acquire a house creatively.

import · December 15, 1999, 5:42pm

Re: Rehabbing Houses - Posted by keithk2

Posted by keithk2 on December 15, 1999 at 18:42:53:

Chris,

Each city has it’s own quirks and variations on the building code requirements but if you check with your local building department, you may find that they allow a fair number of jobs on a property to be done by the owner or under the owners supervision without anyone needing a license. Just ask and they’ll probably tell you whether or not a particular part of a job needs a licensed person to work on it.

My local building department requires a licensed contractor for work on gas, electrical, heating/cooling, foundations, load-bearing walls, sewer lines, and hazardous materials abatement/removal. Anything else can be covered under an owner’s permit that allows you and your friends/associates to do the work on property that you own. You don’t need licensed people for these jobs but it’s your name on the permit and you’ll be the one responsible for adjustments and changes when the inspection report comes back.

Don’t even think about doing work without a permit on the sly. This can get very expensive and those building inspectors don’t take too kindly to people working behind their backs. You’ll need them on YOUR side if you plan on doing more rehab jobs in their pea-patch again.

Hope this helped

All success
Keith

import · December 15, 1999, 5:31pm

Re: Rehabbing Houses - Posted by GL

Posted by GL on December 15, 1999 at 18:31:59:

It depends where you are and what you are doing. For cleaning, painting, minor repairs just go ahead and do it.No permit required.

Since you need a dumpster I assume you are doing a lot of work or your tenants were Slob of the Year.

Call the Town Hall and ask about a building permit. Tell them what you are doing and they will tell you whether you need one and what it costs. Usually a nominal sum like less than 1% of the cost of the work.

Plumbing and electrical work require inspection by the appropriate inspector.

Don’t try to be clever and phenagle your way around this. They can get you in a lot of trouble if they feel like it, and they will if they think you are a conniving wisenheimer who is trying to pull a fast one. Especially if it involves substandard work by unlicensed workers which may cause health and safety problems for future buyers or tenants.

The best approach is to go see the inspector before you begin work. Ask his advice about how you should do the job. Ask if you need to hire a licensed tradesman. I have had them say “You seem to know what you are doing. Go ahead and do it like this, which is perfectly safe and will save you some money. Just be sure to call me so I can inspect it before you install the drywall” .

In other word go in with the attitude " I am an honest, professional real estate investor. I wish to follow all rules and regulations. Explain to me what I should do and I will do it. You are my government representitive. It is your job to help me do my job properly. Let’s work together to make this a better town to live in".

Following this method I have never had a problem and usually they bend over backward to give me a break and help me with good advice.