The Professionalist Real Estate Investing Podcast
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The Professionalist Real Estate Investing Podcast
Building Smart: 7 Critical Construction Mistakes You Can't Afford to Make
Podcast Intro
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Welcome to the Professionist Real Estate Investing Podcast. I'm with my guy, rocky. How you doing, rocky? I'm doing good man, thanks for having me again. No problem, I had to have you come on this one because after we talk about this one, which is the seven big mistakes to avoid in new construction, I have a great story that goes hand in hand with this, because you're going to be everybody's going to be out there amazed like what exactly was this person thinking when building something? But we'll get into this one the seven big mistakes to avoid in construction. And so the first one is don't skip the inspection. Do not skip the inspection that's the number one thing because you don't want to know you. You want to know everything that's going on with the place, I mean from from the foundation to a little um teaser out there. If you build something you add on another floor, make sure you get a hold of an engineer. Why you need to get hold of engineer? Because you're gonna make sure that second story stays in place.
Speaker 2:Yeah, for sure. My neighbors, they're talking about putting a suite above their garage and they had a contractor friend. Oh yeah, we can do it. We got to upgrade this and this and we can do it. We got to rip the roof off and stuff and they're talking about doing that and she's like well, he's like first of all, you should get an engineer. You should get, like you know someone that knows the structure and everything that. We have somebody like that. So they brought him in and the dude looked at them. They're like we can do it for sure. He's like, but we had to rip your entire roof off, we had to rip the entire garage out. And she's like why the entire garage out? And she's like why? She's like the foundation itself is not supported, has a support system for a two-story, and I was like, oh my God, I didn't even think about that. So they say, yeah, we can do it. He basically said we can do anything, we can build you anything, but you got the money and the time we can do it.
Speaker 2:Oh wow, he said you, you gotta rip the whole damn half of the house off to get the garage out right, which the garage is inside the house, yeah, and then you build up from there. I was like, of course you can build an extra house if you have the money. That's crazy. You can put a pool on top of your roof if you wanted to, but you won't pay.
Speaker 2:You won't pay for it. I was like I didn't even think about that, because I was like, oh, yeah, because I told him, like you can put an extra roof above your garage, yeah, an extra room. And I was like, oh, that's a good idea because the room's there. But he's like inspected your concrete, inspected, make sure they have the rebar in the right spot, and then your framing has to be, you know, the proper framing, with extra support beams and stuff like that. I was like, oh my God.
Speaker 1:Yeah, and you're right about the soil too, because if the soil is wrong, there's going to be a lot of things going wrong or not going to happen, or it's going to cost a lot of money. Yeah, yeah, yeah. It says builders can miss things plumbing connections, electrical wiring, hvac issues, you name it. It says always hire a third party inspector before closing. It might cost a few hundred dollars, but it could save you thousands in the long run, which is true.
Speaker 2:If you can't.
Speaker 1:If you have the ability, I would hire somebody to go over everything to make sure everything is good.
Speaker 2:Yeah, I know people skip it because it's just money. Like, oh yeah, let's check the electrical, let's see how many extra $600 to $800 for some guy to come out, and then whoever did your electrical is like that's good, that's good. Like you know, you got to check it out.
Speaker 1:And then you know a lot of us too, me too, like you go by looks it, looks good, it looks like it should be okay. Yeah, but you don't really know behind the scenes how it is or how it's going to operate yeah, like you said, it looks good.
Speaker 2:But it looks good because you don't know what you're talking about. If I do what I was talking about, I'll do myself exactly right.
Speaker 1:I wouldn't know, I don't know. Like number two, assume the builder has your back. It says friendly sales rep. Sales rep in your model, your model home. They work to for the builder, not you, oh yeah yeah so when people build homes, they have blueprints of how to go about houses and like you were just we were talking just before like the material that's used. Yeah, how cheaply made. Like that's the material that they're using to build homes.
Speaker 2:There's quality and material, like everything. Everything has a level to it exactly, yeah, they're.
Speaker 1:All they're thinking of is the, the quantity over the quality you know what?
Speaker 2:that's funny. My uncle's gonna build a fence and we built fences before together and I told him, hey, make sure you get that number two fence. And he's like what Like? We're both like, kind of like oh, what does that mean? Again, and apparently just the fence boards with the dog ears. There's qualias of fence and it has like a number one, two and three and those are the like.
Speaker 2:Three is like the best one, like industrial fences that just made out of wood. It's just the quality is much thicker, they're just much thicker, right, and it's not cedar or something like that, it's much stronger wood versus like these big companies that all come into the like Lowe's or Home Depot and these boards are super thin, super thin. They boards are super thin, super thin. They're cut, super thin. They're literally flimsy and they're all warped because they're so flimsy. It's like these are brand new cuts from from the home depot floor. Like imagine, imagine you put that in the sun for a season or two oh, and that thing's gonna warp split and then you replace those in like three or four years versus like a high quality wood.
Speaker 2:But the home depot one was like I think at the time was like 100, like a dollar 98 per per fence board and the ones I bought at the time a number two whatever that means in the construction world was like three, three dollars and 90 cents. So it was like dang near double, more than double the price. But man, when I put those boards next to each other I'm like, oh my gosh. The quality of it. What quality changed? Can't change it with.
Speaker 1:Oh, yeah, so that makes sense. Because the grade of the boards Because, yeah, you got your thin ones it's just even like everything I view it like, even because I love shoes. If you buy a cheap pair of shoes, you know good quality pair of shoes compared to something that you're going to wear for a week and a break apart, yeah, and we rip it on the seams Right. Exactly, yes, is that always? Bring your own real estate agent or advisor represents your interest, someone who can negotiate, read contracts and ask you, ask the right questions.
Speaker 1:You want to make sure you don't want to. You don't want no one to take, no one wants to take it be a tan taking advantage of in anywhere aspect. You just want to make sure that the builder is doing his job, yeah, and making sure everything is done accordingly the right way. Yeah, number three don't ignore the fine print in the contract, and that's good, especially if you're dealing with the realtor, because realtors, they deal with contracts all the time. You want to make sure that everything in the contract is what it is and what it stands for, because you're not, you're not trying to be thrown off guard by like, hey, you're supposed to do that. Well, it's not in writing. Yes, it is in writing. You need to do that.
Speaker 2:Yeah, and when I bought my AC unit I went to three different companies. They're all high-quality companies with good reviews, but don't get confused. I went with probably, if I say the company's name, it'll be like oh yeah, I went with the top, top oflo ac unit companies in this area and they, their fine print was like if it, if it breaks down you know, within, like, uh, I think if it breaks down within like six months, so we'll replace it, but I think after that that's it, we won't. I was like, oh, that's okay and just, and then just, um, uh, if you have any issues, you know you call this number and call this number and then they'll get to us and we'll schedule in.
Speaker 2:It's like, oh, that's that's for such a big company. It's like, oh, that's that's usually. You want to like a direct contact and we'll take care of you. We'll do our best. Customer service is like always top notch. It was a big company name. I was like, dude, this company kind of blows. And I went with the second best company that was in the area and they're like look, if something happens, we're going to take care of you. Usually we say any between a year. If it breaks down, we'll replace it, no questions asked.
Speaker 1:I was like oh wow, that's great.
Speaker 2:Other companies are like you know, they'll send someone out and they'll look at it. They're like, no, well, if it breaks down, we'll come and we'll just switch it out. And then just I was like, oh, that's cool, I wouldn't have been known to even think about that. And then their quality of customer service like here's our numbers. He's like, he's like, this is what we do. We'll give out our personal like work phone number and see what happens. You can call me. And I was just. It was so way more direct and it was like such a much nicer experience and it wasn't the best of the best company on Google or whatever.
Speaker 2:You know, I was like dude yeah, yeah, it might say it's the best company in the area, but until you like, talk to them, read the fine print and see what they're offering versus like other people. It's like dude. I don't know where they got those five stars from Exactly, I tell people especially with that.
Speaker 1:I tell people do your own due diligence, investigate your own stuff. I don't go by Google reviews all the time because I mean anybody can put anything like five stars or be hateful. Talk to people who's like, hey, have you had an experience with this with your house, like how were they Great feedback. I mean word of mouth is the best thing.
Speaker 2:Oh, it's huge. I love word of mouth. Once I got my solar installed in my house, after it was installed and it looked all nice and everything like, all of a sudden it was like hey, hey, I seen that company come over. How, how were they? I'm like, dude, they're great. Actually I don't know about anyone else, but this salesperson right here got his car, he's great. I was like give him a call. I get a little discount if you get that Exactly right.
Speaker 1:I do that referral fee. But yeah, so yeah, make sure you do your due diligence and you study. If anything breaks down in your house, don't always go by Google. I would just ask people who owns a house like, hey, part of this has like your AC unit, has it broke down Like who did you go with?
Speaker 2:Exactly.
Speaker 1:How were they with you? Who was the person that you talked to?
Speaker 2:maybe I need to get in touch with them because I have a problem with my ac unit yep, yep, and some and some places uh, offer a lot more of incentive, like maybe just a little bit lower interest rate or maybe just a little bit more on the warranty. You know, instead of like 20, 20 year warranty, they give like 21. It's like, why not? Why not go with the guys? The same exact thing, same price, everything, but the warranty is a little better. It's like, yeah, and then you, you know, then the other companies were like oh so why? I see that you didn't go with this. Can you, can we ask you why you didn't go with this? I'm like because they gave me a one more year warranty exactly right, is it?
Speaker 1:oh, okay, and that speaks volumes. Right there, and they were nice. Yeah, and all right. The next one, number four don't over customize. So this one has to do with you know, if you, if this is going to be your forever home, do do as you must like, go all out. But if it's not, and you know you're going to sell in the next five to 10 years, don't over over customize. So I tell people, when I show them homes, I'm like, yeah, we're going to show you this house. And they, like, I don't like the way this is, I don't like the way this looks. And then you have people who that that's their house. They, they fix everything up. And I'm like, and I tell people, like, when a person's on the selling side and they get everything all situated in the house, um, to their liking, the person who's going to buy the house they're not really concerned about that. They're in their mind all right, I'm gonna buy this house. This is what I'm gonna do, because everybody's taste is not the same.
Speaker 1:Yeah, so they're going by like, okay, I would do change this, I would change this when the other person who's selling the house is like well, why don't they like the way it is? It's great yeah it is, but everybody's perception and viewpoints is completely yeah they.
Speaker 2:I watched the. I watched a video of, like, what is the most popular color for house right now? Uh, the interior is like that. It's a light gray. It's super neutral everyone. It doesn't hurt the eyes when you're looking at like a bright yellow or neon. It's not super dark, it's super neutral. It makes the house look clean. You know. It hides any blemishes because of the, the slight gray. It works with the shadows and stuff and I was like, and you know what? It's super easy to paint over. It's not like white.
Speaker 2:If you have a white paint you're gonna have something get hit a times because white might bleed through. Or you're going from black to white. You know it's gonna bleed through, um, but gray it's like it's an easy, cheap paint color that you can get. Uh, I was like, oh, that makes so much sense. Like every single house. If I get a room, probably it's gonna be like gray gray. I was like because they want to, they want they sell it or I sell it. They want to repaint it, they'll repaint it but, like you said, as long as it looks clean, it feels clean. They're like that's what they care about. It's like oh, I love this light gray and it's like no, it feels it's a clean house.
Speaker 1:I don't mind, not like the color, but it's clean house exactly because that person that's buying, like I said, they're feeling like I'm gonna this house, this is what I would change because that's going to be their house. But if it's going to be a forever home, oh, you can go ahead and modify and do as you please. But if you're knowing that you're going to buy this house and you're only going to have it five or 10 years, don't over-customize. That brings me. I was just thinking about something about that too. So it just sold, I believe last year If it wasn't last year, it was the beginning of this year. It was the Michael Jordan home.
Speaker 1:So, it was on the market for 10 plus years I can't remember the exact years, but MJ thought it probably was going to be his forever home, so everything was customized to him. Number 23.
Speaker 2:Everything the Jordan symbol.
Speaker 1:Everything 23. Everything and the reason why it couldn't sell? Because it was over-customized to his liking, because that's the way he built the structure. But it eventually sold after 10 plus years. Some enthusiasts were like yeah, like they were probably thinking like, how can I change this for my liking? Yes everything was personalized for his yeah, yes, that's true, I was thinking about that I was like, yeah, it was, uh, it was. It took a long time for the house up because it was customized for him you know?
Speaker 2:you know that's funny, you said because, uh, some friends and people talk to you that try to sell the house or or rent and stuff like that. They're like you know what's a big killer Ponds? You know how people do waterfalls? I think we have it here like waterfalls and ponds for koi fish stuff.
Speaker 2:It looks nice, but man, the upkeep, the maintenance on it the location of them are usually in the corner or something like that. It's always an eyesore if you don't take care of it. And, like a lot of times, when I was looking at houses like 80 plus houses and I saw little ponds, the first thing that popped in my head was like I'm going to take that out. Maintenance, maintenance, I'm going to take it. No, I'll say I'm going to take it out, I'm going to rip it out or like it.
Speaker 1:Yeah, no, A lot of people don't like it. And the maintenance? I don't even know what the maintenance price of those bad boys are. Yeah, all right, the next one, number five. Don't forget to do your research of the builder. It says check reviews of the BBB ratings and talk to current homeowners in the community Huge, huge.
Speaker 1:I mean nothing wrong against Google, the five-star, the four-stars, people's reviews, but the word of mouth and what people around have dealt with the builders is a great way to navigate if you're going to use them or not or who to go to.
Speaker 2:Yeah, this is asking your neighbors. I was watching I think three of our four of our neighbors in our area did their roofs and all of them went with different companies. Yeah, all of them went with different companies. Well, I technically went because my company that did my solar they're a roofing company and they do roofs all the time and I never saw them on the street, on my street, and I saw like the other companies come in I was like oh, that's strange. Usually you see one company. They take over the whole area because everyone knows everyone. But who knows, somebody got a deal or something.
Speaker 1:Yeah, that's true, very true. It says number six don't overlook the warranty. It says most builders offer a one-year workmanship warranty and maybe a 10-year structure warranty. It just varies. Get clarity what happens if you have a, you know, if your HVAC fails in two years, if your HVAC fails in a year or two?
Speaker 2:you got serious problem. Yeah, cause those things are supposed to last 20 plus years.
Speaker 1:Yes, or you have a roof leaks. It's just, you just want to make sure, like, like I, I'm a big person of warranties. Oh yeah, I'm a huge fan of warranties, because unforeseen occurrences can happen anytime. If I can get a warranty on something, shoot I'm getting it.
Speaker 2:Yeah, especially if it's going to be like your running property or something like that. Like if you live there and you're and you're a roofer, that's what you do for a living. You're probably gonna worry about the warranty on the roof you roof, you're like I could probably fix that cheaper or whatever. But like if, like you said, a brand new build but they're not going to cover a roof for more than a year or two, it's like man, do you? My whole thing was like do you stand by your work? Because if you stand by your work, a lot of people say we stand by our work. Lifetime warranty what is it? Snap on?
Speaker 2:they're like lifetime yeah, that thing for 25 years Snap that wrench, go back, get them brand new. I was like, hey, I remember this one lady she bought.
Speaker 1:What did she buy? She bought. She had a car and she always had. She didn't have to buy many parts for a car, but every part had a lifetime warranty, so when that part went down she always had a receipt and got to replace. Oh, yeah, yeah, so she didn't have to hardly spend anything.
Speaker 2:Yeah, after 20 years you know brand new, brand new used uh car because of warranty.
Speaker 1:Yes, yeah, so uh. And number seven don't automatically use a builder's lender. It said builders said builders often offer incentives to use preferred lenders, you know get closing costs, upgrades et cetera, but those deals may come with a higher interest rate or junk fees, yeah, so don't always do your due diligence and shop around? Yep, definitely shop around.
Speaker 2:Definitely shop around. I didn't think about that too when I did my AC unit, because it was so convenient. They made it so convenient oh, we'll just put your name in and then we'll run your credit and see if you can approve for it through our people. I'm like, okay, that's fine, because we literally did everything on our coffee table or dining room table. We just did everything. Then we got approved and boom, boom, things were set and I was like man, I could have easily went to my bank that I've been banking with for over 20 something years and get probably the same loan, but maybe even cheaper because I've been banking with them for so long, you know, with a better interest rate, better payment plans and stuff like that, and that credit will roll into what I'm doing with my personal stuff or my business stuff. So, man, I could have done that. But sometimes they make it so convenient that it's like I'll just go with you.
Speaker 1:Yeah, it's convenient because it's right there. Yeah, yeah. So that's the seven mistakes that you need to avoid in new construction. First one don't skip inspections. Number two don't rely on the builder's rep. Three don't ignore the contract. Four don't over customize. Five don't forget to do your research of the builder. Six don't overlook the warranty. And seven don't assume the builder. Your research of the builder. Six don't overlook the warranty. And seven don't assume the builder's lender is the best deal. So let me get into my wonderful story, because that's why I was kind of moving on with this one because of it.
Speaker 1:So I have a client and the client got a hold of me to help with him with selling a house. He found how he got a hold of me is because one of his friends I helped sell his house so went out there and I checked out the house and everything and it's out in the country. You go through the driveway, through the fence and you see it. You come up to the house.
Speaker 1:You're like oh, OK, this is kind of you know, through the driveway, through the fence, and you see it, you come up to the house. You're like, oh okay, this is kind of you know, kind of interesting. So you look and you could tell that it was not completely done because in the second story, like you had french doors where there should be a balcony. So I go in there, I look and everything and look all the the electric had been done, the wiring done, the the tankless was it the tankless hot water heater? Yeah, the wiring, all that was done, everything the cabinets and everything still in the plastic and just basically ran out of money. So I went and I was like, all right, we'll put it on the list and everything. They showed me where the septic was at and it was actually a place where it was a cultivation of cannabis. That's where the septic was at. And, um, it was actually a place where, uh, it was a cultivation of cannabis, that's where they used to grow at, but that's there, no more.
Speaker 1:Yeah, so put it on the list and granted, everybody's hitting me up like no other.
Speaker 1:like I'm telling you like about 4,000 people have seen the pictures and everything on on the the um on the internet, yeah, and I'm getting phone calls from the realtors all the time about this property and then a realtor hit me up and says oh, I just found out. Um, I didn't know this, but the house is kind of red tag and I'm like, oh, red tag, like I didn't know anything about this. So I went and I did my own due diligence because the communication wasn't the best. I always have great communication with my clients but some reason or another like the communication part of telling me this wasn't told to me. So I went to the permit place for the county and they were like yeah, you have, it was one was a nuisance. But I found out why it was a nuisance, because on the other side, the other side of the road, uh, somebody else was growing cannabis, so it was a competition battle at that time.
Speaker 2:So that was years.
Speaker 1:That was years down the way. And then after that it was uh, unpermitted septic tank, oh yeah, uh, unpermitted septic tank, oh yeah. And after that was a uh I'm pretty septic tank. It was, um, it was supposed to be. This is what it's supposed to be. It was supposed to be a detachable garage on the property Okay, cause back in the day there used to be a mobile home on the property, okay. So I'm doing my due diligence and I'm like interesting, and the lady's telling me and she's giving me the paperwork, this and that and everything, and I talked to him about it and everything. And then I sit back and I'm like I wonder if there's a mount on these red flags, these citations, which there isn't amount. Yeah, was, there was a was there a amount attached to them.
Speaker 1:Yeah, which it hasn't, because it hasn't gone to the court system yet. Okay, so I'm doing, I'm doing all my work and everything I'm like. This is crazy. So this house, two-story house, was built without no permit. No, nothing, no, nothing. Make it even better there's no blueprint to this house. Oh, that's so risky, so the individual is going only by spite of like on his head in his head how to go about building the house.
Speaker 2:Oh my gosh, oh, that makes it so risky and I'm like okay.
Speaker 1:So then I was like you know what? I need to go back up there again to the permit place, so I go up there. It was, and this is the like I've gone up. This is my third time going up here and there's actually people in there, because the past two times there was no one in there and I was like in and out For the same property.
Speaker 2:For the same property.
Speaker 1:Okay, so I go in there and I'm talking and the gentleman's talking to me and he's like, yeah, he's like so, it was a mobile home on this property. I'm like, yeah, and he, uh, he's like, uh, so how I wonder how they're getting the water. I said there's a spring, but we're, we're about, we're about to we're about to deal with all the fees in a second. This is going to be this is going to be about $20,000 to build a well for the spring for the current flow of the water to come through the house.
Speaker 1:And then he's like well, it's an unpermitted house. It says well, another problem you have here is that he built it without a permit. Like you were saying earlier, there's a second floor, so he's gonna need to bring engineer out to make sure that this floor is stable and for it to be walked upon. Yeah, and for anyone who sleeps upstairs, you know, can sleep up there instead of crashing all the way down to the first floor yeah, yeah.
Speaker 1:And I'm like, oh my god, so here's the money coming up now. I was like all right. And he's like, yeah, so the well's 20 000, right, uh-huh. And then we got like so. And then who's using this water is another key issue, because we don't know who else is using that water. The easement plan for that, oh yeah.
Speaker 1:And then this is the crazy part about this is the one that got me is the engineering one got me and then the septic got me. So around where it's at the property is at, is this unpermitted septic. And usually he said 90% of the time septics who are put in this, put in without a permit, they're going to fail 90% of the time. Oh, wow, and so.
Speaker 2:He tell you why.
Speaker 1:No, he didn't tell me why, but I think I know, I think maybe this percentage might be why. So he said that where it's at, because it's just clay dirt. Yeah, he said the reason why is because in 2018, they changed a lot of modifications and stuff and things for the soil and everything when it comes to septic in 2018. So if he does, if everything works out and he needs a regular septic, it's going to go anywhere these 15, 20,000, the leach and everything. Right, he said. But if it doesn't work out and the soil doesn't work out, there's another one. That other septic is 50 to $60,000.
Speaker 2:Golly.
Speaker 1:Yeah. And I'm looking at him like this, like are you serious?
Speaker 2:It's like cha-ching cha-ching, cha-ching cha-ching.
Speaker 1:And then let me grab this piece of paper real quick. Then he's like, oh, and I took a, you know, I did a scan, I scanned the piece of paper and everything. And he's like, do you know about this? And I was like, well shoot, no, I don't. I said maybe all realtors need to know about this, especially this part, because I like, I like to stay educated on everything as best I can. He said, yeah, the, the, the, the, the county, um, the county, education and I was like what the county education?
Speaker 1:Yeah, the county education is developing fee. It's a developer fee collection. So, for any proposed residential rate at $5 and 17 cents, okay, you have to pay that. Also, when you build a new house, okay, it goes in a separate bank. Okay, so that's over another an expense of over almost $7,500. Oh, wow, that you have to pay for. Yeah, it's a proposed residential rate to develop a house, oh, okay, okay, so that's another expense, wow. So I'm like so we have a house that's unpermitted, septic definitely not permitted. We have these acres. We might as well just sell it for the acres, because there's no way you can sell this house, because we don't even know if, uh, a person's gonna be able to stay upstairs yeah, it's, it's a, it's a ghost house, the house not even there on paper.
Speaker 1:It's not even there. No, yeah, you're right, the, the, the fees and permits and everything my god, dude, the uh, the uh.
Speaker 2:I think I think I had a friend, uh dad, that did uh new constructions or he he like revamped houses and stuff and uh, he had, he did. So he had some guy do the electrical and he has. He's supposed to get it inspected but the drywall guy came in the next day and did the whole drywall. The the electric guy's like dude, gotta rip all that out all that, out All of it out. I can't see none of this stuff.
Speaker 1:We got to rip it all out.
Speaker 2:No, he's like maybe this area, maybe we can just cut this area and I can see this area, but he's like this area down here downstairs we got to rip it all out. I can't, I don't see with the fuse box and stuff there and that the houses you said brand new, this and that and cabinets on the floor.
Speaker 2:Still, all that stuff must get ripped out. Looked at plumbing I mean there's no plumbers gonna be like yeah, it looks good. No, they didn't rip it out. Make sure, you know. And granted, like it looks like.
Speaker 1:So basically there's no door on the on where the electric box is. You see all the wiring. You see all the wiring for the tankless um hot water, hot water heater, but through the walls, they got to check everything.
Speaker 2:All that drywall has to come out.
Speaker 2:They want to know where it leads to and to make sure it's it's done at this, it's not spliced and crazy in some areas and stuff like that Exactly. I was like, oh dude, that's going to be, that's a lot of money. A lot of times, luckily, they were able to like screw the draw out because it wasn't paying yet. But he was pissed. He was like dude, I told you don't draw out yet or whatever, but let's just go. Guy was cool, he was like I'll call him back tomorrow but yeah, he's like this whole thing would need to come out.
Speaker 2:I'm not gonna pass something. I can't see.
Speaker 1:I was like, oh, dude no, this guy right here, because he'll be liable.
Speaker 2:Yeah, it burns down. It's just like oh yeah, I expected his name's on it, but yeah, imagine this guy trying to sell his house. No, I'll do the whole.
Speaker 1:That's crazy now and the crazy part of this is I might have somebody who wants to buy the house and the thing is he said that he can fix everything on his own and everything, and his problem is if he sells it. I said if you sell it, you're going to have to sell it for cash. Yeah, and he's like could it be sold? I said, yes, it can be sold, but I will tell you this. I'm going to disclose everything that I know.
Speaker 2:And if they ever have to pull permits or whatever and get the house inspected for something, I mean there's no one that's going to warranty the house Never. They're like how are we going to insure the house? Never, they're going to have someone appraise it right or whatever, and stuff they're going to look it over. And if you don't get that appraisal, they're going to look it over. And if you don't get that appraisal, they're going to be like, and they appraise it Like yo. That house is worth nothing because we don't like.
Speaker 1:this is crooked, this is that or whatever it is, oh man.
Speaker 2:Yeah, there are all inspections that the banks always do to look at houses. Like you said, you have to sell it cash because no one's going to loan you a house. That's not permitted no. And don't be alone in your house. That's not permitted, no. And if you, even if you do buy it I mean like we talked about, I think like number one- you don't skip the inspections.
Speaker 1:Yeah, until permits. It's so true, because right now it's at a rate where the part I can't get out of it there's no blueprint. Every house does every. Every house has to have a blueprint. Yeah, I mean, that's how I always tell people. All right, let me see what's the blueprint of the house.
Speaker 2:How's it structured?
Speaker 1:Yeah, I'm not going by sight.
Speaker 2:Yeah, I feel it. So the guy sold it, the guy that you're selling, he's the one that built it.
Speaker 1:Yes, hmm, yes, and there's actually a guy who is thinking about selling it. I mean selling, buying it. But I told him I'm gonna disclose everything underneath the sun to let him know what's going on. Yeah I said and I said, and I said he said can it be done? I said, yes, it can be done, but I'm disclosing everything. Yeah, so you don't come back on anyone like you know what you bought, you know what you. You know what you bought.
Speaker 2:You know what you bought? As is baby, as they say on the parking lot. As is, as is.
Speaker 1:Yeah, you take it off, Sorry if it breaks down in an hour. That was on you. You knew what it was.
Speaker 2:Oh man, that's crazy. Yeah, no permit, I mean the foundation, who knows? Because even the foundation is the first. Well, the first permit is to see if you can even build it on there, yes, and then the soil and all that stuff. Get that checked out. But once you pour that concrete, that foundation, it's like all right. Yeah.
Speaker 1:You start building, but who knows? Yeah, so we'll see. I'll have to keep you tabs on this story.
Speaker 2:Oh man, let's see.
Speaker 1:Let's see if you get sold and how much, and yeah, I mean I, just a month ago I sold my friends his uh, he had property and I mean he had a. You know everybody says about with real estate. You know they think it's glamorous. No, there's some ugly stuff too. I, um, I basically helped him with the paperwork to to sell um, his, the property that was in his name and like the property, the house that was on the property, I'm pretty sure me and you, if we push the house it would actually fall down it. And it didn't have a foundation. It had no, no concrete slab, which is crazy man.
Speaker 1:But yeah, anything can be. Real estate is not. It's not there's. It's glamorous, but there's some not so glamorous stuff that gets talked about with real estate. Yeah Well, you heard, you heard the saying of slumlords oh yeah, yeah, you know buying these little rundown places.
Speaker 2:You know what you buy, the quality that you buy, the home you live in, the rental properties you live in, or you want to get and get going. You know it really tells you like what, what, what level you're willing to go in Exactly.
Speaker 2:Like oh, man, I got, I have these four or five rental properties. I'm you know all this, I'm trying to get a new rent in there, all this stuff, and man, he's like he's doing it. That guy's doing it, man like he keeps telling me he has rental properties and all that stuff. Then the more I dug into it I was like well, how much you're renting these places out? He's like anywhere from like 700 bucks to a thousand, seven hundred thousand.
Speaker 2:How like how big oh yeah, how big are these? We're probably like one bedrooms or two bedrooms or whatever. I'm like, okay, um, and then he tells me the area. I was like the one behind the rail tracks, those places, those are your rent properties. I was like, oh man, no wonder you keep complaining about getting new renters and stuff like that, because they come in for a month or two, they thrash it and they're out. I was like, oh dude, that's when. I was like I'm not going to be that, I've got to help my game a little bit.
Speaker 1:You've got to view it as an investment. You take care of the property and then the people who come in, who rent, they take care of the property. You want good renters, yeah, you don't want them to leave. You want them to pay that mortgage down. Yep, yep, yeah. So, wow, yes, I had to give you that little story because that story is like. It's like I was just like, especially yesterday, I was like I can't believe this. And then, whatever you do, I'll say this too If someone says that you're going to, something's going to be taken off or anything, make sure you have that in writing, because hearsay does not mean anything.
Speaker 1:You got to have that, you got to have a pen to that piece of paper. Say like and let it be known like no, this cause I've dealt with a lot of that too. Like, well, they told me this and they told me that. I'm like who told you? Oh, up there. And I'm like who'd you talk to? And like did they write anything down? No, I'm like then there's a whole bunch of hot. Legally, it's like whatever, like that, like that house, legally, the house ain't even there. Yeah, it's not there, like the gentleman said from the county is they? He's this, he's like I don't know what to be done. Needs to be done. Like you said, it's not there, but you might need to tear it down. Even then, you're still taking the l yep, yep, yep like.
Speaker 2:Yep Like yeah, yeah, yeah. You know what I think? I saw a video that some guy bought these houses that weren't permitted, but his plan was I'm going to buy the lot. The lot is the money, the dirt these houses don't mean crap.
Speaker 2:He ripped these three. It was like was it ADUs? Yeah, it's like three ADUs in one little property, but it was split in three different parcels. He's like, yeah, the ADUs are horrible, they're not permitted. It was basically a shack someone built. He's like he ripped them all down, built three new ADUs in the area and permitted all that. He's like, yeah, the guy wanted to sell the property in the house. The house is on there, but he's like no, he's like, like you said, no permits none of that, so he was able to get it for super.
Speaker 2:basically bought the dirt and then he ripped everything out after a couple months or whatever he built three months and he was able to like quadruple his his investment. I was like dude. If you have a plan like that, all right. If you.
Speaker 1:If you have the the capital, that that'd be the best way, because when you started from the ground up, you know exactly how your property is being built. Yep you know, exactly what's going on. And then, when it's built, the maintenance like we was talking about earlier. You ain't worrying about maintenance for a long time Because it's brand new.
Speaker 2:Yeah, if you have good tenants that like to cut the grass, like to fish, you know, switch light bulbs out and do all the little maintenance. You'll never have to hear from them. That's how I was. I was that renter. I was just like man, the water here is not Oregon. I'm going to really light the pile, light all the pile lights out. I'm just going to home. You'll get a new pilot light. Just switch it out and then, like it was like. A couple months later I was like, oh, yeah, by the way, I told my, my landlord. I was like oh, by the way, like last month they went out, I just fixed it. She's like you did. I was like I was like, yeah, I just, it's easy, you know, I just fixed it. She's like, oh, you should have.
Speaker 2:You should tell me I would have called you know a guy come out I was like man, that would have been like a $200 call just to get them out there. You can give me the $200.
Speaker 1:Yeah, right, deduct that off my rent.
Speaker 2:Yeah, she's like oh, you're the best. Hopefully I did it right. It was only a couple of screws.
Speaker 1:Exactly, I'm living All right world. That's another episode of the Professionalist Investing Podcast. My guy Rocky Yep, Everybody have a blessed day.