Terry’s Tidbits

 It’s Not a Problem until it’s a Problem

David was excited about his new investment property he just closed on. It had been several years in the making, saving money, doing research, attending investment workshops and finally taking those first steps into real estate investing. He discovered during the investor workshops, he didn’t need a real estate agent to assist him with buying a home. He could use the typical commission rate, an agent would require, point that out to the owner and negotiate a lower price. He found a fixer-upper advertised online, drove by the home, called the owner, made an appointment to see the home, wrote up the contract and presented it to the owner. He had skillfully negotiated, having the owner install a new roof on the “As-Is” contract. He took it upon himself to do the home inspection, as there was no reason to hire a home inspector to point out the things he already knew what needed to be done. He felt confident the money he had paid to the “Fix and Flip” coaching program was about to pay off. The way he figured, he would be able to pay off the credit card for the cost of the coaching program and stick a few thousand dollars into his pocket before he purchased his next investment.

David had scheduled taking his two week vacation time to remodel his new investment and as he pulled into the driveway of his new investment, he stopped and just looked at it. He opened the door, stepped out of his truck into a fresh pile of dog poop. What a way to start the project, as he wiped the stuff from his boot onto the tall grass, while walking towards the spigot to rinse the stuff from his boot. He turned the handle and nothing came out. He had paid his deposits for the utilities to be turned on and didn’t understand why he didn’t have water. He turned and walked back towards his truck to get a rag and wipe the crud off before going into the house and determine what the problem was. When he reached the front door, he spotted a tag stating there was an open valve in the home and it would be better if someone would be at home when the water department came back to turn the valve. David wadded the paper into a ball, unlocked the door and stepped into his investment. He went through the house and attempted to turn the shutoff valves to the fixtures, but they were all frozen with calcium deposits. He walked into the mechanical room where the washer and dryer had been and noticed the pool of water from where the water department had turned the water on and shut it off. David was sure the washer and dryer was part of the contract and he would go back and read over it, and contact the seller. David tried turning the valves and they too were frozen with calcium deposits. He started making his list of materials he would need from the builders supply house, turned to walk out of the house and was confronted by a dog inside the home. The front door was wide open and the dog growled as David retreated out the back door, running around the house to shut the front door to capture the dog inside and then called animal control. Fifteen minutes later, the animal control officer arrived, retrieved his sling pole and gloves to retrieve the dog from the house. Within seconds of opening the door, animal control had the dog secured and drug it from the house as the neighbor walked out to witness her dog being hoisted into the animal control truck. She screamed at the men; “What are you doing with my dog”? She made a mad dash towards them demand they release it from the truck. The control officer advised the woman, it was against city ordinance to allow a dog to run free and before he would release the dog, he would have to see the dog’s tags and shot records as well as the lady’s driver’s license to issue her a citation. I don’t keep those kinds of records, as she glared at the men. Ma’am, I’m going to have to confiscate the animal and if you want to retain it, you can get it from the animal control office, where it will receive its shots and get chipped and that will cost you one hundred twenty five dollars. The citation will cost you seventy-five dollars and you will need your driver’s license or some form of ID. The woman turned and walked to her home and returned with her license and said nothing to either man as the animal control officer filled out the citation. She glared at the men as she was handed her citation, turned away and went back into the home. The control officer shook his head as he turned towards David; someday people will learn, I’ll bet that dog has never had any shots. David thanked the officer as he shut the door to his truck and then pulled away. David reached into the back of his truck, grabbed a tape measure to measure the windows, they would be the first thing he would replace, right after he changed out all the valves in the house. He hadn’t figured on changing the valves, but it wasn’t that big of deal it would just reduce his profit and an additional day of labor replacing them. He jotted down all the measurements, avoided the dog poop he had stepped in earlier and made his way to the building supply. He returned about an hour and half later with all the new valves and windows. He figured he would get the washer valves changed first, so he would have water on site and change the others out later. He wanted to get the windows changed out first as there was a forecast of rain in a couple days. He changed out the valves and wandered around the front yard to find the main valve and turned the water on.  He ran inside to check if anything was flooded, and to his surprise, all he heard was the toilet tanks filling. David felt pretty good about himself, now it was time to start on the widows. He was on the side of the house, taking the third window out when a white pickup truck pulled in front of the house. David figured it was the water department coming back and when he came around to greet the man, it was the building inspector. The man greeted David, shook his hand and handed him his business card. Are you the owner, the inspector asked? David acknowledged he was and told the inspector he had just closed on the house and was going to fix it up to flip. So you’re not going to live here? David smiled and felt really proud to announce he was an investor and was going to flip the house in a couple weeks. The inspector asked; are you a licensed contractor? David shook his head, no sir, I own the home, I don’t need to be a contractor. The expression of the inspector changed as did his voice; sir, here in Florida, you have to be a licensed contractor to work on an investment property. We were called because it was reported that there was a new roof installed and we have no record of permit. David proclaimed it was the previous owner and he had no idea he needed a permit. The inspector took a few steps back and looked at the roof, shook his head and looked back at David; that has all got to come off, you can do a roof over on a homestead house but not on an non-owner occupied home without engineering. What you would have to do is get a roofing contractor to agree to certify the roof and an engineer to certify that the structure will carry the load. You will need a permit to replace the windows and it will be at double the fee because to begin working without a permit. I am going to issue you a stop work order and you will have thirty days to bring your plans into the building department and begin the permitting process. We were also informed of a storage building in your back yard that is encroaching your neighbor’s property. The inspector walked towards the driveway and pointed to the shed. Side setbacks are ten feet and that shed appears to be about two feet away and because it’s bigger than 150 square feet, you’ll need a permit for that and engineering plans for tie down. David was aghast and at a loss for words as he looked over to the neighbor lady standing on her front stoop, arms crossed with a huge smile on her face. David now angrily pointed out to the inspector; that shed has been sitting there for years, now I have to pull a permit, this is BS! The building inspector looked up from writing the stop work order; it’s not a problem until it’s a problem. David’s heart was racing, he knew he had just wasted his two week vacation time that would be spent trying to locate contractors to finish the project. David asked the inspector; how much is it to get a contractor’s license? The inspector looked up, smiled; it’s a one hundred sixty dollar application fee to the state, seventy five dollars for the background and credit check, then you have to buy about a thousand dollars’ worth of books, take a thousand dollar course to learn how to take the open book test, pass a two day examination and then qualify with the state to apply for your license. If you were to start right now, you might have your license in about nine months, if you are a fast learner. Sir, it’s not a problem till it’s a problem and you just bought a problem. David looked back over to the neighbor and she turned laughing and stepped back into her home. The lesson David just learned, he didn’t know what he was doing. The fifteen thousand dollar course he took never mentioned anything about having to be licensed. They had even trained him how to get other people to invest with him and get paid at closing, which was all a bunch of BS. David looked at the stop work order and the possible fines of five thousand dollars and up to two hundred fifty dollars a day fine if any work that would be done to the property. The inspector turned to David; go ahead and cover those windows to protect it from the weather, good luck sir.

David would learn in the future of which contractor could do what and how they worked on their timeline. He went for the cheapest bid, didn’t check for proper license and watched the team tear off the roof, install new shingles, he paid the contractor, called the building department to inspect the roof, only to find out a permit was never pulled and the contractor was not licensed to work in the state of Florida. Five days later, David received a certified letter notifying him he was to appear in front of a magistrate for “improvement property without acquiring a building permit after a stop work order had been issued”, “hiring unlicensed contractors to work on the home”.

David is just a character of many stories I have come across in my years as a licensed contractor and having sat on the county’s Codes Enforcement Board. You can attend all the fix and flip workshops you want, pay thousands of dollars to learn how to buy real estate without using any of your own money and what they will never teach you is; experience. Find a local group and gain knowledge from local people and REI groups. You don’t need to pay thousands of dollars to buy some investment guru’s course and weekly coaching, you need local experience. It’s not a problem till it’s a problem and the lack of knowledge and experience is a problem.

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