Q. I want to flip houses, and need to make the whole process go as quickly as possible in order not to lose money. I know it takes time, but can you tell me the fastest way to get a permit, and can I grieve the taxes right away, before closing? The idea is that I want to start doing anything I can to make the improvements so the house is sellable before even finishing the closing so I’m ready to go on Day One as the new owner. The less time it takes, obviously, the better.
A. Money is the name of the game, especially when “flipping” houses, and the more time it takes, the more you lose in mortgage costs and expenses. But there are many questions that need to be addressed, and problems you have to be financially prepared for. The biggest obstacle when a client comes to me and wants to flip is not knowing the rules of the agencies, and not knowing the legal issues involved. My average flipper client is flippant about following the law, which can bury them in debt, especially if they show a complete disregard for regulations. Yes, you can speed all over town to get where you’re going, save a few minutes here or there — and be pulled over for traffic violations, stopping you dead in your tracks.
Do your homework. Learn about the property, what you can and cannot do, simply, with difficulty and delays, or even at all. If you plan to take the roof off and add a second floor, it requires planning, and building plans done correctly enough to get approvals take time to prepare. Rushing can sink you if the plans won’t pass, are missing information or leave workers wondering what to do. Workers who just keep building to stay on a schedule, but do things that won’t pass inspection, will also cause time delays. Not every municipality has the same rules, either. Some have rules for how many total square feet of living space are allowed, while others only restrict the lot coverage, not living space. There’s a big difference between the footprint restriction and the total living space of multiple levels of structures.
Grieving taxes can only be done by the property owner, so you would need to get the cooperation of the seller, which can be harder than you planned. One flipper told me he already grieved and reduced the taxes, not only for the property he hasn’t yet purchased, but including all the major changes he’s making, which is simply not possible and not true. The delay in seeing taxes reduced alone is at least a fiscal year, so the new buyer of your flip-wonder would still be waiting. False statements to buyers are also not right, so avoid doing it to keep a sale going. It’s simple enough to verify misleading statements, and can put off the sale as well. Good luck!
© 2017 Monte Leeper. Readers are encouraged to send questions to firstname.lastname@example.org, with “Herald question” in the subject line, or to Herald Homes, 2 Endo Blvd., Garden City, NY 11530, Attn: Monte Leeper, architect.