Tom and Harry decided to buy an older house from a foreclosure sale, pay as little as they could to buy the house, make whatever repairs are necessary to market the house, and flip it for a profit. You will remember that they bought the house in both their names with joint money and a joint purpose, and were therefore considered to be “partners”. Harry died leaving Tom to finish the house.
Making the assumption that Tom was able to probate Harry’s Estate and get the title while he went on with rebuilding the house, Tom has some decisions to make.
The first decision, is just what has to be done to this house to make it ready for the market?
Since you are a Realtor and you are Tom’s good friend, Tom asks you how to market the house. You will tell him that an inspection will be required as part of the contact for sale. While the inspection won’t always look for code violations, it will look for deficiencies in the house that are apparent, including the quality of the roof. Since the age and condition of the roof lend to its value when sold, there is a very good chance that Tom will both replace the roof and do other work inside the house. Tom will call for estimates from roofers, plumbers, electricians, window experts, and anyone else needed to put the house in a condition to sell.
But assume he doesn’t. He bought this house with the thought in mind that his own work (and Harry’s) would rehab the house and with minimum dollars he could flip the house. So now he intends to save money by hiring a guy down the street to put the roof on and help him to do the work inside the house.
First, the law requires a permit to re-roof a house. That permit is issued by the local government. This article assumes the house is located in unincorporated Okaloosa County. Each of the cities has its owns requirements and Tom has to check the rules in whatever city, or county, that the house is in. The rules are similar but different.
Tom’s permit is required to be posted outside the house. Replacement of the roof will be obvious to anyone driving by. If Tom does not get a permit, someone is likely to report the work as a code violation. If that happens, Tom will be stopped in the middle of his roof project, and will at least be required to get a permit.
If Tom gets his own permit so he and his helper can replace the roof themselves, new problems exist. For one, Tom is retired and prone to “visit with the boys” at night. That implies he may not be in the best physical shape. There are two things Tom wants nothing to do with. One is reroofing a house in Florida, particularly in the middle of summer. In addition, if the job is not done quickly, Tom is likely to have summer rains at the same time he has the old roof off and before the new one is installed. That will be disaster. The other thing Tom shouldn’t do is anything in the attic. Attic’s are only for squirrels, or anyone less than 30 years old.
For Tom to get his own permit, he will be required to sign an affidavit that he owns the house, lives in the house, and expects to stay in the house for at least the next year after he pulls the permit. That rule is in place because too many “civilians” set out to make a lot of money from flipping houses and to do it on the cheap by hiding the blemishes, selling, and moving on.
Chances are Tom will want to find a licensed roofer who will get a permit, install the roof according to code, and obtain a final inspection from the county or city. The insurance premium on that house will be surprisingly aided by proof that the work was permitted and inspected.
Tom will have the same decision to make inside the house. Any structural change to the house or any alterations to the wiring or plumbing other than changing the fixtures will require a license. Tom can get estimates and coordinate that work, but a specialty contractor must pull the permit, do the work, and get the work inspected.
Whether you are Tom, or whether you are a licensed general contractor, you will be required to hire licensed sub-contractors in the follow areas;
- Pool or Spa
- Air Conditioning/Mechanical
- Septic Services
- Solar Electrical Work
Tom learned about a partnership in an earlier article. Now, Tom knows that rehabbing and flipping a house is not an easy, no-brainer profit. It takes planning and investment.
The County and cities are becoming more alert for permits, and they are respectful of licensing. The difference between minimum wage, regardless of how hard you work, and making good money in one of the above trades, is having a license. If you are one of those workers and don’t have one, get a license. If you don’t know what it takes to get a license, call Alan Baggett at the Building Industry Associates office in Ft. Walton. His number is 850-863-5107. He has invited your call.
In my next article we will talk about inspections; what inspections are required, and what an inspection will look for, and what it will not.