Permitting Problems and Finding Hard Money Lenders

Ashley Kehr:
That is Actual Property Rookie episode 162.
My identify is Ashley Kehr, and I’m right here with my co-host Tony Robinson.

Tony Robinson:
And welcome to The Actual Property Rookie podcast, the place each week, twice per week, me and my fantastic co-host Ashley Kehr, speak all issues actual property. However with the give attention to the fellows and women at the start of their investing journey. We need to carry you the inspiration, the data that you’ll want to get began as an actual property investor. So Ashley Kehr, earlier than we get began, let’s simply say that this has been like some of the technically troublesome podcasts to file. Ashley and I’ve tried recording this like 5 occasions, however our system retains crashing. So we’re hoping that we will get by way of in a single piece.

Ashley Kehr:
Yeah. And we actually haven’t even gotten previous … that is the farthest we’ve made it, to date proper right here into the podcast.

Tony Robinson:
Oh, yeah. We’ve stated this intro 5 occasions.

Ashley Kehr:
Yeah.

Tony Robinson:
So hopefully it sounds tremendous polished by now. However Ash, what’s new with you? Give me like the short rundown earlier than the system explodes on us.

Ashley Kehr:
Yeah. Properly, Tony, to start with, I acquired to say joyful belated birthday. Inform everyone-

Tony Robinson:
Oh, thanks, Ash.

Ashley Kehr:
About your birthday in case they’re not following you on Instagram and will get to see all of the fantastic issues Sarah does for you.

Tony Robinson:
Yeah. So I’m coaching for a health competitors, which is about 5 weeks away. And this final weekend was my birthday, nevertheless it was additionally my final cheat meal weekend. As a substitute of getting the standard birthday factor the place individuals carry presents, I simply had like an enormous cheat meal celebration. And I requested all my family and friends to carry me all my favourite junk meals. So I had like some of the epic cheat meals ever with each doable dessert and junk meals you can consider. After which my spouse being the wonderful particular person she is, she did some actually cool issues for me. However she ended up renting like a slingshot, these little like three wheeled motorbike go-kart issues. And we acquired drive that round for the weekend, too. So, it was throughout, identical to among the best birthdays, for certain.

Ashley Kehr:
Yeah. Simply the best way she adorned your kitchen with an image of your face and pizza. However I’ve to inform you, so my enterprise accomplice, Daryl that you just’ve met, he didn’t assume that you’d cheat. He thought that you wouldn’t have any of that meals. So, what have been among the belongings you ate?

Tony Robinson:
Yeah, I imply, I acquired a lot stuff. However Ashley and Daryl despatched me some Flemings, which is sort of a very nice steakhouse right here in SoCal, so I acquired a few of that delivered. I imply, I had shrimp scampi, I had fried shrimp, I had fried hen, I had banana pudding, I had a bunch of Oreos, I had Reese’s Puffs, I had pizza from Domino’s, pizza from Pizza Hut, pizza from my father-in-law’s restaurant. The listing simply goes on and on and on, all the things I might ever need, it was in all probability there.

Ashley Kehr:
Properly, that’s superior. That’s good to listen to that you just loved your self and then you definitely acquired proper again into the fitness center and proper again into your routine the following day.

Tony Robinson:
Proper again into … yeah.

Ashley Kehr:
One factor that we did need to ship you was a catfish from after we into Paula Dean’s in Tennessee. The catfish that you just love there.

Tony Robinson:
I like a superb catfish. So for those who ever need to shock me with catfish, simply know that you just’re greater than welcome to.

Ashley Kehr:
So at the moment I went and checked out a property. It’s one which I’ve checked out a number of occasions and I’m simply making an attempt to determine what to do with it and what the aim could be. However I’m having hassle with the campground that I’ve beneath contract now. I talked to the county at the moment and the RV websites which are there have been by no means really accredited or permitted by the county, which clearly is a large purple flag.
So actually what it was is the infrastructure there. So the proprietor added on 50 new pads to the RV park and he by no means acquired them accredited from the county. And he by no means handed in his engineering plans to the county or the DEC, the Division of Environmental Conservation. So these will not be accredited in any respect. And if there are points that we must dig up off of this, as a result of there’s no plans for them, there’s nothing since this property is a foreclosures and we’re shopping for it immediately from the financial institution. So after we’re carried out with this, my subsequent name will in all probability be the DEC and see what’s occurring on their facet of issues. All the time thrilling and eventful.

Tony Robinson:
All the time one thing occurring, however I need to dig into that a bit bit, Ashley. So a pair questions. First is, how did you establish that these pads, these RV spots weren’t permitted? Was that one thing that they got here up in your inspection report? Once you went to go file paperwork to open title, did they are saying, “Hey, these plans don’t match the plans which are on file.” Like, how do you establish that one thing’s not permitted?

Ashley Kehr:
So you may speak to the county. This really was the county, the code enforcement officer for like that city, that village. And he had referred to as my lawyer, really. He acquired the appliance for … there’s a sewage remedy facility on the property after which there’s additionally 9 wells. And he acquired the paperwork to switch possession into my firm’s identify. And earlier than he accepted their software, he referred to as my lawyer and stated, “I would love to speak to the brand new purchaser first.” And this was a part of our due diligence to achieve out to the county and simply see what was occurring, however he really beat us to it. So, that type of labored out nice.
And so I did my cellphone name with him at the moment, and he went over all the points which are on the county facet with this property and would must be remediated. And there’s a ton of income streams on this property and every of the completely different operations … so there’s a banquet facility, would want a allow. There’s a restaurant, it might want a allow. The cabins would want a allow. The RV parks would want a allow. And he went over with me, what already had permits in place, what was lacking and what could be my supposed use with the property. So he simply saved occurring and on, it was so nice. And I used to be very appreciative that he would simply give this data to me.
And one factor he instructed me to do is to go to the county web site and beneath departments go to the clerk’s workplace. And I’d be capable to submit a FOIL request the place I’d be capable to are available in and take a look at all of his documentation and experiences, something he had on that property. That is my first time ever doing due diligence on an enormous business property like this. So it’s at all times nice when you have got individuals which are going that can assist you and type of information you too, on this studying course of. In order that’ll be one other step that I do is, after which meet with him and go over all of the documentation in his workplace, too.

Tony Robinson:
So are you able to shut on this property with out remedying the problems that the county has recognized? Or is that this an entire block so that you can with the ability to shut?

Ashley Kehr:
I can nonetheless shut. The query is now, if we simply can’t get permits, if we’re going to need to dig up the infrastructure, if we’re going to need to have new engineering plans drawn, what are the price of that? And is it nonetheless price buying the property? So it’s simply going to be transforming the numbers, figuring that out. So we’ll see what occurs. And there’s a pair different issues, too, which are type of holding it up as to if we go ahead or not with the property.
However I’ve to say, I’ve spent some cash on this. I’ve employed any individual to do like a pitch deck for me and actually assist me fantastic tune the numbers on this and do a deal evaluation. I’ve put cash into having the upkeep man taking round and I’m paying attorneys charges. However I’m studying a lot simply by way of this due diligence interval, even simply with the syndication course of. I’m it as all that cash is a chance price that I’m studying. And if it’s a unhealthy deal, it’s a foul deal. And I in all probability will save lots of of 1000’s of {dollars} if I find yourself not going by way of with it. Or perhaps it’s a whole lot and I’ll undergo with it. So we’ll see.

Tony Robinson:
I like all the educational that you just’re going by way of as a result of we’re each, in numerous methods, type of making an attempt to department out into extra business actual property. However I like that you just’re type of going first since you’re letting me know what questions I must ask. So I’m selfishly asking a few of these questions for myself. I’m certain the listeners are getting some worth from it, too.

Ashley Kehr:
I hope so. Yeah. And I used to be pondering of placing collectively like some type of doc the place make like actually fantastic tuning my listing of issues for due diligence, for a business property too, particularly a campground.

Tony Robinson:
Yeah. Once you’re carried out with that, simply shoot it my approach, too.

Ashley Kehr:
Yeah, I’ll. I’ll share with everybody, after all. If anybody is trying into studying about due diligence for RV parks, so there’s really the ARVC, American RV and Camp Rely … I don’t know what his stands for. However I feel it’s arvc.org perhaps, or.com. They really have a due diligence guidelines. You pay, I feel perhaps 100 bucks and you’ll grow to be a member and so they have a due diligence guidelines. They usually’re together with a ton of different paperwork too.

Tony Robinson:
Yeah. That’s a very good piece of recommendation. And I simply Googled, like, is there some type of motel house owners affiliation that I can perhaps discover some data onto? So there you go, Ash, you simply drop in information during this dialog. I recognize it.

Ashley Kehr:
Yeah.

Tony Robinson:
Properly, we gave numerous good information, however we additionally even have a query to reply at the moment, Ashley, proper?

Ashley Kehr:
Yeah.

Tony Robinson:
So somebody slid in your DMS, so what query can we acquired teed up for at the moment?

Ashley Kehr:
Truly, this query at the moment is one in all my Boot Campers from the Rookie Bootcamp. And that is Carlos. So his query is, “Hello, Ashley, hope all is nicely. Fast query, do you suggest or is it even doable to make use of arduous cash from a unique state? Thanks upfront.” So the brief reply to that is sure. You should use arduous cash from completely different states if the arduous cash lender can lend in your state.
So numerous arduous cash lenders are nationwide, some are solely state particular. The arduous cash lender I’m working with proper now, they’re from Florida, I consider, I feel it’s. However they will lend in New York. I’ve associates that do arduous cash lending in Washington. Some can lend throughout the nation, others can’t. One large distinction that I’ve grow to be to study is I stay in a really rural space and I put money into rural areas. Lots of arduous cash lenders gained’t contact rural areas. In order that’s the place I type of bumped into hassle is that they wished to see that inhabitants and would solely put money into markets that have been cities. In order that’s one thing else to be careful for. However sure, you will get a tough cash lender from a unique state to lend to you on a property.

Tony Robinson:
I don’t assume I’ve a lot so as to add to that, Ashley, you type of hit all of the items. I suppose, my solely recommendation to Carlos could be to buy round. Speak to no less than a small handful of various lenders. And if that is your first time utilizing arduous cash … and actually, you need to use this strategy in your first time doing something, actually. But when that is your first time utilizing arduous cash, the primary time you speak to that first arduous cash lender, simply allow them to know like, “Hey, that is my first time utilizing arduous cash. What do I must know concerning the course of? What questions ought to I be asking you?” And simply type of pay attention to these issues that tough cash lender talks about.
After which whenever you go to have that second dialog, you’ll have a greater foundation of what you have to be in search of and what you may examine and type of distinction. And with every progressive dialog, by the point you speak to 5, you’re going to be a professional in just like the completely different arduous cash lender choices which are there since you speak to so many various individuals about it. So that will be my solely extra recommendation, Carlos, is that as you’re in search of people, whether or not or not they lend regionally or nationwide. Simply attempt to get a superb pool of individuals that you would be able to type of select from, so you may grow to be higher educated in what that course of appears like.

Ashley Kehr:
And if one says, no, they will’t do this. Doesn’t imply that one other one can’t do it both, too. So for those who get one no, don’t take that for a solution and preserve trying round.

Tony Robinson:
I do know this query will get offered to me so much. It’s identical to, “Hey Tony, how do you discover a lender?” Even like common finance, “And the way do you discover a good financial institution or this, that, and the opposite.” And you may go after referrals. So like if you recognize different buyers which are utilizing arduous cash, ask them what firm they’re going with and numerous occasions they will level in the suitable path. Go on the Larger Pockets boards, the Larger Pockets web site, usually. There’s a wealth of data and referrals and sources on that web site. The Actual Property Rookie Fb group to start out networking with different individuals and locations the place different buyers are congregating.
And if that doesn’t work, I imply simply Google, arduous cash lender, X, Y, Z, state, and see what pops up there. And once more, simply be sure to do your due diligence by asking numerous good questions. However there’s not a scarcity of potential cash on the market to fund your subsequent deal. You simply acquired to type of put within the work to make it occur.

Ashley Kehr:
Properly, Tony, I feel we answered that query for this week. And for those who guys need to be part of our bootcamps, I’ve a Rookie Bootcamp that focuses on the acquisition of your first funding property. And Tony has one that’s targeted on the acquisition of your first brief time period rental property. So that you guys can examine these out at biggerpockets.com/rookiewaitlist to be on the wait listing for the following launch of the boot camps.
Thanks guys a lot for becoming a member of us at the moment. I’m Ashley at Wealth from Leases and he’s Tony at Tony J Robinson. Yow will discover us on Instagram. Thanks, and we’ll see you subsequent week.