# İzmehShavu-Post No. 4 About municipalities and their rigidity - I recommend that investors read!! I took…
# Entrepreneur Weekly Post # 4
About municipalities and their toughness - recommend that investors read !!
I took the writing seriously and am trying to disseminate valuable information that does not appear in the group, so after searching the group, I decided to write about the municipalities-issue which is not enough.
introduction
I will share with you that as far as choosing an investment area is concerned, I believe in looking with the eyes and belong to the school of feet-smearing and I dig in the soil and mud, to examine an investment area. How does this relate to this post? aboutPart of the review process, I come to the area and do tests with the local municipality, in order to avoid financial loss, Which is also a supposedly minor topic of lawn mowing at $ 25, is a factor in the profitability of the deal at the end of the year (I cited an example below).
Many are lenient in the municipality's role in the deal, but as someone who has accompanied deals in which the municipality has tried to set foot, I do not stick to the matter and the other side, nor afraid of the municipality's demands; I attach great importance to the municipality's part of the deal and do checks in front of it so that I have a numerical certainty.
What tests must be performed with the municipality before sale?
When it comes to a rental property, get in the shoes of the management company and do all the checks, make sure that the management company handles all issues with the municipality properly. In the US, time is of the utmost importance, as there is a penalty for late delays.
1. upkeep
Some municipalities require two types of household checks, such as in Michigan:
- PRESALE INSPECTION
- and rental certificate of compliance
When the municipality requires a cash check (before closing the deal), it is usually only external inspections. In this situation, the transaction cannot be closed until the defects are not addressed and then there is a possibility that the seller under the contract undertakes to arrange the repairs and, alternatively, the buyer can make a written commitment (sign a document) to make the repairs up to 60 days from the closing date.
Search the purchase contract (PA) for the sentence, for all its various formulas:
Note: Buyer/seller to assume any and all city violations
How is it done?
Under no circumstances should you wait for such a test, A check will not suddenly come out of nowhere, the requirement exists in the law and if not invited, a check can be a condition that comes under a contract, when there are actually deficiencies in the house and the deal cannot be closed as it will not be approved by the local municipality or the buyer will have to absorb them., Or the negotiations will be destroyed. Unnecessary. If there are deficiencies that we did not know beforehand, the renovation budget increases, my holding time on the property increases and the numbers change completely to no avail.
Always, before entering into a contract in a new city, check what the municipality's requirement is on this issue.
The cost of the procedure - about $ 200 varies in each municipality and in almost all transactions, the payment applies to the seller.
When it comes to checking for rent - The property cannot be rented without a permit (in areas where I work in Michigan, municipalities require a rental population permit for each property). Need to initiate. You have to call the municipality and arrange a date to check a house. Coming from a municipal inspector, I try to wait for a local representative (recommended to wait with coffee and donuts ) accompany the inspection and ask the inspector for contact information, so that we can talk about the results of the inspection the day after and if changes need to be made. The inspectors are also human and they make mistakes (and mistakes, as you know, can cost me tens and thousands of dollars).
As part of the city's population permits, there are requirements, for example in Michigan because it is a cold state, asking for proper heating system approval and some municipalities are also seeking proper boiler water and smoke detectors approval. Knowing these things beforehand, it saves time and headaches later. It is always advisable to contact the rental / planning and construction department in the municipality by phone and request an email address to send the systems confirmation as soon as we have received from the company.
By the time the permit is renewed every two or three years (depending on the municipality).
3. Visibility of the property
There are several municipalities on the sidewalk crack, they require replacing the entire sidewalk and no local repair can be done. Such work costs about thousands of dollars. You have to know the municipality you work with and expect it. In this example, for example, if the numbers work, I correct. I have a guy who specializes in this and gets me a job every week and he already knows and knows the municipality's standards.
Actually, I warn that a deal can look attractive, but suddenly such a spend collapses the deal.
lawn mowing
On the face of it, it sounds insignificant, but it is not so and I will start from the beginning to the beginning, in the area where I work, one of the investors I knew, bought a property that he managed himself by remote control, before renting the property, the grass grew and was not mowed and the neighbors complained to the municipality and the latter marked the property as a vacant property ( vacant) and added requirements for the property owner to perform strict inspections in order to verify that the house complies with the municipal code. It all started in the grass to remind you and ended with the municipality arriving and asking him to issue an electric permit, plumbing permit and building permit. Total costs in this case reached $2000, unpleasant!!!!!!! Remind you that lawn mowing costs $25 on average in Michigan? Basa.
Recommend to be on hand with the pulse and make sure the management company does its job, it is people ... in order for the numbers to work and profits to be high. The same goes for snow removal. Do not rest in this matter, constantly making sure that the house meets the conditions of the municipality and if an alert has been sent to remove the malfunctions during the time period given to you.
And finally-
Property transfer affidavit - Listing the property in the municipal records
Document signing the transaction record. Each Michigan state has a requirement for filing the above form, so be sure to check with the municipality in the area where you purchased what the conditions for listing the property after purchase. After closing the home and purchasing was actually done, the above document must be forwarded to the municipality within 45 days for registration of the property in the municipality and classification. - Is the property for investment or residential. If not served within 45 days, penalties are expected.
Without submitting this form, a check cannot be made prior to rental. Need to make the change in cost before.
Either the Teitel company submits the form to the municipality, or the buyer, either way, has to do it, so initiate, call and check that it has indeed been submitted.
Well, that was my shankle about municipalities, what would you like me to tell / talk about tomorrow?
Write to me in the comments and start working on it.
— feeling blessed.
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interesting. Definitely depends on area. In the areas I work I have not encountered this but I know there are areas that a few inches in the grass bring a report. To what extent do the costs associated with repairs affect your Bottom Line? I can say for example in New York that cracks in the sidewalk I do not repair despite the risk that the cost will not make sense for a rental property. (There is insurance)
Roni Yore
About presale inspection. Usually, buying a home is done before, is it the same thing?
Excellent. Thanks!
Accurate and accurate information. Well done Yaron. Ya Cannon !!
Raz Yore
?
Each post in color. Thanks!