Saturday, February 13, 2010

The Philosophy of Painting & Life

Today I did some painting in my own home. I actually really enjoy painting, but only because I do it on my own terms.

OK, before you yawn and click away, let me tell you a little about how I paint. There is no tedious taping. no drop cloths. No pushing all the furniture into the middle of the room. No messy rollers and trays. Just one gallon of paint and a stubby paint brush. I may paint for 20 minutes or 3 hours, the point for me is that I am doing the painting. The project is getting done.

I have freinds who have lovely houses with not a lick of the walls painted since they moved in years ago. Usually they say its just such a big task to tackle, they never have enough time, energy, or motivation to undertake such a big project. Well, I have an acute lack of all three of those as well, and yet my house is slowly becoming a cozy, colorful abode instead of keeping that stark white institution look.

I have a sort-of philosophy in life. Nike stole it from me about 15 years ago but I still hold it as mine... Just Do It.

If there's one thing I can't stand its wasting time to get something started. I have a motivation problem (do they make a support group for that?), so when I get in the "mood" to do something, I need to do it NOW. To me, all the set up that most people think is necessary to start a paint job is a non-issue. Just grab a brush and get going for God's sake! Or else you may never find the time to go through all the steps you supposedly need to get to the final result.

The thing is, this philosophy holds true in so many other areas of life and business. We hear all the time about "analysis paralysis" and "fence sitters" and people who get lost in the prep work only to give up and never make it to the actual meat, the fun part of the project. Why in the world would anyone beat themselves down on the minutia of start up details when really all they need is a good brush and a bucket of paint?

Of course, it is true that I have painted a wall or two, or several dozen, before. True, someone who's never held a brush should absolutely take more precautions and do some practicing. But this is not rocket science, and the things most of us do in life and business are not either. It shouldn't take too much prep for even a newbie to be ready to dive in and get started. Anyone who does suffers from one of the two other afflictions that should also have support groups: Fear and Laziness.

Keep it simple, people. Most projects and business endeavors need not be so monumental that you just don't want to think about getting started, and so never do. Do yourself a favor. Buy a little paint, dig out your brush, do a quick test run or research if you feel the need, and then JUST DO IT. You'll figure out the best methods and your own style as you go, and you'll actually be making progress as you figure it out instead of waiting for everything to be set up just right before you even begin.

Oh, and yes, sometimes my walls are half-painted, a project in limbo, for days, months, even (my dirty secret) years, but at least I made progress. I got started. That's more than many of my friends can say, and more than so many others out there can say about starting any number of things. If you wait for everything to be ready and perfect, you're probably going to be waiting a very, VERY long time. Action, even action that may be a bit messy and unprofessional in the beginning, is better than inaction. Everything else can be learned or fixed as you go along.

Wednesday, February 10, 2010

Great Potential Deal Up In Smoke... Literally

Last week I got a submission to my website for a lead that sounded great. After talking on the phone with the seller a couple times and driving by the house to check it out, I was sold on the deal. It was the best deal I've come across in many many months, possibly ever. I would buy this lovely tri-level 4 bedroom home on a cul-de-sac in a wonderful family neighborhood for a bargin price, and the seller was perfectly happy to sell it to me Subject-To, meaning I basically would just take over his low mortgage payments, with no cash to his pocket. From what I could tell from my snooping, the house only needed some paint, carpet, and maybe some minor updates. For the $55k in instant equity I'd be picking up and $400 a month cash flow I'd have by renting it, those minor repairs were well worth the cost!

The family was going out of town last week on a little vacation and we agreed for me to meet him at the home this week to take a look inside and sign all the paperwork. We'd pretty much came to an agreement over the phone already. They came back Monday night and I called the owner today to confirm our appointment. He said they'd had a lovely vacation, but yesterday afternoon his wife called him at work to tell him the house was on fire. No joke. More than half the house burned completely down.

Of course, after my initial shock and finding out that his wife and their 3 children are just fine, my first thought was "NOOOOOOOOOOO!" My awesome deal had just went up in smoke, too literally. Funny how selfish human beings can be. I surpressed that selfish reaction and talked to him at length about his family and what they were going to do. I told him about some rentals I knew of in the area (none were mine) and offered him some of my kid's outgrown toys and clothes if they needed it.

As I look out my window now at the foot of snow on the ground, I can't help but imagine what it must have been like for that family, standing outside in the snow watching their house burn down. Sure, they were going to sell it and were having some problems of their own, but no one could have anticipated they would loose all their personal items and a place to live before then. I again recall how thankful I am for what my family and I have.

Now I try to force down my dissapointment for loosing a great house and remember that it could have been worse. I could have bought the house and then had it burn down, possibly even with tenants inside. Or, it could have even happened here, to my family. Unthinkable, but certainly not impossible.

I just hope it doesn't take a couple years for a great deal like that one to come along again. The thought of it whetted my appetite, and suddenly I'm feeling hungry to buy. Ah, but at least I've learned that the good deals are worth waiting for. And this scenario isn't very likely to happen again... right?

Friday, February 5, 2010

Stay tuned for the next episode...

Alright, I've been debating for months if I should restart this blog. After my world sort of fell apart last September, I thought it would be useless to post all the whining and blubbering that would inevitably come out when I sat down to write. Suffice to say that nothing I was working on previously actually ended up closing, and I spent the last few months of the year wondering what in the world I was trying to do with my life, both in business and personally (which for me are so intertwined its hard to separate anyway).

But, here I am, writing the next installment. This year, in 2010, I am learning to work and live a different way. Some of the crazy passion for life and work has somehow gone out of me, which was scary and dissapointing at first. However, I have come to realize that being more level headed and less emotionally involved in everything gives me the distance to hopefully make better judgements. We'll see how that turns out, won't we?

So hello again to all my friends that were following my expolits. I'm still here! And I'm back in the saddle, although I'd say I was easing into it this time and not hitting the road at a wild gallop. On the business front, leads are still coming in and I'm still looking at houses and small multi-families. None have been that interesting... yet. I've decided to operate under the guise that I don't NEED my next deal, I can be picky and wait for the right one to come along. Its a good feeling, one I believe will work to my benefit in the long run. I hope you'll all stay tuned in for this new season of Investor in Limbo. I know I'm anxious to see the outcome of the next few episodes!

Thursday, August 27, 2009

The story of quad deal #1: Ending still pending.

A little back story first.

Earlier this year I did two major things: Left my regular "day" job and started my OWN real estate investment company without my former partner. While both were scary in some ways, they were exciting and fun in many others and I've really enjoyed being my own boss. I had run the numbers before I became unemployed and knew that I could go the summer without working at all, and much longer if I could get another cashflowing property under my belt. My plan was, if things went well, to buy a quad or other multi-family building that would cash flow at least $1000 or more a month so that I could have a little more income coming in and then be able to work on other aspects of real estate with a lighter mind.

I knew I had enough money for one good subject-to transaction. I was looking for a quad (or larger if possible) that would ideally not have any immediate/large repairs, hopefully have at least a couple of current PAYING tenants, and that the seller would need no or practically no cash down from me. I had enough to pay for closing and a couple of back payments, and am perfectly willing to do minor repairs myself if needed. Yeah, I know, many people told me I was probably dreaming about nailing such a property. Who'd just sign over a quad in good shape with good cashflow potential?

So when a Realtor called me up out of the blue and told me about this really awesome quad that was bank owned and just lowered to a killer price, I was interested. I'd spent the summer looking for a multifamily building and wasn't having much luck within my parameters, so a killer REO seemed worth a look. The Realtor was right. It was an awesome deal. The previous owners had been rehabbing it and were nearing completion when I guess they ran out of steam or money or both. All the major things had already been finished, it just needed some minor stuff to be ready to rent.

I absolutely knew, without a doubt, that the numbers would qualify for a 100% hard money loan. I had the percentages and fees memorized and ran many estimates and circumstances and tried to use conservative numbers. I happily put down my $2000 earnest money deposit and after some back-and-forth on numbers I got it under contract. Although I can't qualify for a hard money loan due to not having the regular income to refinance out of it, I knew this kind of slam-dunk deal with no money down would be good enough to get a financing partner. I was right, they lined up fast.

Problem is, the 100% hard money financing didn't go quite as I expected. Turns out that even though this will be a "hold" property and not a flip, and even though it is in the cashflow's best interest to keep rehab costs down and not do any extra bells and whistles (its really in a "lower income" area, after all), the lender still requires a MUCH larger rehab budget than my contractor's estimate. Twice as much, actually. They say its to protect their investment in case they have to take the property back, but from what other people are telling me of their experiences, this 100% lender never really gives 100%, there's always some caveat that prevents it. They advertise 100% rehab loans, but everyone I know that has used them (or tried to use them) ends up actually needing cash down. So with a doubled rehab budget the numbers no longer qualify for a 100% loan, and none of my potential financing partners has the relatively small amount of cash to cover the increased budget.

So its looking more and more like the deal is dead.

But wait, its not over yet.

When I submitted the offer I was in a hurry and went online to get a quick pre-approval letter from an online bank late at night. I just needed something to lock up the deal fast, other offers were coming in. Now the bank that owns the quad is demanding to see a denial letter from this online bank that I was preapproved with in order to let me out of the contract with my $2000 earnest money. Problem is, I can't get a response from the supposed "bank" that I got the preapproval from, so I can't seem to get a denial letter. My $2000 may be going down the drain, and what's worse the Realtor that I was working with doesn't seem to care. In retrospect, I probably should have used my own agent rather than the listing one so that my own interest was better protected.

And Murphy still wasn't done yet.

The worst part is that during all this, I actually found the deal that I'd been waiting for all summer. A man called me off of a mailer I sent and said he had two quads that he was getting behind on payments with and he was ready to walk away. SCORE!

Oh, wait, some of my meager amount of money meant for just this deal was already tied up in the other REO quad. Major Bummer.

One of the two quads he owns turned out to fit all my criteria, so after some thought and consideration it is now under contract with me and a new partner (see yesterday's post) to make up for the fact that I am lower on funds than I should be.

I could lament about the fact that I should have stuck to my plan and waited for the right quad to come my way, but I still believe the first REO quad is an incredible deal and I don't regret pursuing it. I actually still want it, but am running out of ideas to get to the closing table. If I loose my $2000, I'll only regret rushing and not using a more legitimate bank's preapproval letter!!!

So, please wish me luck in getting out of the contract with my money. As an unemployed person I really need to keep every dollar I have, I have no way to make it back! Or contact me if you want to buy a quad with minimal repairs needed at a great price in Richmond, VA and can either finance it yourself or have good credit and good income and can bring a little cash to the hard money closing table.

The ending isn't written in stone yet, but Saturday is the start of our big vacation of the year and I'd sure like to go without a stressed out mind and heavy heart.