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?
Showing posts with label landlord. Show all posts
Showing posts with label landlord. Show all posts
Wednesday, February 10, 2010
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.
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.
Wednesday, August 26, 2009
Countdown to a quad closing!
Today was a happy day! Not a closing day yet, but the next best thing. Signed contract day! The second quad deal that I've been toying with for a while now is officially under contract as a totally "Subject to the Existing Mortgage" deal. Yippee!!! I'm just a title search away from owning a nice cashflowing quad!
Actually, I'll be owning 50% of a nice cashflowing quad. I was in the unfortunate circumstance of having already put some of my small amount of cash into the first REO quad I found (which is still under contract and up-in-the-air about closing), when this second Sub2 deal, the deal I really had been looking for, came along. So with very little cash left in my account and the seller's sob story of how impossible it was to keep the place rented, I hesitated to put the building under contract immediately. Sometimes he who hesitates is lost, but I knew that I would have a hard time buying two quads at the same time with my very limited funds. But lucky me, I happened to had met a local fellow investor in my social networking earlier in the year, and it turns out that she was looking for this exact same type of deal too! So now I only have to put up half of the title, closing, back payments and holding cost money, which takes a huge burden off me and gives me the confidence to move forward in the deal. It also helps that she has a great method for keeping her units rented!!! =)
So today we met the seller at the property (for the thrid time!) and he readily signed the contract, showed us copies of his leases (three units are rented, for the moment), and gave us authorization to contact his mortgage company so we can start the Sub2 process. Title search was ordered today and we're going to get an inspector out there in the next day or two just to give it a once over and know if there's any structural issues. Then, within a few days or so, we'll have ourselves a closing! Did I say "Yippee" yet???!!!???
The nice thing about Sub2 transactions is that it really is a winning situation for everyone. We get a property that will cashflow and, eventually, build good equity (there's not much equity in it now, but that's not what I'm after), the seller gets his back payments caught up, avoids foreclosure, his credit score improves over time and he gets rid of the headache that he just didn't want to deal with in his retirement. Oh, and the bank gets to keep getting payments on their nice lucrative loan, but with banks being such whiners and tightwads right now I really don't care what's in their best interest.
Happy day! I'm so excited about this quad that I sometimes forget the trouble I'm having on the other one I have under contract! But not for long... sigh. More on that in another post, right now I just want to revel in the fact that I have very nearly achieved what many people told me was impossible/extremely unlikely. Now I wonder what is the appropriate amount of nose-rubbing I can do without being unlikeable at investor groups? ;-)
Actually, I'll be owning 50% of a nice cashflowing quad. I was in the unfortunate circumstance of having already put some of my small amount of cash into the first REO quad I found (which is still under contract and up-in-the-air about closing), when this second Sub2 deal, the deal I really had been looking for, came along. So with very little cash left in my account and the seller's sob story of how impossible it was to keep the place rented, I hesitated to put the building under contract immediately. Sometimes he who hesitates is lost, but I knew that I would have a hard time buying two quads at the same time with my very limited funds. But lucky me, I happened to had met a local fellow investor in my social networking earlier in the year, and it turns out that she was looking for this exact same type of deal too! So now I only have to put up half of the title, closing, back payments and holding cost money, which takes a huge burden off me and gives me the confidence to move forward in the deal. It also helps that she has a great method for keeping her units rented!!! =)
So today we met the seller at the property (for the thrid time!) and he readily signed the contract, showed us copies of his leases (three units are rented, for the moment), and gave us authorization to contact his mortgage company so we can start the Sub2 process. Title search was ordered today and we're going to get an inspector out there in the next day or two just to give it a once over and know if there's any structural issues. Then, within a few days or so, we'll have ourselves a closing! Did I say "Yippee" yet???!!!???
The nice thing about Sub2 transactions is that it really is a winning situation for everyone. We get a property that will cashflow and, eventually, build good equity (there's not much equity in it now, but that's not what I'm after), the seller gets his back payments caught up, avoids foreclosure, his credit score improves over time and he gets rid of the headache that he just didn't want to deal with in his retirement. Oh, and the bank gets to keep getting payments on their nice lucrative loan, but with banks being such whiners and tightwads right now I really don't care what's in their best interest.
Happy day! I'm so excited about this quad that I sometimes forget the trouble I'm having on the other one I have under contract! But not for long... sigh. More on that in another post, right now I just want to revel in the fact that I have very nearly achieved what many people told me was impossible/extremely unlikely. Now I wonder what is the appropriate amount of nose-rubbing I can do without being unlikeable at investor groups? ;-)
Saturday, August 22, 2009
Cross your fingers and don't breathe, some quads dangle almost within reach.
I could not be happier to say that I have TWO quad deals in the making that are looking very good right now. Even though I was out of town all week, I still somehow managed to make phone calls and drive to the Panera and Office Max parking lots to send emails (I was much too sweaty and covered in paint splatters to venture out of the car!), which was enough to keep things rolling along on both deals. I must say I'm quite proud of myself for doing this unique form of multi-tasking!
I got back yesterday evening. Today, Saturday, I went to Quad Deal #1 with a contractor and hard money lender to get a firm repair estimate and figure out if its going to meet the financing requirements like I think it will. I'm thrilled that the contractor's bid came in exactly within my target. Rock on with my bad self! I've always been pretty good at estimating repairs, but wasn't so sure on a 4 unit building like this, especially after reviewing the home inspector's notes (which I had happen while I was out of town, a good and bad thing but at least I know there's no big surprises). Little things times four can really add up to big bucks. But, the contractor's numbers were good, so now I get to move forward one green space towards the closing table. Nobody breathe, please...
Of course, now I am starting to get nervous. This is the time when deals often begin to fall apart for me, and my confidence is slightly rattled from past failures. I've been doing some thinking about my past unclosed deals though, and I'm sure that this time I have better deals, more experience, and more confidence than I've ever had before. I am resolute in my determination to make these things close. IT WILL HAPPEN. And this time next month I fully expect to be the proud owner of two lovely quads that will bring me a nice chunk of monthly cash flow and ease my family's worried minds. Yes, it will happen. I know it will. I know it will. I know it will.
Still too nervous to discuss too many details and jinx the whole thing, but I do promise that as soon as the closings happen I will happily tell you all the whole story for each one. How I found them, what I did to buy them, etc.
Until then, please sleep with your fingers crossed under your pillows for me. My 2009 Big Goal #2 is getting closer and closer to becoming a reality. I could really use all the luck and support I can get!
I got back yesterday evening. Today, Saturday, I went to Quad Deal #1 with a contractor and hard money lender to get a firm repair estimate and figure out if its going to meet the financing requirements like I think it will. I'm thrilled that the contractor's bid came in exactly within my target. Rock on with my bad self! I've always been pretty good at estimating repairs, but wasn't so sure on a 4 unit building like this, especially after reviewing the home inspector's notes (which I had happen while I was out of town, a good and bad thing but at least I know there's no big surprises). Little things times four can really add up to big bucks. But, the contractor's numbers were good, so now I get to move forward one green space towards the closing table. Nobody breathe, please...
Of course, now I am starting to get nervous. This is the time when deals often begin to fall apart for me, and my confidence is slightly rattled from past failures. I've been doing some thinking about my past unclosed deals though, and I'm sure that this time I have better deals, more experience, and more confidence than I've ever had before. I am resolute in my determination to make these things close. IT WILL HAPPEN. And this time next month I fully expect to be the proud owner of two lovely quads that will bring me a nice chunk of monthly cash flow and ease my family's worried minds. Yes, it will happen. I know it will. I know it will. I know it will.
Still too nervous to discuss too many details and jinx the whole thing, but I do promise that as soon as the closings happen I will happily tell you all the whole story for each one. How I found them, what I did to buy them, etc.
Until then, please sleep with your fingers crossed under your pillows for me. My 2009 Big Goal #2 is getting closer and closer to becoming a reality. I could really use all the luck and support I can get!
Friday, July 17, 2009
One small goal at a time!
For the first time in over a month I feel like I had a good week!
I really do struggle with time management, goals and priorities, so meeting one of my goals this week feels like an incredible accomplishment, even if it is a somewhat small goal in the grand scheme of things. This week I set a goal of getting a website up on my domain that actually works and can capture lead information for me while I'm out of town for almost two weeks. It's a wonderful feeling to have accomplished that goal!
I did have to let some of the other things I have going on slide a bit. Just based on this week though, I think I've found a good formula to work with when it comes to my own schedule. Setting daily goals and making daily schedules and to-do lists just leave me feeling overwhelmed and unproductive.
This week I set one major goal: Design website and get it up and working. Then I had a couple secondary goals: Go to my "problem" rental to mow the grass and remove all the staging items to get it ready for the new tenant, and to attend a meeting for Local Real Estate Deals Magazine to go over some new and exciting things we're working on. I also had to make time for the kids and took them to the pool and park a few days. So all in all it was a very successful week! Several of my "bottom" goals did not even get touched, but perhaps they will one day have their turn being the top goal of the week.
I really do struggle with time management, goals and priorities, so meeting one of my goals this week feels like an incredible accomplishment, even if it is a somewhat small goal in the grand scheme of things. This week I set a goal of getting a website up on my domain that actually works and can capture lead information for me while I'm out of town for almost two weeks. It's a wonderful feeling to have accomplished that goal!
I did have to let some of the other things I have going on slide a bit. Just based on this week though, I think I've found a good formula to work with when it comes to my own schedule. Setting daily goals and making daily schedules and to-do lists just leave me feeling overwhelmed and unproductive.
This week I set one major goal: Design website and get it up and working. Then I had a couple secondary goals: Go to my "problem" rental to mow the grass and remove all the staging items to get it ready for the new tenant, and to attend a meeting for Local Real Estate Deals Magazine to go over some new and exciting things we're working on. I also had to make time for the kids and took them to the pool and park a few days. So all in all it was a very successful week! Several of my "bottom" goals did not even get touched, but perhaps they will one day have their turn being the top goal of the week.
The working website was a primary goal for me because I am aiming to capture as many leads as I can over the internet. Taking tons of phone calls all day long is not feasible for my life, and paying a phone service is not yet in the budget (but I know the value of them having used one in my previous REI company). So my new marketing and mailers are all going to be driving sellers to my site to capture their information. Cross your fingers that it works for me!
So if I didn't email you back or take your call or meet with you this week, I hope you'll forgive me for putting on my blinders and working diligently on meeting my first of many weekly goals to come. Obviously I don't want to ignore the world every week, but think of everything I could accomplish if I could!
Sunday, July 12, 2009
My problem property gets a tenant... finally.
I have this rental property that's been a thorn in my side pretty much since the day we first acquired it. I bought it late last fall with my then partner, intending it to be our first minor rehab and then to rent it out after the fix up. We got seller financing and used a credit line for the simple rehab materials, and decided to do all the fix-up ourselves. Ideally we were hoping we'd be able to lease-option it to a first time lower-income buyer and give that person the chance to become a home owner, but it seemed like it was in a great rental area and so we were fine with straight renting it if we didn't find a tenant-buyer.
I can not begin to describe here all the things that went wrong with this property, both because of the house itself, because of the time frame we bought in and because of my partner's and my various shortcomings (lack of time, lack of agreement, lack of a pickup truck, etc.). Perhaps one day I will be able to share the grueling details with you all, but I think I need a little more time to heal first. I can say that lease-optioning didn't work at all, and finding a tenant has been a difficult puzzle to solve. The neighborhood was full of rented properties, the rent was right, and the phone rang consistently, but for some unknown reason I could not get a prospective tenant to move into the house. Its shameful to say this, but the property has been vacant all this time, and carrying costs are eating us alive!
So now we have a tenant ready to move in on the first of the month. Please praise the God or Goddess of your choosing for us. I find it interesting, though, that the longer this property sat around and did nothing for us but drain our bank account, the less and less I was interested in dealing with it. I know that logic dictates that I should have become more desperate to get it rented and therefore worked even harder, but the exact opposite is what actually happened. And it wasn't just me, my partner actually "lost interest" long before I even did, and only thought of this house when he wrote the check for the mortgage and called to ask me if I'd found a tenant yet.
How did we finally get it rented if we'd nearly mentally written it off, you may ask? We finally decided to hire a property manager. Sad, but the decision had to be made. We opted to have the management company only handle finding the tenant, I will still be managing the property after she moves in. Its a big blow to my pride that I could not get a tenant in the house myself, but at least now I do not have to duck the question at my REI meetings of "So did you get that house rented yet?" Ummm, no, hey what's that shiny thing over there?
I think its important to realize when you are not performing as well as you'd like to be and to know when its time to delegate things to someone who will get the job done and/or clean up your mess. Granted we probably should have delegated a lot sooner, but at least we made the decision to do it now before it got any later in the year. I had nightmares of crossing the one year mark of holding this house with no tenant!
So as of the first we will have no vacancies, hooray! Now I can concentrate on finding more properties without feeling guilty that I still have one sitting unrented and semi-forgotten. I think I'll skip looking in the same area as this particular house for a while though!
I can not begin to describe here all the things that went wrong with this property, both because of the house itself, because of the time frame we bought in and because of my partner's and my various shortcomings (lack of time, lack of agreement, lack of a pickup truck, etc.). Perhaps one day I will be able to share the grueling details with you all, but I think I need a little more time to heal first. I can say that lease-optioning didn't work at all, and finding a tenant has been a difficult puzzle to solve. The neighborhood was full of rented properties, the rent was right, and the phone rang consistently, but for some unknown reason I could not get a prospective tenant to move into the house. Its shameful to say this, but the property has been vacant all this time, and carrying costs are eating us alive!
So now we have a tenant ready to move in on the first of the month. Please praise the God or Goddess of your choosing for us. I find it interesting, though, that the longer this property sat around and did nothing for us but drain our bank account, the less and less I was interested in dealing with it. I know that logic dictates that I should have become more desperate to get it rented and therefore worked even harder, but the exact opposite is what actually happened. And it wasn't just me, my partner actually "lost interest" long before I even did, and only thought of this house when he wrote the check for the mortgage and called to ask me if I'd found a tenant yet.
How did we finally get it rented if we'd nearly mentally written it off, you may ask? We finally decided to hire a property manager. Sad, but the decision had to be made. We opted to have the management company only handle finding the tenant, I will still be managing the property after she moves in. Its a big blow to my pride that I could not get a tenant in the house myself, but at least now I do not have to duck the question at my REI meetings of "So did you get that house rented yet?" Ummm, no, hey what's that shiny thing over there?
I think its important to realize when you are not performing as well as you'd like to be and to know when its time to delegate things to someone who will get the job done and/or clean up your mess. Granted we probably should have delegated a lot sooner, but at least we made the decision to do it now before it got any later in the year. I had nightmares of crossing the one year mark of holding this house with no tenant!
So as of the first we will have no vacancies, hooray! Now I can concentrate on finding more properties without feeling guilty that I still have one sitting unrented and semi-forgotten. I think I'll skip looking in the same area as this particular house for a while though!
Thursday, July 9, 2009
So what is my real estate investment strategy anyway?
Many people lately have been asking me what my real estate investment focus is. I can understand why, since right now I don't have a lot of details on what I'm working on in my blog. That's because its a whole bunch of NOTHIN' at the moment. I'm working on changing that, new marketing materials have been ordered and some new ideas will soon be implemented. So much happened in the first half of this year that was totally unexpected and really threw me off track, and made me reevaluate and have to start over in some ways. I can't believe that half the year is gone already, but I'm glad to be getting back in the saddle now instead of later!
But back to the question, what is my focus? In theory that's simple, I buy rental properties that I can hold for monthly cash flow and long term equity gain. I acquire these properties sub2 or with seller financing and then put a small amount of money and/or elbow grease into them to get them rental ready. I need monthly cash flow because I need some stability in my currently very sporadic small income, and long term gain because I have ended up with no retirement plan and know that Uncle Sam isn't going to be able to help me by the time I'm ready for retirement, I have to help myself.
In practice, its not so simple. The many leads that come in with every new marketing push usually means I end up exploring other areas of real estate investing that aren't necessarily my focus. So many of them are good leads, just not what I planned to be looking at. Some need short sales, some need cash or financing to get the seller out of a short term loan, some need so much repair that I couldn't possibly use them, some are in areas that won't rent well or are in areas that I personally just won't go into. You know the drill. All those who have done any marketing for properties gets calls and emails from every type of seller, not just the ones you actually want.
So I usually end up getting all involved with properties that don't help me towards my goals. Most of the time I'm okay with this. There is a lot to be said for learning the ropes on multiple investment strategies, and I never think it hurts to get out there an make more offers. Very often these "other" leads and offers don't end up going anywhere for me, whether because of my own lack of knowledge, my lack of interest, or something else I'm not really sure. But I do know that I certainly wouldn't mind becoming what Dave Lindahl calls a "transaction engineer" and being able to close more of these other leads more effectively. Working on that too, reading a lot and learning more about what others are doing, and getting some practice on those leads doesn't hurt. (don't worry, I never screw the sellers, if things don't work out I always refer them to others in my network that should be able to help them better than I can)
I know I need to "get paid" more often for all the time I end up putting into some of these deals though. Having them fall apart with nothing to show for my efforts really stinks. So I joined a new group in my area, the Richmond Wholesalers, with the thinking that rather than waste my time on these properties that don't fit my model and end up not getting anything out of them for whatever reason, I could at least be trying to wholesale them and make a few thousand for the effort. Duh, you say? Well yes, but I will tell you of my own previous wholesaling experiences and the fates of several other wholesalers I know in a future post. Lets just say its not as much of a no-brainer as you might think.
So there's my focus for those of you wondering. Buy and hold rental properties in decent condition with creative terms, and wholesale anything else interesting that comes my way. Lets see how far I get in this round of marketing keeping that focus on the straight and narrow.
But back to the question, what is my focus? In theory that's simple, I buy rental properties that I can hold for monthly cash flow and long term equity gain. I acquire these properties sub2 or with seller financing and then put a small amount of money and/or elbow grease into them to get them rental ready. I need monthly cash flow because I need some stability in my currently very sporadic small income, and long term gain because I have ended up with no retirement plan and know that Uncle Sam isn't going to be able to help me by the time I'm ready for retirement, I have to help myself.
In practice, its not so simple. The many leads that come in with every new marketing push usually means I end up exploring other areas of real estate investing that aren't necessarily my focus. So many of them are good leads, just not what I planned to be looking at. Some need short sales, some need cash or financing to get the seller out of a short term loan, some need so much repair that I couldn't possibly use them, some are in areas that won't rent well or are in areas that I personally just won't go into. You know the drill. All those who have done any marketing for properties gets calls and emails from every type of seller, not just the ones you actually want.
So I usually end up getting all involved with properties that don't help me towards my goals. Most of the time I'm okay with this. There is a lot to be said for learning the ropes on multiple investment strategies, and I never think it hurts to get out there an make more offers. Very often these "other" leads and offers don't end up going anywhere for me, whether because of my own lack of knowledge, my lack of interest, or something else I'm not really sure. But I do know that I certainly wouldn't mind becoming what Dave Lindahl calls a "transaction engineer" and being able to close more of these other leads more effectively. Working on that too, reading a lot and learning more about what others are doing, and getting some practice on those leads doesn't hurt. (don't worry, I never screw the sellers, if things don't work out I always refer them to others in my network that should be able to help them better than I can)
I know I need to "get paid" more often for all the time I end up putting into some of these deals though. Having them fall apart with nothing to show for my efforts really stinks. So I joined a new group in my area, the Richmond Wholesalers, with the thinking that rather than waste my time on these properties that don't fit my model and end up not getting anything out of them for whatever reason, I could at least be trying to wholesale them and make a few thousand for the effort. Duh, you say? Well yes, but I will tell you of my own previous wholesaling experiences and the fates of several other wholesalers I know in a future post. Lets just say its not as much of a no-brainer as you might think.
So there's my focus for those of you wondering. Buy and hold rental properties in decent condition with creative terms, and wholesale anything else interesting that comes my way. Lets see how far I get in this round of marketing keeping that focus on the straight and narrow.
Friday, June 26, 2009
So apparently I suck at time management.
Man, when I had a J-O-B I thought to myself, "all I need is to get rid of this horrible time-wasting job and I'll have all the time I need to finally get things done!"
Nearly one month after fulfilling that dream, I still have no time. There's just never enough. I seriously don't know how I gained 9 more hours in my day and yet still accomplish so little!
I started out with a plan. Really, I did. Sounded like a good plan on paper. I would spend my early mornings doing emails, then get out of the house to either run errands, take the kids someplace fun, visit properties or drive around neighborhoods looking for possible property leads. I would alternate the activities on different days. Then we'd come home, get the kids some lunch, put the little one down for a nap, and I'd start make phone calls and send more emails for the rest of the afternoon. Seemed perfect, but in reality it is just too much to cram into one day, every day.
My online stuff takes much longer than I time-budgeted for. Between multiple email accounts, social networking, blogging, reading articles, doing internet searches, etc I can easily fill up the entire day just sitting in front of my computer. Which is NOT what I envisioned me doing when I left my cubicle where I just sat in front of the computer.
On my list of things that aren't getting done: go to the bank and deposit some checks, call back some potential tenants for one of my properties, do searches for specific property types in the area to send letters to, go to the store to buy an ink cartridge so I can print some forms and return them to a Realtor that's asking for them, figure out a better system of organizing my leads, take the kids to the Library to get library cards and books, and many others I'm sure.
I need a new plan. I'm thinking about trying to designate certain days for specific activities, but having two kids at home makes that a bit more difficult since I am often limited to scheduling things around meals, naps, play time and the incessant need to break up the "Whaaaa!!! He stole My toy and pulled my shirt!!!" fights.
I used to consider myself a great multi-tasker. Give me a pile of work and I'll tackle it all at the same time. Now with undefined work and undefined times of doing it, I have turned into a disorganized mess. My husband even rightly teases me for not being able to do a simple load of laundry while I work from home. I mean to, I just get distracted and time slips away then before you know it he's coming home and the laundry never made it to the basket! (obviously he didn't marry me for my homemaking skills!) Not to mention I never left my computer and very few phone calls were made. Arggggg, how does the time get away?
So, I'm working on a new plan. It may take a while for me to find my right grove, but I'm trying to come up with something workable immediately if not permanently. I know I'll figure it all out eventually, after all, many other people in similar positions have figured it out and area doing well. I just get frustrated when the goals I set for myself need to be readjusted so drastically. But, if the system isn't working then its time to get a new one. There's no way I want to be still floundering at this time-management thing in another month. I'm up for any ideas and suggestions if you all have them!
Nearly one month after fulfilling that dream, I still have no time. There's just never enough. I seriously don't know how I gained 9 more hours in my day and yet still accomplish so little!
I started out with a plan. Really, I did. Sounded like a good plan on paper. I would spend my early mornings doing emails, then get out of the house to either run errands, take the kids someplace fun, visit properties or drive around neighborhoods looking for possible property leads. I would alternate the activities on different days. Then we'd come home, get the kids some lunch, put the little one down for a nap, and I'd start make phone calls and send more emails for the rest of the afternoon. Seemed perfect, but in reality it is just too much to cram into one day, every day.
My online stuff takes much longer than I time-budgeted for. Between multiple email accounts, social networking, blogging, reading articles, doing internet searches, etc I can easily fill up the entire day just sitting in front of my computer. Which is NOT what I envisioned me doing when I left my cubicle where I just sat in front of the computer.
On my list of things that aren't getting done: go to the bank and deposit some checks, call back some potential tenants for one of my properties, do searches for specific property types in the area to send letters to, go to the store to buy an ink cartridge so I can print some forms and return them to a Realtor that's asking for them, figure out a better system of organizing my leads, take the kids to the Library to get library cards and books, and many others I'm sure.
I need a new plan. I'm thinking about trying to designate certain days for specific activities, but having two kids at home makes that a bit more difficult since I am often limited to scheduling things around meals, naps, play time and the incessant need to break up the "Whaaaa!!! He stole My toy and pulled my shirt!!!" fights.
I used to consider myself a great multi-tasker. Give me a pile of work and I'll tackle it all at the same time. Now with undefined work and undefined times of doing it, I have turned into a disorganized mess. My husband even rightly teases me for not being able to do a simple load of laundry while I work from home. I mean to, I just get distracted and time slips away then before you know it he's coming home and the laundry never made it to the basket! (obviously he didn't marry me for my homemaking skills!) Not to mention I never left my computer and very few phone calls were made. Arggggg, how does the time get away?
So, I'm working on a new plan. It may take a while for me to find my right grove, but I'm trying to come up with something workable immediately if not permanently. I know I'll figure it all out eventually, after all, many other people in similar positions have figured it out and area doing well. I just get frustrated when the goals I set for myself need to be readjusted so drastically. But, if the system isn't working then its time to get a new one. There's no way I want to be still floundering at this time-management thing in another month. I'm up for any ideas and suggestions if you all have them!
Friday, June 5, 2009
The Quest for the Illusive Multi-Family property
I'm on a quest. Not the dragon-slaying type, but so far equally as mythic and frought with difficulties.
I made it my goal at the beginning of the year to purchase a multifamily property, and I'm not talking duplex. I have bigger things in mind.
Problem is, it is now June and I have realized I have wasted half the year on other things that have not realted to that goal. Properties that won't rent, partnership that needs dissolving, job that took too much of my time for not enough reward, kids that need extra attention, the list goes on. Life happens and while I've been working on keeping that together its hard to remember to focus on some of my goals. You can all relate, right? Time to get my rear in gear!
The reasons for wanting a multifamily are pretty obvious, I think. Higher cashflow with less overall maintenance for starters. Who wouldn't want that? Of course, its not easy to find a lender that will lend a million dollars to someone with no job, less than stellar credit, no downpayment, and very little verifyable income. They don't seem to care that the rents coming in are close to twice the expenses and debt service and the building will far exceed paying for itself. No, you need to have "skin in the game" everyone keeps telling me. Even the seller holding a second or getting a private lender to hold a second doesn't help. Come on, don't you see these numbers people???
Well, that leaves me with the same stand by I usually use for single family properties, buying with creative terms like seller financing, and I must say it takes a lot more work to find those particular properties, hence the fact that I am behind in my goal. So far I've come up empty on a property that I like and that I can get good terms on. I'm determined to find one, I'm sure its out there! But in the mean time I'm still calling and sending emails to any commercial lender that I come across that advertises themselves as a non-traditional lender. I've contacted a lot. No luck yet, but they are all nice enough to tell me to give them a call back as soon as I come up with $200,000 cash to put down and they will gladly work with me. Gee, thanks for the help.
I know I'm asking for the moon, but it takes only a few minutes of my time to ask for it and maybe, someday, some brave knight out there will help this fair maiden to lasso the moon AND help me slay this dragon of a goal in one fell swoop. Hey, a girl can dream, right?
I made it my goal at the beginning of the year to purchase a multifamily property, and I'm not talking duplex. I have bigger things in mind.
Problem is, it is now June and I have realized I have wasted half the year on other things that have not realted to that goal. Properties that won't rent, partnership that needs dissolving, job that took too much of my time for not enough reward, kids that need extra attention, the list goes on. Life happens and while I've been working on keeping that together its hard to remember to focus on some of my goals. You can all relate, right? Time to get my rear in gear!
The reasons for wanting a multifamily are pretty obvious, I think. Higher cashflow with less overall maintenance for starters. Who wouldn't want that? Of course, its not easy to find a lender that will lend a million dollars to someone with no job, less than stellar credit, no downpayment, and very little verifyable income. They don't seem to care that the rents coming in are close to twice the expenses and debt service and the building will far exceed paying for itself. No, you need to have "skin in the game" everyone keeps telling me. Even the seller holding a second or getting a private lender to hold a second doesn't help. Come on, don't you see these numbers people???
Well, that leaves me with the same stand by I usually use for single family properties, buying with creative terms like seller financing, and I must say it takes a lot more work to find those particular properties, hence the fact that I am behind in my goal. So far I've come up empty on a property that I like and that I can get good terms on. I'm determined to find one, I'm sure its out there! But in the mean time I'm still calling and sending emails to any commercial lender that I come across that advertises themselves as a non-traditional lender. I've contacted a lot. No luck yet, but they are all nice enough to tell me to give them a call back as soon as I come up with $200,000 cash to put down and they will gladly work with me. Gee, thanks for the help.
I know I'm asking for the moon, but it takes only a few minutes of my time to ask for it and maybe, someday, some brave knight out there will help this fair maiden to lasso the moon AND help me slay this dragon of a goal in one fell swoop. Hey, a girl can dream, right?
Saturday, May 2, 2009
To blog or not to blog, that is the question:
Whether 'tis nobler to suffer the thoughts of mine own mind without exposure, or to take up the pen and unleash those thoughts, and by that stroke open mineself to the world?
For me it wasn't much of a decision. I already narrate my life in my head as I'm living it and talk WAY too much about my own situations, good or bad, to anyone who makes the mistake of asking, so it's no big step to write all those thoughts and soliloquies down for the world to see. My only hesitation is that everybody who thinks they are anybody, especially in the real estate investing world, already has a blog. Isn't the blog market over saturated already? Do we really need another person throwing more junk into cyberspace that no one reads? Well, maybe not, but my ultimate decision was "too bad!" and here I am. The internet pretty much has unlimited space anyway, right????
Let me start out by saying how incredibly excited I am to be a part of Local Real Estate Deals as we begin our quest to link real estate investors across the nation together on a huge variety of media platforms. Local investing topics in a national format, who'd of thunk? Trust me when I tell you that LRED will soon be an industry leading company and household name to investors everywhere in the USA, and maybe even beyond!
So what will I be offering to my faithful readers here on LRED's blog profile? Probably nothing Earth shattering, sorry to disappoint! A little humor, a little insight, hopefully a little education, and, if I'm really lucky, maybe a little scattering of brilliance every now and then. I will happily post the good alongside the bad and the downright ugly, freely sharing my experiences with real estate investing, personal development, my road to wealth creation (road still under construction!), and the goings-on at Local Real Estate Deals. If you're looking for all the answers, keep looking (and let me know when you find them!). In the mean time, subscribe to this blog and give me some feedback as we go. The only thing I like better than hearing my own self talk is hearing the ideas, experiences and feedback of others in response!!!
Oh, and don't worry, I'll keep the Shakespeare references to a minimum, I promise! ;-)
For me it wasn't much of a decision. I already narrate my life in my head as I'm living it and talk WAY too much about my own situations, good or bad, to anyone who makes the mistake of asking, so it's no big step to write all those thoughts and soliloquies down for the world to see. My only hesitation is that everybody who thinks they are anybody, especially in the real estate investing world, already has a blog. Isn't the blog market over saturated already? Do we really need another person throwing more junk into cyberspace that no one reads? Well, maybe not, but my ultimate decision was "too bad!" and here I am. The internet pretty much has unlimited space anyway, right????
Let me start out by saying how incredibly excited I am to be a part of Local Real Estate Deals as we begin our quest to link real estate investors across the nation together on a huge variety of media platforms. Local investing topics in a national format, who'd of thunk? Trust me when I tell you that LRED will soon be an industry leading company and household name to investors everywhere in the USA, and maybe even beyond!
So what will I be offering to my faithful readers here on LRED's blog profile? Probably nothing Earth shattering, sorry to disappoint! A little humor, a little insight, hopefully a little education, and, if I'm really lucky, maybe a little scattering of brilliance every now and then. I will happily post the good alongside the bad and the downright ugly, freely sharing my experiences with real estate investing, personal development, my road to wealth creation (road still under construction!), and the goings-on at Local Real Estate Deals. If you're looking for all the answers, keep looking (and let me know when you find them!). In the mean time, subscribe to this blog and give me some feedback as we go. The only thing I like better than hearing my own self talk is hearing the ideas, experiences and feedback of others in response!!!
Oh, and don't worry, I'll keep the Shakespeare references to a minimum, I promise! ;-)
Subscribe to:
Posts (Atom)
Posts
