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 mortgage. Show all posts
Showing posts with label mortgage. 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!
Thursday, July 30, 2009
Lesson Learned: It doesn't hurt to make an offer.
My Dad has a buddy who has a little place at the beach in the OBX (North Carolina's Outer Banks). Every year we go down there as a family and spend a week at the house, which we get for a dirt cheap rate of course. The house is nothing really glamorous or special, sort of resembles a double-wide on stilts, but its clean and comfortable and suits our needs perfectly.
This year, we had to find a new house at the beach for our extended family vacation. My Dad's buddy had his beach house up for sale for a couple years and this summer finally sold it. Two years ago He was asking something like $350,000 for the little place one lot over from the Sound in a vacation house subdivision. After a while the price dropped to $250,000 and last summer my Dad and I thought about what it would take for us to buy it from him. With the banks tightening up and neither one of us having much money to our names, we sighed and just kept dreaming of what it would be like to own a beach house. The last listing price I heard was $225,000 at the end of last summer.
Then this year, a few months ago, we start planning our regular vacation and my Dad tells me that his friend sold his beach bungalow and we'd have to find someplace else to stay. Well, congratulations, I'm sure he's happy to have it sold.
Out of curiosity, I asked my Dad if he knew how much the place had sold for. He told me to sit down. This was not good. His friend let the house go for only $80,000. I was dumbstruck. For $80,000 we could have figured out some financing ourselves and been the proud owners of a beach house.
But we never even made an offer.
We didn't even know that the guy had been that desperate to unload the property. We never asked how much he'd be willing to accept. Down there in a prime beach rental environment with limited buildable lots, I would think the land value alone would be more than $80,000. I still can not believe the seller accepted something so low.
So this year we are vacationing at someone else's rental beach house. Its very nice, but I can't help but mentally kick myself every time I pull up to it. I could have had my very own beach house and not had to stay in someone else's income property. But I never thought to act and just make an offer. Hell, I would have given the guy $100,000 and been extremely happy. Instead I'm left mourning the loss of another deal. This is one lesson definitely learned.
This year, we had to find a new house at the beach for our extended family vacation. My Dad's buddy had his beach house up for sale for a couple years and this summer finally sold it. Two years ago He was asking something like $350,000 for the little place one lot over from the Sound in a vacation house subdivision. After a while the price dropped to $250,000 and last summer my Dad and I thought about what it would take for us to buy it from him. With the banks tightening up and neither one of us having much money to our names, we sighed and just kept dreaming of what it would be like to own a beach house. The last listing price I heard was $225,000 at the end of last summer.
Then this year, a few months ago, we start planning our regular vacation and my Dad tells me that his friend sold his beach bungalow and we'd have to find someplace else to stay. Well, congratulations, I'm sure he's happy to have it sold.
Out of curiosity, I asked my Dad if he knew how much the place had sold for. He told me to sit down. This was not good. His friend let the house go for only $80,000. I was dumbstruck. For $80,000 we could have figured out some financing ourselves and been the proud owners of a beach house.
But we never even made an offer.
We didn't even know that the guy had been that desperate to unload the property. We never asked how much he'd be willing to accept. Down there in a prime beach rental environment with limited buildable lots, I would think the land value alone would be more than $80,000. I still can not believe the seller accepted something so low.
So this year we are vacationing at someone else's rental beach house. Its very nice, but I can't help but mentally kick myself every time I pull up to it. I could have had my very own beach house and not had to stay in someone else's income property. But I never thought to act and just make an offer. Hell, I would have given the guy $100,000 and been extremely happy. Instead I'm left mourning the loss of another deal. This is one lesson definitely learned.
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!
Sunday, June 14, 2009
Private Investors: Show me the money and I'll show you a sound investment.
I have to admit, when it comes to real estate investing I am consistently putting the cart before the horse. I will chase leads, talk to sellers, and look at properties all day long, but when it comes to talking to people about private lending and finding the money to do the deals, I never seem to get around to it at the right times.
Talking to people about money is just plain boring to me, while looking at houses is super exciting. I can't tell you how many deals I've lost simply because I didn't have anyone showing me the money BEFORE I found the great deal. In all the excitement I'd leave the funding until last, thinking the awesomeness of the deal would make funding a breeze, only to have time run out and/or someone else swoop in and snatch it up while I was out looking for a lender. This is one reason why I originally started out with a business partner. He was a "numbers" person that loved talking to others about money, and it was deemed one of his responsibilities to get out there and find the money while I found the deals. Sounded perfect, but unfortunately it was a part of the bargain that he didn't hold up and we've since parted ways. Trust me, I'm ready to learn my lesson once and for all that the money needs to come first and that I have to be the one to find it.
I read an article in my local paper today about private investors who thought they were funding deals for a real estate company and getting great returns, just as it should be. ( http://bit.ly/YPkML ) Turns out the real estate company was not rehabbing the houses or even holding the notes for under 80% of the house's appraised value as they were told, so the private investors were left holding notes on dilapidated old boarded up houses that were so over leveraged, often by multiple notes, that there was no hope of ever recovering the investment. And these so-called real estate investors owe their lenders over $25 million.
I already dislike the "show me the money" part of this business, but it is one I whole-heartedly believe in because I know how safe and secure investing in real estate the RIGHT way can be. I am sickened by these poor investors who have now lost their life savings, retirement money, or family nest egg due to one incredibly unscrupulous individual. and he probably loved talking about money and was very good at it from the amount he was able to receive. On the other hand, I can not believe these investors essentially handed over their money and just assumed everything was as they were told it was. Would these same people give a large lump of money to their stock broker and just trust that he knew what he was doing and was making them money, never reading a market report or checking in with the broker, even with the stock market falling as we speak? Perhaps they would, but perhaps they are also part of the problem the country is currently in.
So now, as I resolve to go and secure more funding before I miss out on another great deal, I must hit the streets with this incredibly derogatory article overshadowing my good intentions. Will potential lenders have read this article and now completely shy away from securing their investments in real estate? Will they think we are all scammers just taking their money to buy ourselves big boats and fancy cars while the alleged investment crumbles on its lot? I pray that is not the case and that logic and reason allow people to see that this is an extreme case of abusing the system.
So how can I assure you, Mr. or Ms. potential private lender, that I am not such a despicable person?
Well, for starters I am a member of all the larger real estate groups and associations in our city, and in fact I'm president of one of them ( http://www.richmondring.com ). I have a lot riding on my reputation in real estate and would not do anything that would jeapordize my position or lower my ethical standards. Ask anyone in our groups, I'm a stand-up kind of gal. Next, I want you to be comfortable with the property in question. I'll meet you there any time you like to see what your money is buying and if invested, how the progress is going. You should never invest in a stock and then not bother to check up on it and the market, why in the world would an investment in a house be any different? I will show you the inspection report (if obtained), contractor's written estimates, get an after repair appraisal, and close with an attorney or title company that will record the mortgage note with the deed of trust for you. There are many other ways to help you keep your investment safe and secure AND profitable, these are just a few to start. I want you protected and happy so that we can have a long and profitable relationship!
Oddly, I'm now even more determined to show people the great benefits of investing their money in real estate. perhaps this article will give me the boost I needed to get out there and talk more about it with more people. Perhaps I'll go so far as to call it a personal quest to prove to Richmond that real estate investments are an excellent choice to earn very profitable returns on your money. I don't expect to raise $25 million to counteract the damage done by this one disgusting investor, but every little bit counts toward righting some of the wrong that's been done to many private investors in this town.
Talking to people about money is just plain boring to me, while looking at houses is super exciting. I can't tell you how many deals I've lost simply because I didn't have anyone showing me the money BEFORE I found the great deal. In all the excitement I'd leave the funding until last, thinking the awesomeness of the deal would make funding a breeze, only to have time run out and/or someone else swoop in and snatch it up while I was out looking for a lender. This is one reason why I originally started out with a business partner. He was a "numbers" person that loved talking to others about money, and it was deemed one of his responsibilities to get out there and find the money while I found the deals. Sounded perfect, but unfortunately it was a part of the bargain that he didn't hold up and we've since parted ways. Trust me, I'm ready to learn my lesson once and for all that the money needs to come first and that I have to be the one to find it.
I read an article in my local paper today about private investors who thought they were funding deals for a real estate company and getting great returns, just as it should be. ( http://bit.ly/YPkML ) Turns out the real estate company was not rehabbing the houses or even holding the notes for under 80% of the house's appraised value as they were told, so the private investors were left holding notes on dilapidated old boarded up houses that were so over leveraged, often by multiple notes, that there was no hope of ever recovering the investment. And these so-called real estate investors owe their lenders over $25 million.
I already dislike the "show me the money" part of this business, but it is one I whole-heartedly believe in because I know how safe and secure investing in real estate the RIGHT way can be. I am sickened by these poor investors who have now lost their life savings, retirement money, or family nest egg due to one incredibly unscrupulous individual. and he probably loved talking about money and was very good at it from the amount he was able to receive. On the other hand, I can not believe these investors essentially handed over their money and just assumed everything was as they were told it was. Would these same people give a large lump of money to their stock broker and just trust that he knew what he was doing and was making them money, never reading a market report or checking in with the broker, even with the stock market falling as we speak? Perhaps they would, but perhaps they are also part of the problem the country is currently in.
So now, as I resolve to go and secure more funding before I miss out on another great deal, I must hit the streets with this incredibly derogatory article overshadowing my good intentions. Will potential lenders have read this article and now completely shy away from securing their investments in real estate? Will they think we are all scammers just taking their money to buy ourselves big boats and fancy cars while the alleged investment crumbles on its lot? I pray that is not the case and that logic and reason allow people to see that this is an extreme case of abusing the system.
So how can I assure you, Mr. or Ms. potential private lender, that I am not such a despicable person?
Well, for starters I am a member of all the larger real estate groups and associations in our city, and in fact I'm president of one of them ( http://www.richmondring.com ). I have a lot riding on my reputation in real estate and would not do anything that would jeapordize my position or lower my ethical standards. Ask anyone in our groups, I'm a stand-up kind of gal. Next, I want you to be comfortable with the property in question. I'll meet you there any time you like to see what your money is buying and if invested, how the progress is going. You should never invest in a stock and then not bother to check up on it and the market, why in the world would an investment in a house be any different? I will show you the inspection report (if obtained), contractor's written estimates, get an after repair appraisal, and close with an attorney or title company that will record the mortgage note with the deed of trust for you. There are many other ways to help you keep your investment safe and secure AND profitable, these are just a few to start. I want you protected and happy so that we can have a long and profitable relationship!
Oddly, I'm now even more determined to show people the great benefits of investing their money in real estate. perhaps this article will give me the boost I needed to get out there and talk more about it with more people. Perhaps I'll go so far as to call it a personal quest to prove to Richmond that real estate investments are an excellent choice to earn very profitable returns on your money. I don't expect to raise $25 million to counteract the damage done by this one disgusting investor, but every little bit counts toward righting some of the wrong that's been done to many private investors in this town.
Subscribe to:
Posts (Atom)
Posts
