Surprise!

Well, I met my broker enroute to the property. We carpool there and are barely getting out of the car when my agent and the inspector show up. After everyone shakes hands and whatnot, we go inside the property. The inspector starts his work and my broker, agent, and myself walk around the house and talk.

The HUD inspection only mentioned one deficiency: the master bedroom door had a hole. It turns out, there was also a hole in one of the bedroom closet doors, and in the 3rd bedroom the closet door was completely missing! So, that's three doors I need to get, instead of the one. Also, while going to each room, I noticed the carpet looked absolutely terrible. The house is barely 3 years old, but the carpet makes it look 20 years. There weren't any huge stains, but, instead, there were little stains EVERYWHERE. It's almost as if someone walked around with a full spitoon and made drops everywhere. Couple that with the carpet needing a good stretch in almost every room, and I'm thinking about replacing the entiure thing. My agent said another investor/client of hers had a flip where the carpet was in the same condition, and they just hired a carpet cleaner to clean it and someone to restretch it. I don't know, htough, as this looks in pretty bad shape. It's also worn in some of the high-traffic areas, too.

Here are some other things I found an hadn't counted on:

1. Bad drywall patch jobs in a couple of locations. One in particular was where the master bedroom doorknob evidentally hit the wall and made a hole. The homeowner must've tried to DIY and did a bad job.

2. Much to my dismay, the place will need a complete paint job inside. There are just too many marked-up areas, nicks/chips, nail holes, drywall patch jobs, etc. to forgo a paint job. The good news is the place is about 250sf smaller than House #1, so I shouldn't need as much paint.

3. Hardware. Besides getting new outside locks for the doors, I'll need to get a doorknob for the three doors (+ one other) that needs replaced inside. I'll have to get a few other piddly items, too, like a couple door stoppers, etc.

4. Garage door. How the hell I didn't see this in my initial inspection is beyond me. But first thing my broker said to me as we drove up to the house was "Real nice. You can replace that one panel on the garage door, and not have to buy a whole new door." huh? I immediately looked and noticed a section of the garage door was smashed in a little. Totally obvious, but somehow I missed it. Great. It isn't a big deal, IMHO, and I may just get by with pounding the dent out with a rubber mallet. We'll see.

Some other minor stuff include getting a plate for one of the stove coils and just general cleaning. Despite some of the bad surprises, there were a couple of good things:

1. Inspection passed. The inspector told me that everything is in workable condition, and the foundation/rood/etc. are all in good shape. Whew!

2. No gas. I didn't (and won't) have to worry about yet another utility company as this house has no gas - only electric.

The remainder of the house is in good condition ,cosmetically speaking. The kitchen is in great shape ... all the cabinets are accounted for and in like-new condition as is the laminent tile floor. The bathrooms both look in great condition. The backyard is level, clean, and of decent size.

After the inspector left, my agent returned and locked the door, and we both left. I got home and didn;t realize just how exhausted I was. I had been up around 4am with one of the twin boys, endured 8 hours at my JOB, and then had to do this. By the time I wound down, it was 11:15p. Needless to say, I went into a deep sleep the second my head hit the pillow.

I know have my work cut out for me. Due to various things, like the condition of the property, location, work needed, etc., I am leaning heavily towards keeping this house as a rental. I wanted to do it anyway, but now I'm about 95% sure. My wife also agreed.

One thing I have failed to mention in my blog yet was a strategy both my wife and I have been discussing. I mentioned selling House #1 and/or House #2 vs. keeping one or both due to various circumstances. One other strategy we have been contemplating is selling our personal residence and moving into House #1 (or House #2). We have a lot of equity in our personal residence and feel we could use the profit to not only pay off some of our personal debt, but also put some money down on one or both of the other houses to produce true positive cashflow. After telling my wife about House #2, though, we are pretty much in agreement we wouldn't move into it. It's not bad at all, but it only has 3 bedrooms. Our personal residence has 4 bedrooms and we are still struggling with the space issue (we use one bedroom as our "storage"), so House #2 wouldn't work. House #1 would be a better fit since it has 4 bedrooms, but it's also about 300sf smaller. So, we are still trying to decide. With Oct 1st right around the corner, though, we need to decide quickly.

I'll post pictures of both the inside and out of House #2 probably later this week (or early next week).