Time For Another Update

I figure I should throw another update on here to let the world know I'm still alive.

I still don't have House #1 sold or rented, but I'm not too worried after the past week. During that time, I've had a flood of calls about the house - all from potential renters. After telling them my rent price, most of them would answer "We'll get back to you", but some would actually say something along the lines of "Do you have anything else available for $100-$200 cheaper?" Of course, I don't at this time, but now I wish I would have kept House #2 for just this reason. It's almost like someone all at once let the flood gates open for people wanting to rent. I do have two parties who are still interested, and just picked up a lease app from one of them just today.

The other good news is that the loan on House #1 is an option ARM. Now, most people hear the word "ARM" today and get all panicked, but I'm actually GLAD I have an ARM on the property. When I refi'd the house in 2005, the ARM had an interest rate of about 6.5%, which wasn't bad for an investment property. Over those three years, I've watched it steadily climb to over 7.5%, which is one of the reasons we were so hoping to SELL it rather than RENT it again. However, something funny has happened these last few months. In January, I believe the rate was still somewhere in the 7-7.5% range. Then in February, it dropped to 6.75%, and dropped again in March to something like 6.25%. The other day, my wife called me at work to tell me the April statement shows a rate of 5.75%!!! That's even cheaper than our personal property's loan! Of course, I know being an ARM, it won't stay here forever, but with today's headlines about ARM fallouts, I figure it will hover around this area for at least another 9-12 months. The good news in all of this is that the almost 2% drop has increased my cash flow for the property. Add to that we now have the place listed for $100 more than before, and we now have well over $600/mo. cushion to work with. Of course taxes and insurance probably eat about $250-$300 of that, making it more like $350-$400/mo. (yes, there are other intangibles, too).

I know what many people are probably saying now and that's "but your last tenant left at the end of February and it's still empty, so you are LOSING money each month, not gaining it", and they are correct, but not as much as one would think. First, the tenant broke the lease, so I got to keep her deposit. That deposit covered the March payment (and probably most of April's as well). It's not even midway through April, and I have a ton of interested people looking to rent the house. Even if these two prospects don't pan out, I can always drop it down $100, and I'll probably have 2x as many people wanting to rent, so I'm not too concerned with it being empty for too long. Within a month or two, I'd be back to making a profit.