RE Attorney

It's funny how things sometimes happen without much effort put in place.

I mentioned in a recent post about calling a local RE attorney to see what services they could offer me as far as owner financing properties and acquiring properties subject-to the existing financing. You may recall the attorney's rep told me they handle owner financed closings, but they don't do Sub2 closings, which was a little disappointing.

Well, I had also posted a message on one of the REI boards I frequent back in December about owner financing, etc. A responder there had sent me a private message last night, which I didn't respond to because they left a similar response on the message boards themselves. So, I responded to them on the message board. About an hour later, I get a private email from a local RE attorney who says he can also help me with owner financed closings. I emailed him back asking for his services and asked if he could also handle Sub2 closings. He responds with a list of things he can do and what he charges. He also says he can do Sub2 closings for me, AND he can service the new loan (i.e., have the buyer pay him, and he pays my original loan company, pays himself a small fee , and then gets my my share). He also asks for a fee when the buyer sales/refinances (10% of the equity spread), which I didn't particularly like, but it's not a huge amount. I told him I'd have to get back with him, since I'd have to look over the numbers first.

So, a small fee upfront, a fee to service the loan, and a backend fee. I didn't ask him if he had a specific timeline for his loans, but I'm sure that works into the equation, too. It all sounds good that he can provide a one-stop shop for all my needs, but I don't want to get mired in fees, either.

(Slightly) OT: Corporate Employee Ratings

Ah, it's that time of year again. Time to update and submit my yearly "How I walked on water" report to my management to see what kind of bonus I'll receive (if any). I imagine almost all medium and large businesses have some sort of employee rating system that defines - or, at least, suggests - how well the employee did the preceding year to help the company. I had to do it in the military every year, and I have to do it each year for my current company. While syntactically different, they are semantically the same.

For my current company, we have to write a summary in the 1st quarter of each year of what all we plan to do to help the company for the rest of the year. At the end of the calendar year, we then submit a follow-up to what we planned to do and basically tell management how we should be the next CEO. I understand the purpose of such a rating system (mainly to CYA of the corporation itself), but after having lived through so many of these things, they are to me essentially a huge waste.

Case in point: this past year.

Without devulging the details of my company's rating system, I'll just say that your management - after going through all the strenious work of reading your input, their own input, etc. - give you a 1-5 number with "5" being "your fired!" and "1" being "he/she really DOES walk on water". In my almost 10 years with this company, I have never gotten a "1" (or "5" or "4"). What I find not only in my company, but in other company's is a lot has to do with corporate politics and what is referred to as the "buddy system".

A rating of "3" in our system basically means you did what was expected - nothing more, nothing less. A "2" means you went above what was expected. I got a "2" a few times early on, but have since always gotten a "3", which I thought was needed in some years, but not last year. Last year, I really busted my chops and got things done - usually far ahead of schedule. In fact, I received not one, not two, but THREE commendations (a formal award a fellow employee can give someone) for helping out people outside my area. My reward? another "3" rating.

That really rubbed me raw, but what really angers me is that management doesn't even follow the mandated rating system the way they are supposed to. You see, you aren't rated against other people in your area, per se, but are rated against others at the same level as yourself. I think I mentioned that I work alongside people with Ph.D.'s and such. I am just about the only person at my level working in my organization (they have formal levels here, which begin at "6" - I am a "7" and most of the people I work with are "9's" and "10's" with a couple of "8's" in the mix). So, instead of rating me against other "6's", I feel - (and maybe I'm wrong) - that I am getting rated next to those people higher up. Of course, when I mention this to management, my assertions are met with denial.

Of course, I can always hope in lieu of a good bonus, I'll get a promotion! ..... Okay, you can quit laughing now.

But then that's the life of a corporate drone. Just another reason to get out of the "rat race".

Some Stuff

Like Trisha, we had a terrible ice storm rumble through central Texas earlier this week that literally shut down the entire region. I had to work from home for 2.5 days as south Texas has no real way of dealing with such inclimate weather (except throwing down some sand). Even so, I've been too busy to write in my blog, so I figure I'll submit some updates now while I have the chance ...

Tenant

I went with Shaun's advice and printed out all the forms needed for the tenant's girlfriend to stay at the place legally. I then went over to the property, and, of course, no one was home. I prepared for such a thing, so I stuffed all the documents in a manila envelope, sealed it, wrote a note on the front and wedged it in the door. I told him to have his GF sign the paperwork (I notated where on the forms themselves), and to return the forms to me when he pays me on the 19th. Well, today is the 19th and - surprise! - I haven't heard a peep from him about the forms or the moeny he still owes me, although, I haven't checked the mail today yet. If I don't see anything in the mail box when I get home, I'll be giving him a call.

Update: I talked to the tenant a little bit ago and he said he was getting the check as we spoke (he just wanted to make sure of the amount). I told him I could come by after work this evening and pick it up, which he OK'd. He also said that his GF would not be staying in the house full time. Matter of fact, she was currently under lease at an apartment, so she would have to stay there fulltime until her lease was up. He said he just wanted to give me heads-up that she would be staying at his place from time-to-time.

House #2

Hmmmmm. I haven't heard from my RE agent in probably two weeks, so I thought I'd shoot her an email to check up. She said the house was shown six times since Jan 6th, including yesterday, which kind of surprised me. I figure 3-4 of those days no one went out there due to the icey conditions, so that means about 6 people in 8-9 days. Not bad. I had thought about adding a $2,000 buyer's agent bonus to the listing to get more traffic, but recended after hearing that bit of good news.

Missed REI Club Meetings

I completely missed both REI club meetings this month. I knew about the first one, but had to work late and just didn't feel like going. The second one I thought was next Thursday, but it was actually last night - that was the one I really wanted to attend as it is more geared toward networking (the other is more about speakers and sales pitches). :-(

Book

This is definately going slower than even I thought it would, although, I have slowly evolved the material into something a bot more to my liking. I'm sure before the thing is finished (IF it's ever finished), it probably wil undergo several more changes. Once I get it it to something worth bragging about (haha), I'll discuss more what it's about. The other book idea is on hold indefinately. I just need about two weeks of complete isolation, and I'd probably get 990 of the 1,000 thinks on my to-do list completed. Oh well.

RE Attorney and Tenant

Talk w/RE Attorney

I traded emails last year with a rep for a local real estate attorney, trying to get a meeting set up. Something would always seem to come up, and I never did get a chance to talk with him. Well, yesterday I had a few minutes to burn, so I called him again. This time I was able to talk directly with the person I needed to. I was fully expecting to say, "Hi - can I set up a time to come in and talk to you about your services and how they may be able to help me?" - instead I got what amounted to a sales pitch. I mean the guy just started and wouldn't stop about everything he could do for me. The only time I could get a word in edge-wise is when he asked me a question. This didn't come across too well for me, but listening to what he could do was a bit uplifting.

Basically, he said that due to the legislation Texas passed in late 2005 that made L/O's all but illegal, it narrowed down the options for investors to basically owner financing the property (which is what I wanted to do in the first place). He said his office can handle all the paperwork and once he got my and my buyer's info, closing should occur within a week - two at the most. I had expected to pay around $2,000 for closing costs, but he said my only costs would be $1,500 (he said the buyer would pay $1,500, also). Not bad, I suppose. I figure once I do an owner finance deal through his office (or maybe two), I'll have the info needed to do them on my own (via a title company) for less.

I then asked if his office handled subject-to closings. His exact quote was "Subject-to's work in California, but not in Texas." Needless to say I was a bit put off by his response as people do them here all the time. And, he was supposedly a RE attorney many investors recommend. So, I may go with him if I can't find someone else, but I still need to call another attorney who I know handles subject-to closings AND owner financed closings. Although, I would need to see what he charges, too.

Tenant

I got an email from the tenant yesterday - the first one ever. He basically apologized, profusely (again), and said he was so thankful I (and my wife) let him pay late (even though he paid the late fees). He said it would never ever happen again (we'll see), and he will have the remainder of the deposit on the day we agreed. Oh, and he said he wanted to know if I had a problem with his girlfriend staying with him. Ugh. So, I responded with a few bullet items with the first couple regarding other things I wanted to clear-up first. I then told him that I wouldn't have a problem with another person staying there, but she would need to fill out a lease app first - even if she wasn't going to contribute financially to the rent each month.

Judging by how slow he does things, I am going to go over there after work today and drop off the app in person and tell him he has 24 hrs to get it back to me.

Tenant (again)

Hmmmmm. I remember giving the tenant to House #1 a form with all the utilities and phone numbers, so that he could get everything setup. He did tell me that he set up the gas, and I transferred the water accoutn myself. Also, a few days after he moved in, the electric company sent me a bill up to the time he moved in, so that account was transferred, too. That only left one more mandatory utility he had to set up: the sewer.

In my city, the sewer, garbage, and water are all paid through one bill to the city. House #1 resides in another town where everything is split out. Sewer is maintained by the city and water is supplied by a MUD (municipal utility district). The MUD and the city have an agreement that if the user does not open a sewer account, they'll turn off the water. Anyway, when I spoke to the tenant last Friday, he said he "believed" he set up the sewer account, but wasn't 100% sure. Of course, to me that meant "no", so I called the city today to verify. Interestingly enough, they showed it as having NO ownership. IOW, when the old tenants left, they marked them off of the account, but never put me back on! After getting that straightened out, the lady said she was going to send a letter to the tenant telling them they have three days to connect service or they'll stop the water. She also said she'd backtrack the bill to start on Dec 9th (the day I told her he moved in, which he did).

Since I used -0- gallons of water in-between, she said I won't be charged anything. Whew! Some of these utility companies charge monthly fees regardless of use, so I was surprised.

If memory serves me correctly, the city charges a $100 deposit for sewer. Anyone want to bet I get an excuse on the 19th regarding the security/pet deposit the tenant is supposed to give me?

Tenant Update

So, I get off work a little after 5pm last night and was just getting ready to call the tenant to tell him I'm on my way over, wen suddenly my cell phone rings. It's the tenant. After formal introductions, he tells me that he can't get me the check that evening as he promised. His excuse this time was he just now got to the bank and the lobby was closed. I asked if the drive-thru was open and he said he went through it, but the teller said she couldn't process the transaction to get him the cashier's check. I let out a frustrated laugh and told him he was already on thin ice being late one day, but now two? I also told him that this should have been his first priority of the day, and not something that he put off until the end of the day. He asked if he could bring the check by my workplace first thing in the morning. I work about 13 miles from where I live and it's probably a good 18-20 miles from House #1. I told him that he was quickly running out of favors, but I'd let him give me the check in the morning. However, if he had another excuse - even if it WAS valid - I would have no other choice but to take the next step (I didn't mention "eviction", but I think he got the message).

When I got home and told my wife, she was livid. Her patience fuse is about 1/100th the length of mine, so she basically hit the ceiling when I told her. Immediately, she said to start the eviction. After talking with her more, she settled down somewhat, but I became angrier about the whole situation. So, I called tenant to give him another blunt warning. Of course, I got his VM. I left him a stern message stating about the situation and told him that when he gets the check tomorrow to be sure to add TWO days of late fees to it (he was legally two days late at 7:00pm last night and I called shortly after that).

Well, the next morning I hadn't heard from him, so I wasn't sure if he got my message. I figure if he didn't (or did and said he didn't), I would tell him he would need to get the check in the CORRECT amount or I wouldn't accept it. In our conversation after work yesterday, I told him to meet me at a convenience store near where I work between 10-11am and no later, and to call me when he gets there. About 9:45am, I get a call from him. He's all apologetic, and says he has the check with the full amount. I tell him to meet me at the place we agreed to at 10am. I jump into my car shortly after, and sure enough, he's there. We make small talk, he hands me the cashier's check for the full amount, and we part ways. I told him this was the last time he was to be late , as I was finished with favors and excuses. Based on his demeanor, I have a feeling he either understands the consequences now, or is so used to screwing people over like this that he know how to act like it. Time will tell. At least I got a valid check for the full amount (plus late fees). Right after our meeting, I deposited the check and headed back to work.

We'll see what happens on the 19th and the beginning of each month. I'm not holding my breath, tho.

Tenant Problems Already

Well, maybe anon was right about this tenant. Either that or the tenant just needs a dose of reality. I mentioned several times before here how I STILL have not received the Inventory and Condition form from the tenant. I told him when we signed the paperwork that I only give tenants a week to fill it out and return it to me. This way, in case they damage the place and say it was already like that, I have proof to the contrary. Of course, I always make it a point now to take a bunch of pictures of the place before renting it out. Not sure it would hold up in court, but it sure wouldn't hurt.

Anyway, on 12/27/06, I called the tenant to reiterate my need to have the form returned. He said due to the holidays, he misplaced the form and gave me a verbal "ok" that the place was in good condition. I told him that wasn't good enough, and said I could get him another copy. The next day, I emailed him the copy (he requested emailing it, since he works rotating shifts). As of yesterday, I still hadn't gotten any response. Yesterday was also the last day for him to pay rent without being charged a late fee. So, I sent him an email both about the form (again) and the fact it was the last day for him to pay rent without being charged a late fee. The 7:00pm deadline came and went without any response.

This morning I called him and he answered almost immediately. I asked him about the form and if he realized rent was now late. He said he was going to send the rent out yesterday, but lost the Lease Agreement (now he lost TWO documents) which has the address to mail the rent checks. I told him if he has my phone number, which he said he does. I asked him why he didn't call me then. He said he was starting to do that right when I called - hence the quick answer on the phone. I told him since it was the first full month's rent, I'll wave the initial late fee but ONLY if he can get me the check today. He said today was his day off and he can either drop it off to me or I can swing by. I told him I'd swing by after work (this will give me a chance to see the inside of the property, too). I also plan to give him another copy of the Lease Agreement.

Lastly, he said that due to the high deposits the utility companies charged him, he wouldn't have the other half of the security deposit until two more weeks. I told him all these excuses weren't looking favorably and I hope this would not become a trend as this would be the absolute last time I would do him any favors. So I told him he had until the 20th to give me the remaining deposit.

I realize I should be more strict, but I'll give him the benefit of the doubt this time. If I don't have the form and/or check tonight then the proverbial $%@& will hit the fan. I've already read-up on Texas law regarding evictions, so I know what I can and cannot do just in case.

2007 Goals

I scribbled a lot of these down before the holiday season, but have not had the time to sit down and think really hard about my financial goals for 2007, so some of these may not happen and others not listed may happen. I tried to be as realistic as possible given my current position with family, work, and things I know will occur this year both within and outside of my hands.

Write a book - I actually have an idea for two books, but I know my time alloted for penmanship will be as rare as hen's teeth. I've scribbled notes down for one of the books on various peices of paper, so I'll try to gather those notes and add some more substance to create a book. I don't think it will be a full-fledged book like many you see at B&N - in fact, it will probably be an eBook distributed electronically.

Sell House #1 and House #2 - I think these were foregone conclusions, but thought I'd add them anyway. I have excellent credit 750+, but my debt-to-income (DTI) ratio stinks. Selling both homes will bring my DTI to something much more attractive. It will hurt seeing both houses gone in more ways than one, but in the long run, I think it will be for the best. This way I will be able to qualify for better loan rates on future homes purchased conventionally.

Buy-n-Hold 2 Homes - Now that I have a firmer grasp on HUD foreclosures, I'll be more savvy in my buying strategy. This will narrow down my already narrow criteria, so I doubt I'll buy more than two HUD homes. If I manage to get three (or more) - all the better. But I want to be realistic in my goals.

Buy-n-Sell 2 Homes - In order to reduce my out-of-pocket expenses buying conventionally (both with closing costs and down payments), I want to buy and sell at least two homes for pure cash reserves. I'm not sure exactly how these homes will be purchased yet, but I want to set a goal for buying and selling at least two for at least $20,000 net profit (total). At this point I want to get more into note holding (see below), so perhaps one or all of these types of sales will be seller financed deals.

Learn more about Land Trusts - I've always been intrigued by land trusts, and want to talk to a competent RE attorney more about them to see if they would be worth doing.

Learn more about Note Buying/Selling - As mentioned earlier, I want to get more involved in paper assets - specifically, the buying and selling of RE notes. I believe there is good cash flow to be made in holding and selling notes - both from my own acquisitions and from just note buying/selling itself. I understand there may be some restrictions without being licensed, so I'll need to talk with people who do this.

Create a Functional Buy/Sell System - My marketing initiative in the middle of last year flopped big time. At the time, I just decided to trash the idea indefinately, which ended up being the rest of the year. Looking back, I now see where I could have made a lot of improvements to the marketing. I've almost completed my new marketing plan, which I hope will get my phone ringing a lot more this year with motivated sellers. Instead of just sending bland postcards out to select individuals and mentioning my phone number and web site name, I'll add much more pizazz to the marketing and make it more persistent. I've included a monthly budget, which I hope I can maintain. If I start getting solid leads, I may have to revise some of my other goals. :-)

Network More - I need to branch out and get my name out there to people - not just motivated sellers, but other investors and professionals in the business (i.e., agents, brokers, attornies). One way I plan to do this is to join both my local REI clubs. I may not go to every meeting, but hopefully I can go enough times to become a noticeable to other people. Already, I plan to meet with two RE brokers this month.

Get my RE License? - I'm really debating this one. The one hurdle I had was getting confirmation that I can still buy HUD foreclosures being an agent. I received an email from my HUD processor before the holidays that said it was possible, so that cleared the way. Now, I'm just wondering how I'll fit the study time in my already overbooked schedule. More importantly, I need to really see how advantageous getting my license will be. For now, I can see absolutely no downfall.

And, finally ...

Create at least One Business - I talked briefly with my CPA last week about this. She said she would have to review my goals, financial position, etc., and see what business model would work for each of my situations. She said an LLC would probably work for buy-n-holds, but would need more info regarding my note buying/selling, property management, and other ventures. I guess as the need arises, I'll be talking with her a lot more about it. I'm not going to go hog-wild and say I'll create three businesses, if I really don't need them. However, given my uneasiness about holding properties in my name, I will definately create at least one LLC to hold the two properties I plan to keep as rentals this year.

More Updates

Title Company

I finally got things squared away with the deed. The paperwork showed up on my county's online system on Dec 20th, coincidentally, but the deed still didn't show the legal description. I called the title company again and after being on hold for a good 5 mins was told they will need to file an "Exhibit A" to the deed on file with the description. This will make everything official finally. Whew! Guess next time I'll be even more careful at the closing table.

RE Agent

I finally got my agent straightened out about the listings, flyers, and sign. I saw the "For Lease" listing online with the correct verbage. The flyers were also changed to my liking, and she put a "For Lease" sign along with the existing "For Sale" yard sign. She also added "owner financing available" to everything.

CPA

I met with the CPA twice now in the last week to go over my financial situation. It looks like I'll be getting back almost my entire federal withholding from the year thanks in part to the twins, the new property, and the fact I paid the property taxes for House #1 back in January (among other things). I also talked to her about entity creation, owner financing, note buying, etc.

Oh yeah ... One of the things I am seriously going to look into this coming year is note buying/selling. There may be some issues with being licensed (one of the things I need to check into), but I see it as a whole new stream of income. Nothing like getting cash flow without actually owning a property. :-)

5 Things You Didn't Know About Me

Well, Trisha decide to tag me to talk about some things people may not know about me. My list is probably more boring than hers (and others), I'm sure ...

1. I have lived in 6 different states (Michigan, Texas, West Virginia, Pennsylvania, Virgnia, and North Carolina) - two, on seperate occasions (Texas and West Virginia). My step-father was an insurance salesman, so we moved a lot in my youth.

2. I'm agnostic. Down to the core, my pilosophy, ideology, religion, or whatever you want to label it would probably be partly Aristotilian, partly Taoist, and partly a mixture of probably everything else. Most people are offended with other people's beliefs if they aren't the same as their own, but I always respect what other people choose as their idealogical foundation, whether it be theist, atheist, agnostic, or anything else. Some of my closest friends are Catholic and Methodist and we routinely trade barbs with one another. How much better the world would be if everyone respected others in this way.

3. I'm a college football nut. As you can imagine, I'm pretty much glued to the TV now with bowl season in full swing. When I was in my early 20's, I would bet on the games each week, and actually did pretty good. As I matured, the attraction to betting on the games faded, but not the attraction of the games themselves. So from August until the following January, you'd probably find me in front of a TV on Saturday afternoons. :-P

4. I used to have a mild form of Social Anxiety Disorder. I used to do everything imaginable to avoid social gatherings. I would pretend to be ill to avoid Christmas parties, or other business gatherings. I would become physically ill if I had to give a speech to coworkers or for a college class. I would have to be dragged by friends to go out to clubs or other social gatherings when I was single. And so on. I'm still not a raging extrovert, but I can definately say I'm a lot more social now than before. It's ironic, but diving into REI and being forced to interact with others on a near daily basis has actually been a blessing in this regard alone.

5. Okay, I actually mentioned this in a recent post, but I grew up mostly in small, unincorporated town in West Virginia. My family was poor - not poverty poor, but not too far off, either. We moved around a lot (see #1 above), but the majority of my youth was spent in this place. To fully set the scene, we also lived in a mobile home. My mother and step-father always made sure we were well cared for, though. It has definately given me a real sense of humility. In their defense, me and my siblings ALL turned out very well. I am an engineer, my older sister is a Doctor, and my other sister is an insurance agent - all of us graduated from college despite both my parents only having a high school education.

Some Updates

Title

I hadn't received a call back from the title company rep, so I called her back to see what was being done. She said she's been calling the county clerk's office and claimed the person there told her the system has been down since mid-November. I find that hard to believe, but I couldn't get any straight answers out of the clerk's office myself. I called the lady at the title comapny back yesterday and the receptionist said she was out until the new year. Great. I did a little more snooping, and think this may all be okay anyway. We'll see come January.

CPA

I met with my CPA yesterday, but didn't bring any paperwork with me. I've just been too overloaded these past few weeks to go through all my paperwork. She said based on the info I gave her, she guesses that it would be best to pay the property taxes in 2007 vs. 2006 for ALL of my properties as I could be taking a big capital gains hit in 2007 if I sell both of my investment properties. She said I can get her all my paperwork to her next Wed and she would have a better idea. Since next Friday is the last day for me to pay my property taxes for 2006, I didn;t really give her a lot of time. :-(

RE Agent

I stopped by House #2 for the first time since I met with my agent about listing it. Her sign in the front yard just says "For Sale" - no "For Lease/Rent" anywhere visible. I picked up a flyer from her box and was even more disappointed as it was 75% advertisement for her business and 25% marketing for the house. Even the 25% wasn't very exciting. It was basically a picture of the front elevation with a few blurbs underneath. No price, no "For Lease/Rent" headings, nothing about me offering owner financing, nothing about me offering it as a lease/purchase. Needless to say, I was VERY disappointed. Later, I did a search on the local public home search web site (http://austinhomesearch.com), and the property was listed - however, the description still doesn;t have "owner financing available" in it. Worse yet, it is STILL not listed in the "For Lease" section. The entry in Realtor.com isn't any better, either. I guess it's time for a phone call and.or email. This is just one more reason why I want to get my own license. As the old saying goes, "if you want something done right, you have to do it yourself." Geesh!

Comfort and Joy?

I got an email from my agent over the weekend saying she shows the previous owners as still owning the home. I know our county's tax online system is always a few weeks behind, but it's been almost two months since we closed, so I do a little investigating. First, I do a search on our county's online records (different from the tax records search), and don't see the deed or DOT's recordings for the property. Uh-oh. I then look in my closing documents for the house and notice the Special Warranty Deed that HUD issues the buyer at closing is completely missing the legal description for the property. Ugh. This doesn't look good. Now it appears I have TWO problems, and I can't do anything until Monday when everyone is open again.

After calling this person and that person and getting transferred here and there (I think I told everyone how fun HUD's were - right?), I finally got hold of the person who has my file and is responsible for the recordings. Unfortunately, she's not there and will have to call me back. Oh joy.

I'm sure this will all get resolved quickly (ha!) and easily (hahaha!!!).

House #2 - Day #1 - Already an interested party

I'm not even sure my agent has put the house in the MLS and/or put a sign in the yard, but she just called me to say that a person may be interested in doing a lease/purchase. She said the lady just went through a divorce and her credit is bruised, but says she makes "very good money" (my agents exact words). She says she needs about 6-12 months to clear-up her credit, and is looking for a place to live in until her credit is good enough to purchase the home with conventional financing. I told my agent that "yes" I'd be willing to do a L/P, but would need some time to talk to my wife and run some numbers first. She said "no problem" since the lady may not even end up liking the house when she shows it to her this afternoon. Another thing my agent mentioned was that the lady inquired as to what, if any, of the lease amount each month could go towards the purchase. Hmmmm. I'll have to think about that one.

2006 REI Year In Review

Summary: I didn;t achieve anything near what I wanted this year in regards to real estate investing. At the beginning, I had hoped to acquire at least three additional properties. I also wanted my marketing to get traction to the point that in January of 2007, I would be averaging a deal every two months. That, too, never materialized. So, here is was my 2006 REI Year in Review:

House #1 - I had fully expected the tenants to move out sometime in the beginning of the year. However, it took them a longer-than-expected time building their own house. They finally moved out at the end of October, which was a good thing for me. I immediately put it on the market as both an FSBO and FRBO. I had a few interested parties at the beginning, but nothing panned out. I eventually got a tenant in that is also wanting to buy the property at the end of his lease term (end of May/2007). Rent is $50 more than with the previous tenant, so we are making about $375/mo, between the rent and loan. Factor in taxes and insurance, though, and we are probably only making about $75/mo positive cash flow.

Marketing - I had I hopes of starting a marketing campaign that included sending post cards out to several neighborhoods. I had all the figures layed out, along with how the campaign would recycle households ona 3-4 month basis. My initial thoughts were to get 1-2 deals in the first three months. It turned out to be a MAJOR disappointment, though. I received VERY few calls, and -0- deals. After about the thrid month, I decided to shelve the project, indefinately. I had spent close to $250 in actul costs and gottent $0 in return.

I also wanted to start hitting a subset of those neighborhoods with bandit signs. Again, I had high hopes, but nothing panned out. Matter of fact, several of my bandit signs are STILL hanging in a few of those areas, and I STILL haven't gotten a single call.

I think I'll revisit both these marketing avenues again in 2007. I was using USPS to both create and mail my original postcards, but I may fork over some more moeny and have them done more professionally-looking. I also want to start a door hanger campaign. Lastly, I want to get new bandit signs specifically for those areas I target in the hopes they will draw more deals.

Time - In all fairness to what I wanted to do, but didn't, I believe a good portion of my failed goals were due to one thing: lack of time. I realized going into 2006 that my time would be limited with the twins' arrival. I never expected that my free time would be almost ZILCH, though. 2007 should be a little better, but not a whol lot, in respects to free time. The twins should slowly migrate from the almost constant holding to being a little more independent - not a lot I can assure you, but a little more. In fact, we are already witnessing it to a degree. Of course with every additional minute of free time, other factors come into play. I'm still deciding whether to get my RE sales license, and, if so, that will probably consume any free time I may acquire this coming year (and, perhaps, even a lot of non-free time).

Knowledge - I can't even begin to lst all the knowledge I acquired this year in REI. Almost all of the information I gathered was acquired through doing and not reading. Every book I've read on REI has been beneficial in getting me to where I'm at now, but even combined those books are probably a fraction of 1% of the knowledge I've gained by doing - most of which through my own trial and errors.

New Acquisitions - Even though I fell way short of my goal of acquiring at least three properties for the year, I did manage to pick up one. I bought it at about 77% FMV, which isn't bad. The bad thing was that I couldn't get the kind of financing I really wanted due to various factors, so I still may not make out like a bandit on this one. If I sell it in the next couple of months, I'll probably only make about $8,000-$10,000 after all expenses are accounted for. I could live with doing several of those each year, but they definately won't lead me on the fast track to financial independence, though.

House #2: Listed

I met with the agent last night to finanlize the listing of House #2. Afterwards, I had "investors remorse" (my term) - I kept thinking of the money I'll be losing in commissions, how I should have continued listing it myself, and so on. But I just need to sit back and relax for a few weeks without the worry of talking with potential buyers/tenants. I think that will be well worth the 3-6% I'll lose in fees.

I decided to go ahead and list the property for sale and for rent as I mentioned before. The agent ran a quick rental analysis of the area and said my lease price is actually not too much higher than the going rate for comps in that subdivision. I had listed it high with the notion that if I get a tenant then the rent will be so high that I'll at least cash flow. My wife and I both want to sell, but cash flow would be good, too. At this time of the season, I'm more likely to get a renter than a buyer anyway.

So, we both went by the property after signing all the paperwork, so I could show her the place and point out things I repaired. It was already dark outside, and the lighting in the house really made the drywall repair jobs stick out to my dismay - but she never saw it, so maybe it was just my already knowing about them. I also pointed out areas in the carpet that still had some stains and other areas where the carpet needed stretched. Almost simultaneously, we both said that if a buyer balks, we can always throw in an allowance at closing to seal the deal. All in all, she seemed to like the property and said it is priced right and should have no problem selling or renting.

Oh, while at her office, I met the broker again. I had sent her an email earlier in the day with some RE agent questions, but she had never responded. At the office, she apologized and said she had a very busy day, yadda, yadda, yadda. But she was very interested and sitting down with me when we both had more time to go over my questions and to talk about it more. She definately sounds like someone I'd like to work with/for, but, again, you just never know.

As soon as the listing goes out on realtor.com, I'll post a link on my blog.

Also, I haven't heard from the tenant since we closed the deal last week. He was supposed to send me a condition report of the property within 5 days, but I haven't goten it. However, I haven't checked the mail in two days, either, so it could be sitting in there. I'll check the mail after work and if it's not there, I'll give him a call.

Some Updates

First, I'm back on track with my CPA. I told her we could meet early next week to go over all my needs for the year. Second, I received an email from my agent overnight in which she basically apologized profusely for not getting back with me. I decided rather than waste more time and resources, I'd go ahead and use her to list this property. So, I sent her an email ignoring her last response, and told her we want to list it "For Lease" as well as "For Sale". The lease price is higher-than-normal for that neighborhood, but we'd rather sale than rent it. If we do get a qualified tenant in then at least we'll be cash flowing positive for 6-12 months. I told her I'd like to meet her tonight to finish all the details. She said she could open her office up after hours tonight and we could finalize the deal. I seriously doubt I'll get any offers until Jan, but you never know. I also sent her broker an email with some questions about being an agent. She seemed easy to talk to and would probably be nice to have as a broker, but that's going by first impressions and a 45 min chat. As the old saying goes you never know a person until you work for them. Lastly, I decided to hold-off on the RE agent thing until I can get some more information. Specifically, I want to know if being an agent restricts me from purchasing HUD properties. According to the HUD processor's web site for my region, I'm only prcluded IF my broker is a contracted HUD Listing Broker, but doesn't necessarily say 'yea' or 'nay' to my direct question.

Realtor®

I guess every RE investor when they started out, asked themselves if being a RE agent would be worthwhile. By some accounts I'm sure many newbies in the field have even asked if they HAD to be a RE agent in order to buy/sell properties.

I, too, have considered the pros and cons of being both an investor and an agent. With the recent follies of my RE agent, I was once again drawn into the "should I get my RE license" foray again. This time, though, I haven't been more sure in my life of being one. Actually, aside from a hefty up-front cost in education, fees, and whatnot, and the occasional cost for education and renewel fees, I really don't see much of a downside. On the contrary, I think the pros far outweigh the cons, IMHO.

Another reason I am thinking about this so heavily now is time - both my time (which is more valuable to me now than money) and the time of the year. Thankfully, the two will coincide soon to enable me to persue my short-term goal of being a real estate agent. While I will still be considered working next week, my boss has already informed me that I can work from home, if I want, and to not expect too much in the form of actual work, since all the projects will be in hibernation until after the holiday season and most people will be or are already gone for the year. So, I can actually come to work and do some work, but also use some of the time for studying for my license. I'd prefer working from home in most cases, but there are just too many distractions to get ANYTHING requiring thinking done there, so I'll probably just come into work all next week. I'll be on vacation the week of Christmas, so I can probably get some study time in those days as well.

Believe me, I will not be taking this lightly at all, so don't think I'll just study off-n-on those two weeks, pay my exam fee, take the exam, and pass. I know it will take a LOT more studying than that and a LOT more time. The requirements in Texas are:

150 Core Credit hours in the following for prelicensing ...

Principles of Real Estate I (30hrs)
Principles of Real Estate II (30hrs)
Law of Agency (30hrs)
Law of Contracts (30hrs)
Additional Core Course (30hrs) *

(*) - I'll probably take either the Marketing or Property Management course.

And, another 120 credit hours (4 courses) in either from this list, or from previous education. Now, this point really got me as they define "previous education" from these course. Having a Bachelors degree seems ot me like I will cover most, if not all, of those requirements. It all depends on when I submit my package to TREC for review (this occurs AFTER I take the core courses, though) as to what they'll accept or not.

Hard to Find Good Help

Over on the Live, Learn, Invest Blog, the author wrote a recent post about how some real estate agents don't have a clue. In my brief, 2-year stint in REI, I concur wholeheartedly. Anyone who has read my blog from the beginning will attest to all the unprofessionalism I've received from perceived professionals in this business be it agents, loan brokers, loan officers, government officials, or whoever. It seems I'm a magnet for attracting these types of people. Usually, I'm one to give a person the benefit of the doubt, and it has burned me in the past. I still think most people are honest and hard working, but our lives are always intertwined with interference that make perfection a fantasy.

Last week, if you recall, I sent an email to my CPA asking her when we could meet to discuss my accounting needs for this tax year. It's now Wed of the following week, and I haven't gotten any response. True, she may be away from her computer, so I decided to send her a follow-up email. (For those wondering, she always preferred emails over phone calls.) We'll see if I get anything. If nothing comes in my mail box by this weekend, I'll start looking for someone else. {sigh}

Update: I decided to check my "spam" folder for my email to see if by chance the agent or CPA sent me a response that got flagged as spam. Nothing from the agent, but the CPA sent a response earlier today that GMail thought was spam. Looks like I can scratch finding another CPA off my list. Whew!

The real big deal is with my current agent. I had full intention of sending her an email first thing yesterday to list our property. When I checked my email, she had already sent a follow-up to see how I was doing, if I needed anything, etc. Nice. I responded that I wanted her to list House #2, and gave her the info. I specifically told her that I wouldn't get out of work until at or after 5pm and if she had a problem with meeting in the evening. In her response she said:

"We can meet tonight and I can get the key from you."

A little while later, she sent me an email with all the forms I needed to sign. I spent my lunch period signing the forms.

Well, just as I thought, I got out of work about 5:10pm. I headed home to grab a quick bite and to call my agent to see if we could meet. When I called, I happened to look at a clock which said 5:50PM. After several rings, her VM picked up and I left her a message asking her if she still wanted to meet tonight or to put it off until tomorrow or another day. I left her my name and number and asked her to call me back as soon as she could. An hour went by with no response ... then two hours ... then three hours. I checked my email just in case she sent me something there. No response there, either. Right before going to bed, I checked my phone and email again. Nothing. As I write this at 10am on Wed, I still haven't heard a peep from her.

Update: Well, I finally got a call back from the RE agent at 4:40pm today. She said she only got her VM now (huh?). Okay, I'm not saying she's lying, but I'm not seeing any dedication coming from her. I mean (as I say in the next paragraph) she should have called me to see if we were going to still meet last night (i.e., staying on the ball). I'm still not sure what I'll do. I figure less than 2 weeks from Christmas, the market will be pretty much flat anyway for the next 2-3 weeks, so it's not like I'm in a hurry to get her to list it.

I just don't understand it. My wife is a stickler for people in professions such as this to be on the ball, and she flat out suggested finding another agent NOW. She used to work with a commercial broker as his assistant, and said no matter what, she would always call people back that very same day - whether she had an answer for them or was still finding them the info. She said even if I hadn't called and left her a message, she STILL should have called me back to see if we were still meeting, or what I planned to do - IOW, be on top of the deal. I've said it here before and I'll say it again, I should open a business - ANY business - and it would be successful for one reason: CUSTOMER SERVICE.

As far as the agent is concerned, I'm not going to contact her until the end of the day or if she contacts me beforehand. If she doesn't have a good excuse, I'll either find another agent or try the flat fee listing service (of course, knowing my luck the service will have an agreement with this agent to list the property).

House 2: Listing w/Agent

After another weekend with no offers (lots of interested parites, but no offers), my wife and I have decided to list House #2 with the RE agent I met recently. I'll meet her at the property tonight to give her the paperwork and key. I asked her to send me a CMA in order to get a better idea of what to list the property for. My research shows the house can go for around $125-129k, but I may have to lower it to the lower-$120's in order to sell faster - especially at this time of the year. The builder has the exact same floor plan in their inventory for $140k, which is WAY too much, if you ask me - I don't care if he's including a free washer, dryer, fridge, and/or beer-making machine, that's just too much for that area, IMHO.

I had thought about listing it myself via one of theose flat-fee listing services (about $600-700 after everything is said and done), but I just want to relax for the next few weeks to month. I've been at this REI thing for two years now without really taking any kind of break. I think I'll do that starting next week.

CPA

I'm so busy these days, I almost need to hire an assistant to keep track of everything I need to do. I've thought off-n-on about meeting my CPA now for months. It's one of those things I keep procrastinating about. Last night, I realized we are already heading into the throws of December, and I haven't even talked with my CPA since earlier this year! So, I sent her an email asking her when we could meet, but haven't gotten a response yet. I actaully met a real good CPA on one of the REI sites I frequent. From his posts, he seems to know his stuff when it comes to entity creation, applicable laws, and other CPA stuff as it pertains to real estate investing, because he is a seasoned investor himself. The only problem is he lives in Dallas. I've talked to him before, and he said he is willing to take me on as a client, but we'd have to do a lot of emailing and/or faxing of documents, long distance calling, etc. With time running out this year, I think I'll just go with my current CPA for this year's stuff, and maybe use the other CPA for next year's stuff. We'll see.

BTW, I think I'll do what Shaun did and post my thoughts of what I did and didn't accomplish this year, along with what I want to do next year.

House 1: Leased

I met the potential renter at House #1 last night to fill out all the paperwork for leasing the house. He reiterated that his credit should be repaired in 2-3 months, and would like to buy the house as soon as he can get a loan for it. However, I have a minimum term of 6 months on my rentals, so he'll have to wait until the end of May to buy it anyway. I had to go to the house to fix the toilet, too. The fill valve was leaking where the water intake goes into the tank. It probably only needed a washer, but the whole fill valve, hose, flapper, and arm looked in bad shape, so I just replaced the whole thing with a new one for $8. Leak fixed.

I am going to meet him at the property again tonight to pick up the 1st month's rent, 1/2 the security deposit, and 1/2 the pet deposit (he has a cat). We agreed he'd split the deposits up over the first two months, so he'll give me the remaining half with next month's rent check. Of course, all that will go to pay for the taxes that are due on the house by Jan 31st.

Since we were able to rent House #1 by ourselves, my wife wants to forgo hiring an agent to market House #2 for now. I told her the traffic has been almost non-existent for that house, and I doubt I'll get any more interest doing it myself, but you know women (no offense, ladies). :-)

I figure House #2 will sit until at least after the Christmas holiday season, but you never really know about these things.

Update: Met the guy at the property last night and gave him the keys and a copy of all the paperwork. In return, he gave me a nice check. Can't beat that!

Quick Update

Been extremely busy at work, at home, with REI, and with another venture I hope will open some doors. I've had a flood of people interested in buying and renting both houses since my last post, but no one seems to want to take the plunge. I think I finally convinced my wife we need a RE agent to sell them as I just don't have anymore time to devote to marketing/selling them myself. I have a meeting later this afternoon after work to interview a new agent. She actually works (and lives!) in the same area as both houses, so she may be a good fit as a future resource. She is also HUD-qualified (at least the HUD site says so - something I'll ask), which should help in future HUD acquisitions. I'm also going to meet a prospective client at House #1 who is interested in buying or leasing the property. He says it looks great from the outside, but he wants to see the inside to make a final decision. I also got an email from a birddog I met recently, who sent me two leads. One looks promising - the other looks too high. I need to run hard numbers on both to see if either will work.

See what I mean about busy? And that's just the REI part of my life. :-P

Edit: Met with the agent AND the agent's broker for well over an hour. Sounds like this will be a good fit, but I've said that before. The good thing is that the broker understands RE investing to a "T", since she invests herself. She's also a member of the city's Planning&Zoning Commission, so she has firsthand knowledge and said she can pass along any info to me. She also said that I was right in that the city does not have a housing authority, but said I could still rent via Section 8 by using a nearby city's housing authorty office. This was both new and exciting news to me as it opens up new doors for rentals.

Another bit of very good news ... The couple that saw House #1 tonight fell in love with it. They want to move in NEXT week. He says his credit is dinged from a divorce almost two years ago, but should be straightened out in 6 months. They want to lease it for 6 months and then buy it using a conventional loan. Also, they'll be renting it for $50 more a month than my previous renters. Whoo-hoo!!! I still need to verify his employment and make sure neither is feeding me BS, but they certainly seem like they are honest people.

Open House Results

Short Answer: A Bust.

House #2 (Saturday)

I got to the property about an hour before the open house was scheduled to begin. I went around and double-checked things, opened the blinds, and turned on all the lights. I put balloons on the signs I bought and put them out in front of the house and at an intersection outside the subdivision. I didn't really know how many people would show, so I bought several 12-packs of soda, some cookies, and mints and laid them all out as well. I had a sign-in sheet and flyers laying on the bar, also.

And then I just waited.

Around 2:30p, I saw someone pulling up, so I got waited for them to come in. Just then my cell phone rang. It was from someone with a Houston area code. I looked out the front window and noticed the person was on a cell phone, too, so I thought maybe it was the same person. Sure enough, I opened the door and the man said he was calling the number just then. I asked him to come in and take a look around. We chatted while he was looking around as he seemed to have a laundry list of questions to ask. He said he was looking for a 4BR in the area. I told him I actually had a 4BR for sale/rent, also, although, it was located further south. I told him I was having an open house on it the following day, so he could swing by and take a look at it.

The man said he and his wife are moving over from Houston (hence, the call from Houston). He said he went through a divorce a while back and his credit is shot because of it. He also had a business which failed at the same time. However, he recently remarried and is looking to start fresh in the Austin area. H said he starts work this coming week at a new job, which, he said on more than one occasion, should pay $60k+/yr. He said his wife is also looking for a job, which should bring in more money. His exact words after telling me all this was, "So, if you pull my credit, it won;t look very good." Ugh. His intentions were to rent for a year or so and then buy the house via owner financing. I told him it was a definate possibility.

For the next 1.5 hours I got absolutely no traffic at all. I saw a couple cars drive, stop, and the person get out to get a flyer, but no one came in. I didn't know how many people would come through initially, but I thought it would be a lot more than ONE - especially, since it was a gorgeous day for riding around looking at open houses. Maybe people were gearing up for the coming holiday week??? I was just totally disappointed.

House #1 (Sunday)

The man who came buy House #2 on Saturday said he was going to look at another house in the area on Sunday, but would swing by House #1 afterwards. Sure enough, he came by the house around 2:30p. He really liked the house, but had a couple of reservations. First, he said he needed four TRUE bedrooms. In House #1, the 4th BR is really a nursery/study/exercise room as it is joined by the master BR via double doors. He also didn't like the monthly lease price of $1,195. I made it artifically high to attract buyers more than renters, therefore, if someone wanted to rent at that price, I would make some decent cash flow. Lastly, he wanted a house that already had ALL the appliances installed (i.e., fridge, washer, dryer). I told him that I'd probably throw in a fridge if someone was serious about renting, but would not throw in a W/D unless the leasee was committed on a long-term contract.

He said the other house he went to view before this one was a 2-story, was all-electric (he preferred gas for cooking), had a msaller family room, but had 4 true bedrooms, was priced about $150/mo cheaper, and had all the appliances already. I told him it would probably be a tough decision then. He wants his wife to come out and look before committing to anything, and asked if I would be available this weekend to show the house, which I said "Yes."

Again, that was the ONLY person who came through to look at the house. I was even more disappointed this time than with House #2's showing.

I discussed some other options with my wife later that night. I told her we could put ads in the Green Sheet and/or local paper. We could also pay $400 and get an MLS listing via one of those flat fee listing services. Lastly, we could lose some profit on the backend and have a Realtor list both houses. I'm strongly leaning towards the last option (the Realtor). We'll lose around $7500-$8000 in seller's commission fees alone, but it may be worth it to get these places sold quicker. Of course, we are running into the absolute worse time for selling a home, so even that may not be too promising.

Open House

I may have mentioned in a recent entry that I will be having an open house on both House #1 and #2 this coming weekend. I plan to have the open house on House #2 this Saturday, and House #1 this Sunday. I've never had an open house, and it's been a while since I've even been to one, but I figure there can't be too much preparation aside from getting some cookies out, soda/waters in a fridge, flyers made, and a sign-in sheet out. Each open house will be scheduled for two hours. I put "OPEN HOUSE" signs in the yards already with a date/time on them so that people who drive by and see the other sign (and pick up a flyer) will know about the open house beforehand. I also put some ads on Craigslist about the upcoming open houses.

The RE agent that called me last Friday (or was it Saturday), called me again yesterday morning. He left a VM saying he was going to be golfing and won't be done until 3pm. He asked me to call him to see about showing House #1 to him and his father. I wasn't able to call him back until almost 3pm, and he said he didn't go golfing after all (we had terrible winds yesterday). He said he would still like to see the house, but it would probably be more like Thursday. He then said he'd call his dad right away and call me back with a definate date/time. The way he said it, I thought he'd call back within 10-15 mins. Well, here it is over 24hrs later, and I still haven't heard from him. This is actually the 2nd time he's called and said he'd call right back, but didn't. Oh well. If he calls before the weekend, I'll tell him just to come out during the open house. :-)

I still haven't heard back from that couple, either, who I showed House #1 to last week or the guy who I showed House #2 to the other night. Lots of nibbles, but no bites yet.

OT: Beta Blogger

I haven't investigated this much, but I got an error recently trying to post a reponse to another person's blog the other day and it gave me an error saying I couldn't. I can't remember the exact error, but it had something to do with me recently merging to the new beta blogger. So, if someone is trying to post a response here and gets the same error, I guess I'm screwed temporarily as I can't seem to revert back to the old format. Bah!

Small World

So, I get home last night and am in the middle of hanging some shirts, when my wife yells to me that my phone is ringing. I get it too late, and write the number down. As I'm writing, the phone beeps and shows that the person left a message. So, I call my VM and listen to the message. It's from a man wanting to know more about House #2. I was going to go to both houses anyway to hang some "OPEN HOUSE" signs for this coming weekend, so I wait to call him when I'm at House #2.

I drop by HD to pick up the signs and head to House #2. As soon as I get there, I call the man back. He says he owns a house in the neighborhood, and his mother is wanting to come down from West Virginia to live near him. I tell him I'm originally from West Virginia, too, and that if he wants to see the house now, I am there and can meet him. He says he'll be right over.

Sure enough, not more than 5 mins later, he's at the house. Beforehand, I had turned all the lights in the house on so he (or I) won't have to do it when he gets there. As he's looking around, we talk about West Virginia and how it came to be that we both ended up in the outskirts of Austin, TX. Ironically, our paths were almost exactly the same. He said he was in the Army and was stationed at Ft. Hood for 8 years. He got out and moved down here so that he could get a job as a nurse. I moved from West Virginia to San Antonio due to being in the Air Force. I was in the military for 6 years, and got out and wound up where I'm at due mainly to my career as well. He says he's been trying to get his mother to move down here to get away from those dreadful winters in West Virginia, which, ironically again, is what I've been trying to do with my mother ever since my step-father passed away two years ago.

He asks a few questions about leasing the home (i.e., terms, specials I have, security deposit), and says he'll talk to his mother more about it. He said it's the exact same floorplan as his, and his mother fell in love with it when she came to visit several months ago. He also said the plan was to have her come down in mid-December, have a house or two lined up for her to choose, drive back to WVa to pick up her things, drive back here, and unload her stuff. So, he said they were looking at around a Jan 1st move-in, which sounded good to me.

It was interesting, but I was more happy to meet someone from where I grew up more than knowing I may have a renter for the house (note: there aren't too many people I meet down here that are from WV). After he left, I put up the "OPEN HOUSE" sign next to the other sign in the yard and left to House #1 to do the same. I plan to have an open house on House #2 Saturday and then have one for House #1 on Sunday. I also noticed that the flyer tubes for BOTH houses were empty, and I didn't have any spares. I had just checked these on Saturday, and they were about half full, so I must've gotten a lot of lookers on Sunday. I need to print out a LOT of flyers to put out tonight AND to keep as backups at each house AND for this weekend's open houses.

House #2: Finished

I'm finally finished with House #2 - well, almost. I spent 6 hours at the house Saturday and finished the rest of the cleaning and touch-up painting. After vaccuuming and steam cleaning the carpet, I've decided against replacing it. There were a coupld of stains that didn't come completely out, but they weren't so bad that it would require ripping up the entire carpet in the house. Man, was I exhausted afterwards. I not only finished vaccuuming and steam cleaning, but I also ...

... finished painting the trim on the baseboards and door frames,

... removed the 7-8 cement blocks from the fence outside (I guess their dog would try to crawl under the fence, so they put blocks in some areas to prevent him from going out),

... cleaned all the windows (inside and out),

... cleaned the outside rear door and siding,

... got on my hands and knees and scrubbed the linoleum in the kitchen, pantry area, utility room, and entry with Comet,

... cleaned the kitchen again, including the sink this time,

... went around and did some spot cleaning,

... gathered all my tools and supplies and loaded them in my car.

I'm sure there were some other things, but that's all I can remember. My back, knees, arms and fingers were killing me afterward from scrubbing the floors. They had a lot of scuff marks, etc., so I had to get down on my knees and scrub hard to get them out.

I'm still not completely done, as I left two large bags of trash and my ladder there that I need to pick up. Also, with carpet that has never been steam cleaned before, when you do it the first time, little piles of carpet fibers appear every so often. It happened with House #1 and it happened with this house. Unfortunately, the vaccuum I used to clean beforehand is old and they don;t seem to make bags for it anymore (I checked at Walmart and Home Depot beforehand). So I still need to go back and vaccuum the whole house again to get the little piles up and to give it a nice appearance.

My wife suggested having an open house next weekend, which I agreed. The weekend after that is Thanksgiving, and holidays (especially Thanksgiving) aren't usually a good time to show houses as people are too busy visiting relatives and/or out of town. So, I'll try to get things set for a showing this coming weekend at BOTH houses (different times, of course).

BTW, I haven;t heard back from anyone yet regarding House #1. I emailed the couple who came and saw it last week about the financing, but haven't gotten a response. I also expected the RE agent who called me about his dad to call me back, but he never has. Maybe the list price scared him off or something - who knows.

Activity Heating Up

I guess I just need to give it time for my marketing to take root. Within the last few days, I must've gotten around 10 calls regarding House #1 alone.

On Wednesday, I showed the house to the couple who called me about owner financing. They actually live in the same neighborhood and rent right now. They said House #1 is the exact floor plan as the house they are renting, which was great because they liked it. The lady fell in love with the house, which was an added plus. They said their backyard is actually a little bigger than theis house, but they liked the idea that there was no one behind the house (it's just a large meadow). She said if she could, she would buy the house today, which really sounded promising. Of course then the bad news came ... It turns out that their lease isn't up in January - as I had guessed - but in MARCH. Ouch! I told her that that would be a definate problem as 5 months is a long time to hold a house - even if she were to put money down. She talked with her husband with me there and asked if they could afford two payments (which he replied "no"). I told her some landlords are flexible and maybe they could talk to their landlord to see if they could work out an arrangement. She also wanted me to run some figures for her as to what the owner financing may look like. They were interested in full owner financing with 5% or so down. I told her without calculating it that it sounded like the payments would be in the neighborhood of $1,200/mo, which was a little higher than they wanted to pay. Later, I was astonished that my guess was pretty much on mark to what I had figured. I haven't had a lot of time to do different kinds of creative financing, but these are two options I came up which should satisfy their financial situation, while giving me good cash flow:

Option #1
===================================
Sale Price: $145,000
Down Payment: $5,000
Financed: $140,000

1st Year: 30yr @9.25% => $1152/mo
2nd Year: 29yr @9.50% => $1177/mo.
3rd Year: 28yr @9.75% => $1202/mo.
4th+ Year: 27yr @10.0% => $1226/mo.

Option #2
===================================
Sale Price: $145,000
Down Payment: $7,250
Financed: $137,750

1st Year: 30yr @9.00% => $1108/mo
2nd Year: 29yr @9.25% => $1132/mo.
3rd Year: 28yr @9.50% => $1157/mo.
4th Year: 27yr @9.75% => $1181/mo.
5th+ Year: 26yr @10.0% => $1205/mo.

I also got a call from several other people wanting to know what the owner financing entails, but that's all they've asked. Today, though, I got a call from a RE agent who said he has a client interested in it. I called him back and he said the client is his Dad who got divorced recently, and his wife failed to sign over the house, so it got foreclosed. His credit is now dinged with a foreclosure, so he is looking at owner financing. He said he could put down $10,000 (maybe more) and wondered what terms I had. I told him I could work with $10k down, but I was firm on my list price of $145k. I told him we could work out hard numbers on the financing later if he looked at the house and decided he wanted it. He said he would call his client/Dad tonight and call me back with a time to meet.

Lots of other stuff happening - too much to write about. Maybe next week if I have some time, I'll write more.

A Wild Four Hours

I tell you nothing in this industry should faze me anymore. I got to House #2 yesterday around 4pm and left about 8pm. Here is what happened in those four hours ...

There were two things that topped my priority list: fixing the drywall repairs and fixing the doors. I wanted to get those jobs finished before anything else, so I started with the drywall. I actually took a digital camera this time and took some pictures of the area after I had sanded away the old spackle and paint. I just need to find time now to download and post the pictures. The first thing I did was spray on the spackle again. It says to let it set 2-5 mins and then to use a straight-edge to "flatten" the spackle down into the rough textured look. I used one of my old bandit signs as the straight-edge and it worked great.

While the spackle was drying, I started with the doors. There were four doors I had to trim slightly due to them rubbing against the carpet. I took each one down and trimmed about 3/32" off of the bottom which turned out to be perfect. During that time, I received FOUR phone calls. I guess the noise of the saw drowned out the ringing as I didn't know I got any calls until I checked sometime later. Three of the calls were from private numbers, and only one left a message. The 4th call was from my 1-866 number, which I couldn't check until I got home later. so, I listened to the VM and it was from a lady who saw my yard sign for House #1 and was interested. I immediately called her back. She said she lives in the same neighborhood as House #1, but is renting right now. She said what caught her eye about this house was the fact I was offering owner financing. She wanted to know more about what all that entailed, so I told her the best I could using layman's terms. She also asked if I could sell the house to them on a Rent-to-Own basis, which I told her would be a possibility (although with Texas' recent laws limiting L/O's, I would need to contact a RE attorney first). We talked a little more and I set up an appointment to meet with her and her husband tonight at House #1.

Whoo-hoo!!!

After talking with her, several things went through my mind. First, she said her current lease doesn't expire until the beginning of next year (she didn't say when exactly). That means if I were to sell/rent it to them, it would have to sit for a couple of months (at least). This may actually be a good thing, tho, as it could be a bargaining chip I can use. For example, suppose we meet tonight and they fall in love with the house. I could tell them that they could have it, but it would put me in a difficult position having to let it sit for so long when I could have sold it to someone else in the meantime. Therefore, I could ask for some non-refundable consideration upfront that could "hold" it for them. This would not only put money in my pocket now, but I wouldn't have to worry about the loan payments in the next couple of months. I'm still weighing this idea as I haven't had enough time to think it all the way through yet.

BTW, I got a call yesterday morning from someone interested in House #2 as well. They left a VM with their name and number, so I called them back at lunch. The man said he was on the phone with his wife talking about House #2 when I called him, and asked if he could call me back in a few minutes. I said, "Sure." I never did hear back from him. :-(

But it was exciting to see that my houses are getting some interest. Oh, well - getting back to the house now ...

After the spackle had dried, and painted over the areas with the NEW (i.e., correct) paint and I did a helluva job, IMHO (third times a charm?). Even close up I couldn't tell the two smaller areas were even damaged before. The larger area is a bit more noticeable, unfortunately, but still a lot better than my previous attempts and a heckuva lot better than what the original owner did. So, my two biggest priorities were now out of the way.

The next thing I wanted to do was to start cleaning. So, I started with the back bedrooms and just started picking up any tools and other debris I left behind. I also picked up any large peices of trash that I knew I couldn't vaccuum up. After that, I started with the first bedroom and vaccuumed. I then sprayed some stain lifter on the carpet stains, let it sit for a few minutes, and steam cleaned the room. To my surprise, all the rough stains came out. I then did the same for the second bedroom and dining room. Let me tell you, when I dumped the water out after cleaning each of those rooms, it looked as thogh someone had gotten two fistfulls of mud and mixed it in the water - it was that filthy. I then vaccuumed both the mini hallways between the secondary bedrooms, the hallway from the entry to the family room and the family room itself. By this time, it was about 8pm and my back was killing me from bending down with that stupid vaccuum the last couple of hours, so I decided to call it a night.

Two things caught my attention while vaccuuming/steam cleaning. First, the carpet is in bad need of stretching just about everywhere. I mentioned before how cheap this builder was and the carpet was definately no exception. I understand normal wear and tear, but this carpet was only 2-3 years old and already needed stretching. That's pretty bad, IMHO. The second thing was the fact that it looks as though I won't need to get new carpet installed. While cleaning, I got most of the hard stains out and the carpet looks great. If I can just get a professional carpet cleaning crew in to do the whole house along with restretching the carpet, I think it will be enough. Ironically, when I got home last night, my wife said we got some circulars in the mail - one of which was coupons for carpet cleaning.

So, an interesting span of four hours indeed. Sometimes days will go by without any interesting news in this venture and other times you have a week's worth of news in only a few hours. :-)

Re-evaluting Things

This is a tough post to write for me, but I think I need to say it.

I really need to re-evaluate what it is I want to do regarding REI in the future. Life has a funny way of dictating things for you even when you have a strong desire to forge in another direction. I'm at one of those critical points in life where I have to make some tough decisions, and re-evaluate my goals (and, more importantly, how to achieve them).

I knew last year that from this year on I would have a rough time with setting seeds for my REI endeavors. My wife and I were blessed with the news that we would have twin boys coming into our lives, so I knew I would be severely limited with time (as if I wasn't already). I'm experiencing now the pnnacle of the mental tug-of-war I knew would come one day. I need to get House #2 in a state of marketability, but it is taking a lot of my time away from the family. In hindsight (and foresight now), I realize I could have hired a handyman for most, if not all, of the repair work I am doing. And perhaps that may be a big part of my re-evaluation.

However, more importantly, I am beginning to come to the realization that all my efforts in achieving my goals may be for naught, anyway. If I were to sell these two houses today, I would pocket around $40,000 at closing. I haven't stepped back to see exactly how that would transform into net profit yet, but I figure in the neighbrohood of $25,000 (give or take $5k or so). Nice, you may say, and I would be in full agreement. But that money will be here today and gone tomorrow as my wife's vision of buying, fixing, and selling houses differs in mine to the point that I wonder if I will ever "make it" in REI. After painstakenly showing her time and time again of the rewards REI has to offer, I have still not convinced her of the financial independence I strive while doing it. She envisions this as more a supportive income rather than a path to building wealth, which is evident by her wish to use the money as disposable income rather than for reinvesting.

I won't say I will get out of REI completely or even partially, but I need to re-evaluate my goals and what it is I not only want and dream, but that I can realistically achieve given the obstacles in life (good and bad) that I have both inherited and created. It's a struggle, but I have persevered worse things.

A Glutton For Punishment

Call me a perfectionist, call me dumb, or call me a glutton for punishment, but I decided all three of the drywall patch jobs just looked "cheap", so I set about redoing them all last night. The thing that really got the ball rolling is the fact that the gallon of paint I bought after going through the 5 gallon bucket WAS different. You can't tell it when you are painting a whole different room, but I had used it to paint over the drywall patch jobs in the master bedroom. Earlier, I had painted the entire bedroom with the 5 gallon bucket. I saw the difference in the paint tones immediately when I walked into the room last night. I had to go to HD to pick up two more door knobs, so I decided to get some more supplies to redo the drywall patches.

I got to the house late (Around 5:30pm), and didn't get home until after 10pm. I was totally exhausted from not only working over 4 hours at the house, or working an 8hr day at the office, but one of the twins decided to get up at 3:30am that morning and not go back to sleep. By the time we got to bed last night, it was approaching midnight. Needless to say, I did not feel like getting out of bed this morning at 5:30am.

Anyway, I spent most of last night cleaning. I cleaned the rest of the blinds, installed a bracket for one of the blinds (it was sagging terribly), took down all the light fixtures (except the dining room and master bed/bath) and cleaned them, and cleaned all the window ledges. I also installed the two door knobs and painted the door frame in the master bath (I had puttied over the scratch marks a few days before).

The remainder of the night was devoted to the drywall patch jobs. I bought some 60 size sandpaper and was thinking when I bought it that it would be too coarse. I'm glad I bought it as the old drywall mud and spackle were a pain to get off for some reason. Originally, I had just installed a peice of drywall in the holes and put joint compund all around it. Stupid, stupid, stupid. I now know why they say TAPE and float as you could see the lines. So, this time I actually put some drywall tape along the joints. It took a while to get all the old stuff sanded off, because the area is not very well ventilated and it would cloud up rather quickly with dust.

Tonight I need to finish spackling the drywall. Afterwards, I'll be able to paint. I noticed a few of the doors need shortened ever-so-slightly (probably 1/16") as they rub-up against the carpet. After that, I can finally say I have nothing left but cleaning and deciding what to do with the carpet. I'll take a vaccuum and our carpet cleaning machine over, too, and get a feel of just how bad the carpet really is.

Doors, Drywall, and More - Oh My!

Even though I didn't work as many hours as I had wanted this weekend, I still managed to get a lot done on the houses.

Friday

I decided to stop by another Home Depot on the way home from work to talk to someone who knows about doors. I talked with a gentleman who gave me some pointers on what to do (and not to do) to get the interior doors up. He said to buy a cheap router and told me to use a certain bit to make the bracket moulding. He also gave me a kit that helps in creating the door bracket moulding. My FIL has a router, so I just bought the bit and the moulding kit. I also bought one of the five remaining doors I would need for the house.

When I got to the house, I started in on the first door (MAster Bathroom - the one I started chiseling). Wow, what a difference. I made the two other mouldings in a matter of minutes. I screwed the brackets on, and, to my surprise, the door was hung. However, when I went to shut it, it wouldn't shut all the way - the door was hitting the door jam. Great. After analyzing it for a few minutes, I realized I didn't make the moulding wide enough. I started on the next door (Bathroom #2), and within 10-15 mins, I had the door completed. It not only hung correctly, too, but it also shut perfectly. I had some other side projects I needed to finish as well, so I did them. My first priority Saturday would be to take down the first door and extend the mouldings a tad bit.

Saturday

One of the things the renters told me the day before they moved was that their lawn mower had broke and the grass in the back was getting high. I had told them not too worry about it that I was going to probably mow and weed eat again anyway. Well, I decided Saturday morning that I was going to mow and weed eat BOTH houses before I do anything else to get it out of the way. With winter coming up, I wouldn't need to mow or weed eat either house until the spring again, anyway.

Unfortunately, I forgot my wife had an appointment Saturday morning, so my plans were delayed. After that and doing some other things around our house, I finally got to House #1 around 1:30pm. The lot is almost 1/3 acre, so it took me a good while to mow and weed eat. There were also a lot of peanuts (the ones used for packing - not the edible kind) on the front lawn. I figured it was due to the renters moving. It took me a good 10-15 mins. to get all that cleaned up as well. So, House #1 was done and it looked great. I then drove to House #2 to start the projects there. I started there by mowing and weed eating as well. If you recall, the house next door to House #2 was in a state of preforeclosure when I got this house. I tried contacting the owner, but I could never reach her. Well, the place is a complete shambles now - the lawn is growing wildly, there's junk in the backyard, etc. So, when I mowed and weed eated House #2, I went ahead and did some yard work to the house next door as well. Not a whole lot, but just enough so it didn't look like an eyesore as much (people don't want to live next to an eyesore).

Next, I took down the first door I hung, extended the moulding a tad, rehung it, and it works perfectly. I tell you, each time I buy one of these houses and fix it up, I learn a LOT about being a handyman. I can now say I can put up prebored 6-panel interior doors. LOL!

Having put up two doors, I was all excited. I still had at least five more to hang (master bedroom, bedroom #1 main and closet, and bedroom #2 main and closet). There is also the utility door and the entry coat closet door, but I think I'll just leave them as is. They are in good shape, so replacing them would only be for cosmetic reasons. I may replace the entry coat closet door, but only because it's right there in the entry when people first walk into the house, but I doubt it. Anyway, I was on a roll and wanted to hang up some more doors. So I headed to the local Home Depot to pick up 4/30" doors and 1/32" door. I also had to pick up some spray-on spackle for the drywall repairs and a few other supplies. Lo-and-behold, I get there and can't find any 30" doors! I find the guy working the door department and he does some checking for me. He says the computer says they have 25/30" doors! but he can't even find them. He even goes in the back and says they are nowhere to be found. Great. I pick up a 32" door and leave the store an unhappy customer.

I get back to the house and hang the 32" door and finish a couple of other projects. It's still early ~7pm, but I just don't feel like working anymore and head home for the day.

Sunday

I get another late start (~2pm) on the house due to personal commitments. Before going to House #2, I head the opposite direction to pick up 4/30" doors at Lowes. Thankfully, they have them. I then head to House #2 and begin my day. I manage to rout the bracket mouldings on all four doors, screw in the brackets, hang them, and reinsert the door knobs on all four doors in almost no time. (Handymen of the world, look out!) I then start tackling the drywall repairs. The night before, I had sanded off the paint and bad spackle job on the two smaller repair jobs to do them over. I also respackled them and the large 3'x4' drywall section. Now came time to test how well I did by painting the areas. I admit they weren't the best drywall repairs ever done, but I was quite pleased by the results. If you look at the areas directly, you can probably tell there was work done, but it's a whole lot better than what they looked like before. I just wish I had taken "before" pictures to show what the original jobs looked like.

Another thing I did on Sunday was hose off the garage, driveway, porch, and the sidewalk leading from the driveway to the porch. When I mowed on Saturday, there was gras all over the driveway. Also, I did all the routing of the doors in the garage, so there was a lot of sawdust on the garage floor. And, the ants I killed early on still had the mounds sitting there, so I housed them off as well. When all was washed off, it looked a lot better.

Like the night befire, I just got to a point where I didn't feel like doing much else (it was probably my body's way of telling me to slow down a bit). So, around 6pm, I started closing shop. Right before I left, I filled the bathtub up with about 6" of water and poured in some of the Simple Green cleanser I bought earlier in the week. I then took down the two blinds in the dining room and dipped them vigorously in the water mixture for about two minutes each. They came out looking spotless. After shaking as much water off them as I could, I rehung them to dry further. Then I left.

To do's

It now appears the worst and heaviest rehab work is behind me. Now, my biggest feat will be cleaning. I still need to take all the light fixtures down and clean them, clean all the blinds, clean all the floors, and scrub both bathrooms, kitchen, breakfast, and entry. I am still undecided on the carpet. It's a complete mess right now with all the back-n-forth work I've done, so it's hard to tell in what condition it's in. I heard one guy say he buys discontinued carpet at Lowes for 45-50 cents per sq. ft., so that's an option to consider. I roughly estimated the carpet in the house to be around 850-1,000 sq. ft., so that's be about $380-550. I read different articles on how to replace carpet, and although it sounds easy, it may just be too much for me to do. Hanging doors is one thing - laying carpet is quite another.

Progress

For the first time with this house, I am starting to see the light at the end of the tunnel. I still have several more projects ahead, but the worst is behind me, I believe.

Painting

I finished painting last night - well, almost. I still need to paint the two small walls where the 3rd drywall repair is located, but that should only take about 30 seconds to do. The master bath really took longer than I expected, because I had to manuever around so many things. The paint dried the same as the bucket before, which was a big relief, too.

Door Situation

I stopped by Lowes on my way home from work and looked at their doors. They had the right size doors without the hardware, which was exactly what I wanted. So, when I finished painting, I ran by teh local Home Depot and checked their inventory again. Sure enough, I didn't look at everything the first time as they had the correct doors, too. I was pickingup two of the 24" doors when an employee asked me for help. We chatted a little and he told me that I'd need to rout the area on the doors where the brackets go. Great. He said instead of buying a router, he suggested a tool that you just pound into the door and it will make the necessary groove. You then just chisel out the wood and your done. So, I took his advice and went back to the house. HAHAHA! Of course, it didn't work for me. It took me about 30 mins to actually make the groove for ONE bracket on the door using this guy's advice. Even then, the groove needed to be sanded down as the chisel left it pretty rough. time to take back the stuff and get a router. I'm just happy that I found the right doors.

Clean Up

I've been avoiding cleaning up messes I make, so when I was at HD picking up the doors, I also picked up a box of construction bags. One of the things I did last night was clean up a lot of the mess. I started using one corner in the dining room as the "heap pile", and after I cleaned it up and some other areas, the place started looking a lot better. I also bought a nice sponge and some of that Simply Green cleaner. I also began cleaning the trim and door frames as well as the linoleum tile in the kitchen, entry, and bathrooms. That made a huge difference as well.

Other

Several other things I did last night were:

1. Caulk all the noticeable gaps in the baseboard and door frames.

2. Use some "liquid nails" to glue down the linoleum in the kitchen where it was beginning to lip up.

3. Started painting the baseboard trim and door frames.

4. Hopefully, finished the mudding of the 3rd drywall repair.

Tonight

Tonight's two big projects will be to finish the dryall repair (sanding, splattering, and painting), and to get a router and start hanging doors. If I can get the drywall done tonight and the two doors I bought last night up, I'll be happy. I have about 1/4 of the house trim painted, and that went by quickly, so maybe I can get that done tonight as well.

It's looking like I'll be done with all my stuff by the end of the weekend. I'm still strongly debating the carpet issue. I want to wait until after I'm done with all the other indoor projects and vaccuum the carpet real good. I'll then get some carpet stain remover and see how well it does on the tougher stains in the house. If it does okay, I just may have the carpet professionally cleaned and restretched. If it looks crappy, I'll just replace the carpet altogether. Estimates I've gotten from other people are anywhere from $1,500-$2,000 to have the old carpet removed and new carpet installed. It may just be worth it.

Almost Done Painting

I managed to get the remainder of the master bedroom, dining room, entry, and some of the master bathroom and entry to the master bedroom painted last night. Tonight I'll finish the master bathroom, and finish prepping the drywall repair on the entry to the master bedroom, so I can paint it. The two smaller drywall repair jobs didn't turn out so good. It was hard to tell how they looked until I painted over them last night. You can definately tell there was work done on them. If I get a chance later, I may sand off the paint and spackle and redo it.

I originally bought a 5 gallon bucket of paint and it almost did the entire house. Unfortunately, I ran out about midway through the dining room, so I had to make a run to HD for another gallon. The label was messed up and I had misplaced the original info about the paint, but the man at HD assured me it he could look it up. When I got back to the house and started painting, something just looked different about the paint. It looked almost like it had a more yellowish tint to it. Later, I found the paper I had written the info down on and sure enough the numbers weren't exactly right. They weren't off by much, but still it wasn't exactly right. Tonight I'll see how it looks and if there is a noticeable difference, I'll return the paint and redo the dining room and master bath.

I also set up the flyer tubes on both houses and put 20 flyers each in both tubes. Yesterday morning, I put a small ad on Craigslist about House #2. Within an hour or two, I got a call from an agent wanting to get more info (he left a VM). While at House #2 late in the afternoon, I called him back, but the phone just rang and rang (i.e., no VM). I also got another call sometime during the day, but they left no message. I called them back and same thing: ring, ring, ring.

Update: The more I investigate the door issue, the more I think it's probably lack of knowledge on my part. I looked at Lowes.com breiefly and notice they have different kinds of doors, too. I bought and then measured (and took back) a 24", 6-panel, prehung door at Home Depot. It included a frame, which I thought was just for ease of transporting, but now I see it was the actual frame it resides in. IOW, I bought the door along with the door frame (or, at least, part of the door frame). No wonder it didn't measure exactly right. So now I think I'll either go back there or go to Lowes and actually talk to an employee in-depth about it before trying to do it on my own.

Painting Almost Done

I'm just about done painting the entire house. I spent several hours last night doing nothing but painting. I manages to knock out the kitchen, breakfast, family, bathroom #2, and most of the master bedroom. I just need to finish the master bedroom, master bath, entry to the master bedroom, dining room, and entry. All that should take about 3-4 hours. I bought some spray spackle to use on the drywall patches, and it looks like it will work. I sprayed it on, let it sit for a few minutes, and then scraped it to flatten the pattern. I won't know how well it turned out until I paint over it. The large drywall patch job in the master bedroom entry is giving me all kinds of fits. The main 3'x4' patch is fine - it's the 3"x4' strip on the adjacent wall that's giving me headaches. Hopefully, I can tackle that in the next few days.

I still need to do something about the door situation, too. I'll probably go by Lowes to see what kind of selection they have. I hate to think I'll have to special order these doors.

Next, I'll start recaulking all those areas that have caulk that is rotting away, plus caulk the gaps in the baseboards and door frame joints. After all that, I'll start cleaning the place. I've lost count of all the spiders I've seen and killed in the house. They are all small for the most part, but there seems to be one every time I look around. I even caught a few walking on walls I had just painted.

I think at this point I'm going to replace the carpet. It'll prob cost me $1-2k, but it may be worth it in the end. I also put a "FOR SALE BY OWNER" sign in the yard with my cell # and "Owner Financing" written on it. I also made a small, hand-written "FOR LEASE" sign I put on the upper corner, too. I also did the same thing for House #1.

I also bought a couple of flyer tubes, but am waiting to actually make the flyers before putting them on the signs.