I had the inspection yesterday. It’s the same guy who inspected my personal home. He remembered me and did a very complete job. He also gave me a discount and some very good suggestions I will be sharing. From the inspection I built a primitive scope of work. Nearly the entire list (except electrical) can be done by an experienced handyman. The big guess is if the hard money lender will allow me to do that. When I get some numbers together I’ll share the scope. Still, I think my rehab high end of 10k is not bad.

The property inspector suggested going to the habitat for humanity store. They have deeply discounted supplies as low as 10 cents on the dollar. All the proceeds go towards the organization which is another plus. The inspector mentioned throwing in 2-3 wow factors for the next inspector. Little items like cleaning the furnace spotlessly. Cleaning up the electrical box, added vents for the attic, and any other odd place that normally gets over looked. Many of the items can be done very cheaply and give the inspector a very good impression. That matters because this home will likely be sold to an FHA buyer. The inspection matters and the more frugal wow factors I can pull off now, the less ow factors I will likely have to deal with later.

I have yet to call the hard money lender. That’s my call tomorrow. I am looking through there website again to make sure I will have the desired info quickly and easily. It will be tight on my finances for a few months until the property sells. I will be using nearly all my liquid assets to make it happen. On the next post I will run through the scope of work and my projected costs. Its a bit of a stab in the dark, but as I learn I can adjust.

On the property manager note, I had a bit of a setback. I had a really good PM firm lined up and ready to sign their contract today. I got a call from them this afternoon. One of their tenured PM’s is leaving the company after 12 years and leaving the industry. They told that while they could handle my two properties, it would not be fair for me until they replaced her. They have 3 other folks in the office, but my properties need a bit more attention at the moment. I appreciate their honesty and will likely use them in the future if I can. I have already lined up another firm. They will be meeting me on Monday at the properties. I plan on having two different PM firms when my personal property becomes a rental. I do not want be left stranded again without a backup company ready to go. Perhaps anal, but if it becomes a burden i can always change back to one company.

I haven’t been able to get a hold of the old PM firm yet, but strangely they were able to send me a bill for August PM fees. Kinda sad companies turn this bad. They will have to use the greater fool theory from now on. Oh well.

I haven’t heard anything on the potential personal property. I hope to hear within the next week, but with two lenders, its anyone’s guess how long it will take.

That’s all for now. I leave you with this quote. “The line between failure and success is so fine that we scarcely know when we pass it: so fine that we are often on the line and do not know it.” Elbert Hubbard

He told us he would not take more offers once ours was in, since it was the first offer in weeks. 2nd, do say that you will push our offer when you have no intention of doing so. Both offers were almost exactly the same. Finally, do not string buyers along for nearly 2 weeks while you pretend to do your job.

Unfortunately this is the 2nd time this year we have had poor dealings with Realtors. That gives their profession a black eye. Its really sad, because I know there are very good Realtors out there. Heck my buyers agent is one of them. But we had our time significantly wasted by someone who does not have the professional courtesy do as they promise. That does not sit well in my book.

Okay off that rant, its unproductive. We will push forward. It may be a blessing in disguise. The neighborhood is good, but I am constantly finding better. The house had a few potentially costly unknowns. We can now push forward to find the right home at the right price in the right area.

That’s all for now. I’m off to drive for dollars. I leave you with this quote “You miss 100% of the shots you don’t take” Wayne Gretzky

Late Update: I haven’t made it out the door, but the seller of the probate property just called and has setup a meeting with me and wants an offer in writing on Monday. He said he’ll have a final decision on Thursday next week. Okay, now I’m out the door. Have a good weekend all.

The BPO (Broker Price Opinion) from the listing agent came in at our offer price. Those versed in short sales will note that the BPO must come from the bank. You are correct. That is still the case here. What the listing agents office does is rather savvy. They do their own BPO, get with the banks BPO agent and come up with a best price for the property. What he found is the bank BPO was generally coming in to high and he was having trouble selling properties from them. This makes his job much easier. It also makes it easier on all the parties to get the transaction done quicker.

My wife and I have a real good shot at this property. The purchase price is 51 cents on the dollar conservatively. We will be going in as owner occupants. We can wait out the lengthy short sale process. We are solid buyers, and we have a proactive agent on our side. All pluses. Time will tell.

On another note. I attempted to call one of the probates tonight to make an offer. I will try again shortly. I will be offering 160k on this property. My coach and I discussed 170k, but I ran the numbers again and rechecked the comps. I’m just not comfortable that high. The comps are very screwy in this area of million dollar homes and bungalows. My comp is at 300k with a high quality rehab. That number requires me to finish the basement. The basement finish requires 20k worth of basement floor lowering to increase the 6.5 ft ceiling height. If I have to duck at my short height, the ceiling will not pass code. I estimate 55k worth of work to this 1350 sq ft home. 675 up and down. I can make a very desirable 3/2 with master bedroom if I get the bid.

That is all for now. I leave you with this quote; “Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.”
Thomas Jefferson

I have one loan through his office (he underwrites his own loans). He is able to refi this one with minimal costs. Paul wisely takes the conservative approach and has his loans meet criteria so he can sell the notes if need be, but it allows him much greater flexibility. The other two will require a complete loan package. He gave me worst case scenario for refi costs. He has to in order to prevent him from making up the difference in case the worst case hits.

Total closing costs $5723 that I bring to the table. That’s a big chunk of change, but I won’t have to make 3 mortgage payments for each month I refi. That’s a savings of $2173 bringing the out of pocket cost down to $3550. That can be recovered in 13 months. In my calculations I must add in the added loan balance of all three of $5691. Also assume $500 appraisal each for 2 properties. The loan with his company won’t need an appraisal. Combined cost of $10214. Divide that out by $328 results 31 month payoff. So to bring it all together.

Closing. . . . . . . .+5723
Added balance. . .+5691
2 appraisals. . . . .+1000
Saved Payments. -2173

Total. . . . . . . . . 10241

Total cost / savings per month (10241/328 = 31 months).

Now my wife and I need to decide whether that fits into our long term plan for these rentals. The downside is obviously the upfront costs and potential of selling the properties before the break even point. The benefit is the much increased cashflow and the long term savings potential on these properties. This would coincide with the recent decrease in payments because the mortgage companies over charged me in escrow. I had $72 reduction in payments this last month. This is mostly due to reduction in taxes due to lost property value in the area. Still, I will have a combined reduction in payments of $400. That is huge.

I will also be increasing rent on my sec 8 property by $30 to Sec allowed rent, the other property will see a rent increase of $50 in October. I have held that rent steady for 2 years. $480 increase in cashflow will be very nice. That will all go back into the properties in either savings, principle or upgrades.

Enough rambling. Just thought I would share my thought process on calculating this decision.

I’ll leave you with this quote, “Progress always involves risks. You can’t steal second base and keep your foot on first.” ~Frederick B. Wilcox

I have been doing my coaching items whenever I can fit them in. Life simply took hold and did not give me any free time what so ever.

With the help from my folks and brother-in-law I completely redid the landscaping on our yard. Its almost done. Bought 2 dozen plants and 3 tons of mulch. Added a new brick border wall up front, removed those three bushes, removed several trash cans of trash and rose bushes, had the front step mudjacked, added solar landscape lights, put in a 3×8 foot vegetable garden, built a temporary fence to keep the dog out, seeded and edged the lawn. Phew. To be honest though, I loved every bit of it. Still have a dozen plants to put into the ground, but its great.

My fiancés folks had their 50th wedding anniversary last weekend. That was very cool. Think about it. How many times in your life do you get to see a 50th anniversary. 3 maybe four times at most.

The next day I completed a bucket list item.

As far as real estate goes. I have dropped probate for now. I will be focusing on REO’s and abandoned houses. My goal is to make 5 offers per week.

My Realtor and I spend 6 hours one evening going over the MLS and offer contracts. I learned a ton of information. He’s a very good guy. He even asked if I want to be on his radio show. How cool is that. I have worked a deal with him to get a form of MLS access. All the same info on a time limited bases. Its a very good thing. Now I just need to squeeze out 5 minutes to make it happen.

Everything is starting to happen. I’m tired of sitting on the sidelines. Its time to take action. I love how busy I am at the moment. It means I’m living life to the fullest and not letting a moment slip by.

I’m not sure how much I’m allowed to post, but I will post the self analysis questions.
1. Have I attained the goal that I established as my objective for the year?
Yes and no. I did not complete my goals, because I did not have definite goals with timelines. On the plus side, I did make those goals this year.

2. Have I delivered the best service of of the best possible quality which I was capable?
No, I didn’t. I slacked off in my job somewhat in the pursuit of real estate. Thats not fair to my employer who is paying me. I decided that I will do better at my job this year and go above my work defined goals. In turn this will translate in better quality work in my own business.

3. Have I delivered service in the greatest possible quantity of which I was capable.
Again, no. I did not fill in available free time at work with other productive tasks. I did menial tasks to pass the time. Again, I will push to go above my work goals.

4. Has my spirit been harmonious and cooperative at all times.
No. While I have been ( my gratitude) of caring to much at work, I certainly have had many moments that were counterproductive to the workplace. Many rants with other coworkers that talk down about the company. This habit is not helpful to anyone. When these conversations come up, I will either try and change the subject or work towards resolving the issue.

5. Has the habit of procrastination decreased my efficiency, and if so, to what extent?
Yes. This is by far my worst habit. It takes me 5 hours to do a 3 hour project because of this nasty habit. I just need to sit down and accomplish my tasks, then kicking back is more relaxed and not procrastination at all.

6. Have I improved my personality, and if so, in what ways?
Yes. I am far more conscientious about my attitude. I am more upbeat and try to have a positive outlook no matter the situation. I am not letting myself concentrate on the negative. In an odd way, it has improved my self confidence as a by product. I have more faith in my ability to accomplish anything I want to.

7. Have I been persistent in following my plans to completion?
Hard to do when I never had solid plans. This year I have made strides into improving my ability to do this. It has improved, but I have ways to go before I can honestly say I complete all my plans.

8. Have I reached decisions promptly and definitely on all occasions?
No, but, I am improving on this. When I went to buy my house last year, I was going to wait for better timing. A good friend gave me some of the best constructive criticism to date. Simply, “Why wait?” Yes, why wait? Whats holding me back, go make it happen. I look at most items this way now. Why wait? No time is ever going to be perfectly right, which makes now the best time to make things happen.

9. Have I permitted one or more of my six basic fear to decrease my efficiency?
Yes I did. In one example, I let the fear of accomplishment and path of real estate from keeping those probate letters on my desk and not in the mail box. Silly I know, but once I mailed them, it was a huge weight off my chest. I guess I feared the calls and the unknown. Odd for me since I have little problem talking to strangers. Yes, fear stalled me on several occasions. I just need to tell myself, that I’m not doing anything irrational that hasn’t been done before.

10. Have I either been over cautious or under cautious?
Yes and yes. The over cautiousness is analysis paralysis. Notice the first 4 letters in analysis. I let that take over. Like many say, “ready, fire, aim”. Over caution stalled me from making decisive goals. Under caution cost me 6k in losses on my rentals this year. (not counting closing costs and down payment). I don’t regret the rentals, in fact I am happy to get such a good lesson at such a low cost. I’m not trailblazing here, and I need to take some solid advice from those in front of me. I heard the advice they gave to me, but did not listen to it.

There are 16 other questions I will answer in the upcoming days. This is just the start.

In other news;
I did not get the winning bid on the house. So be it. There will be more. I likely should have bid higher by 5k. The Realtor stated only one other offer came in at below list. I offered list price. Turned out 4 other offers came in. Shame, she probably cost her seller 5k by not allowing us to rebid. It was 145k with 30k repair. ARV 220k. There will be more and I am in no hurry.

I finally made the postcard for probate to my liking, but for the life of me I cannot get Microsoft publisher to print correctly. I’ll see if others are having the same problem. I’m sure someone has a solution. Bought another 23 leads today. I’m hoping at least 15 will have real property. No calls yet, but I’m sure once I get the postcard in the mail, the phone will start ringing.

Tis all for now.

I’m still getting letters in.  I’ve got a way to go to catch up to Scott’s 150+  I’m at a mere 26.   So be it.  Its always good to shoot for the stars.  I was finally able to get a list for Denver county.  $5 dollars per name.  Sadly, I cannot buy every name every month.  Simple to much money atm.  I will have to try and get as many from lookups as possible.  I will add Jefferson county soon.  I need to double my leads per month.

I think I got the postcard situation figured out.  I should be mailing those off within a week.  I’ll be printing them by hand.  My cost will likely be similar to the click2mail cost.  I may try them down the road, but for now this will do.

On the home front I’m very excited about an offer I put in on a house.  The house has been on the market since May.  Its a 4/2.5 with a non conforming bedroom in the basement.  2700 sq feet.  Needs 30k worth of work.  Bid price 145k, ARV of 220k.  If this goes through, this will be my home for the next few years.  Keepin my fingers crossed.   Thats it for now, I need to get back to work on my stuff.

PS:  (sorry Steph gotta steal one PS)  Turning left at a yellow on a snowy day is a bad idea.  My poor car will be in the shop for a bit because others can’t respect road conditions.  Least no one was hurt.  Time to deal with insurance agencies.

-I figured out mail merge for envelopes and letters saving me countless hours down the road.

-Spruced up my letter a bit with the help of my fiance.  She sends out letters quite often and has to polish them up.

-Contacted my buyers agent and setup a deal for submitting offers on properties.  I should also be able to tap into his very large buyers list.

-Sent out 8 letters so far.  I know its not many, but its a great start.

Looking forward I have several items I need to accomplish.

-Build a squeeze page for buyers

-Setup google voice  (still trying for an invite)

-find leads for Denver and Adams county

-visit each courthouse and determine my best method for finding leads.

-get better resolution when the public access computers in Arapaho county will be working.

-prepare my talking points when sellers finally call.

On the home front:

-I’m in the process of a refi on my personal residence.  When this eventually becomes a rental, it will save me $100/mo

Rentals:

Doing a refi on my larger rental and that will save my 2% or ~ $170/mo.  That will take me from $100 negative to positive cashflow on the property.  Its amazing how much Ive learned this year and how to buy right.

As you can tell, my blog is changing to a cleaner format.  I’ll be doing some more touch ups as I have time.  Hope you like the new layout.

First he used a new pipe http://www.pexinfo.com/.  Its been around since the 60’s but has come into frequent use lately.  It’s a cheaper alternative to metal.  Plus it has a nice feature of expanding if it freezes.  This minimizes pipe burst.  Second, he has done work on the rentals for me $900 last week for several items.  I simply told him I could not afford his original quote.  This is a true fact.  I will be scraping by the next few weeks as a prepare to do the windows as well.  Finally, besides the new washer, all my water connections are within 5 feet of each other within the house.  Shower, sink, kitchen sink and toilet.  Remember this is only a 3/1 house.  I think $1800 is still a good deal, but still reasonable.

I should not, one thing I love about PEX.  Its color coordinated.  Red lines are hot and blue lines are cold.  Brilliant design addition.  When I’m in the dreaded crawl space trying to fix a problem, I want to know right away which water source to turn off or repair.

The house now done, I have enough water pressure all over the house to provide for my needs.  The difference is amazing.  I’m very glad I went down this route.  One added benefit of the water pressure, it will allow me to put in a sprinkler system come spring.  I think this repipe will help the resale value of the house tremendously.  I’m very happy with the results so far.

My next update will likely discuss my new windows or my ventures into wholesaling.  Till then.

For the windows I have 11 windows to replace with 2 actually becoming one picture window with side single hung sliders.  I called 3 companies, Home Depot, New Windows America and Renewal by Anderson.  The bids came in at $6000, $3700 and $12000 respectively.   Its still amazes me how much money you can save by getting multiple bids.  All three sets of windows qualify for the energy rebate.  The 3700 dollar bid will be a lower rebate since it is prorated on anything below $5000.  This makes sense since you don’t want someone doing 4 window replacements for $1500 and getting the full $1500 rebate.  After the rebate my total cost will be $2700.  Although I will pay $3700 up front, I will get the rebate on my taxes. 

Of the 3 plumbing companies I called, I only got bids from two, Cheaper Rooter and Umbrella plumbing and heating.  $800 and $1500 respectively.  While I would not hesitate using Umbrella Plumbing and Heating in the future if they had a better bid, (“He interviewed” well) I went for the cheaper bid on this one for a few reasons.  One, I have had Cheaper Rooter perform plumbing work on both of my rentals and they do quality work.  Two, I suspect that my old plumbing may not hold up to any major work as this.  I may be looking at a house repipe if things turn south.  I simply cannot afford what I expect to be $4000 plus from the other company.  If things turn bad, Cheaper Rooter will prevent me from having to sell my left kidney.

Work is set to start fairly soon on the plumbing and in about 4 weeks on my windows.  This will set me up nicely before the winter.  I am hoping both will help in the sale of my house when the time comes. 

Certainly the repairs on my house have cost me a pretty penny, but not to much more then I expected.   I have spent $3000 on a new furnace, $2700 on windows, $800 on piping, $800 in landscaping, and about $500 in other miscellaneous expenses.  ~$7800 so far.  That is not to terribly bad.  Not to mention I have learned a whole bunch about repair costs to houses.  What a very valuable learning experience.