After a long dry spell, I had a couple wholesalers call me. Both properties would cash flow, both were near my target market, yet I passed on both. They would hurt me more than help me. Its tough to be floating on the ocean surrounded by water. Wait long enough and that salty water starts looking mighty tasty. Take a drink and your demise is only a short time away. Houses are everywhere, just gotta find the ones that help you, not hurt you.

These houses simply did not fit into my overall investment criteria. Property #1 was a 2/1, 1 street over from rental #3 and needed very little work. My projected rents were $800-$850 and would have a net positive cashflow of $100/mo. 63k (closing, repair and refi) is a lot of risk for $100 net positive. I nearly bit on those one, but after some good chats with my wife and my coach, I feel I wisely passed. The 2nd property was in the right location, was the right size, and would be a marginal cashflow property as a rental, but needed to be 15k lower to fit into my needs. I liked the house, just not the deal.

Shiny object syndrome (SOS) is the bane of many investors. They jump from one type of deal to the next or one type of investment strategy to the next without any thought of were its leading them. I am just as guilty of this. Have a plan, stick to the plan, and execute it with vigor.

Tip: I have been finding many new wholesalers lately via Craigslist. Do separate searches for wholesale, arv, investor, fix-up or any other terms only investors would use. Also search for all properties in your price range in your target zips. Gather a list of all those wholesalers. Start calling them, emailing them or simply signing up on their attached website. I have gotten 5 new active wholesalers in the last 2 weeks with this simple method. I went and looked at several of their properties and got some face time with these wholesalers. My potential deal volume has gone up greatly and this didn’t cost me a dime.

I leave you with this quote: “One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular. ” Tony Robbins

The blogging world of real estate is sometimes very small. My wife and I had the pleasure of having dinner with Shae of www.goodfaithinvesting.com. She happened to be in town for a seminar given by Susan Lyons. Its amazing how many ideas can be shared and discussed in two hours. There is nothing more motivating then spending time with people that are making it happen. Shae and her husband certainly fit that category. Oh and by her account the seminar was great and I am kicking myself for not attending.   Hopefully there will be a round 2 in the near future.

In my world, its been a busy time networking.  My wife and I went to Baltimore to visit with my coach and other club members.  Another opportunity to meet with movers and shakers.  I walked through nearly  a dozen homes in varies stages of rehab, got a chance to spend several hours discussing my plans with my coach and enjoy some decent Baltimore weather on the inner harbor.

I have bumped up my marketing campaign.  Still with little success so far.  I am up to 500 letters per month.  I am sending to absentee owners.  I am also sending letters to distressed homes in a drive for dollars campaign.  One item I have focused on as well is finding wholesalers.  That has not been an easy task.  Many do not have great ways to find them via there websites and seo.  Hint hint to any wholesalers out there.  I decided to get on craiglist and do s few searches.  Rehab, investor, wholesale, bargain, you get the idea.  As I came across these folks selling actual homes, I either called them or sent them an email.  Will it work to find me my next deal? It can’t hurt.  I now have 4 methods of finding properties.  Absentee owners, MLS, drive for dollars, and wholesalers.  I will keep up on those to get the next property.

Till the next update (sooner rather than later), I leave you with this quote.  “The successful networkers I know, the ones receiving tons of referrals and feeling truly happy about themselves, continually put the other person’s needs ahead of their own.”  Bob Burg

I got a scary phone call from one of my property managers yesterday.  A soon as I picked up, I knew this was going to be one of those calls.  I could tell from the tone of his voice.

The water heater went out on one of my rentals.  Same water heater I repaired 2 years ago.  It didn’t just go out, it sprung a nice big leak.  Total replacement.  Thankfully this tenant called right away to let us know of the issue.  No water drying service this time.  The water heater was not the scary part.  The scary part is the handyman got shocked when he went to work on the water heater.  Not good.  To see if it was just a built up charge, he tested it again and got shocked a 2nd time.  He’s alright thank goodness.

Many if not most electrical systems are grounded to the plumbing in older homes.  Its nothing new.  If there is an issue it should trip the breaker and not electrocute anyone.  Essentially the electricity will use the plumbing instead of a person to find the quickest way to ground.  This throws the breaker.  Unfortunately this house like many built in the 50-70′s has Federal Pacific Breakers.  They were cheap breakers back then and folks got what they paid for.  Federal Pacific breakers are what almost burnt down my last house.  Its obvious there was a fault and the breaker did not trip.  I’m will not take any chances, all those breakers are being replaced.  Quickest decision in my landlord experience to date.   When it comes to the safety of my tenants, there are not shortcuts or chances to be taken.

Total cost ended up being really good.  $1100 for new water heater and panel replacement.   Unfortunately, I still have not been paid on this property.  Denver Sec8 has drug their feet on processing the paperwork.  They have 60 days to send out the approval and even more time to process our signature after that.  My PM is footing the bill until we are paid on this property.  The bill will come from the back rent collected.  I also hope this will encourage him to get after Sec8 a bit more.

That’s it for now.  I leave you with this quote “Safety isn’t expensive, its priceless.”  Author Unknown

How many folks out there are still working on their goals they set for the year? In our field I’d venture to say better than average, but still not 100%. With 1/3 of the year complete, its a good time to dust off those New Year’s goals and see how far you strayed from the path you have set for yourself.

My goal this year was to create positive habits. So far I have created 2 habits. Paying down debt like a hawk each paycheck and making my daily to do list. The debt part was easy, but the to do list faltered at times. I’m pretty good about it now and really feel lost if I do not complete this task. That’s a good sign.

Now I am working on 3 more habits, running 3 times per week, two 15-30 minute planning/retreat/recalibrate sessions per day and filling those wasted 5 minutes here and there with useful tasks.

I see all three as really helping me down the road. Running is obvious, but the retreat sessions should be very useful. My coach has pushed me to work towards taking at least one positive step towards paydays each day. Those sessions allow me to remind myself to take those steps. They are also distraction free times to brainstorm and reflect. I will pick a topic to focus on each session. I will then write it in front of me (to keep my mind from wandering) and focus on solutions to that problem. I’m only a few days in, but its been pretty incredible so far.

As far as wasted time during the day, I have been filling that with absentee owner letters. It is very time consuming to print, stuff, seal and stamp letters. Those 5 minutes here and there can greatly reduce my dedicated time to the task.

Okay, so that’s me and my goals. I hope others are keeping with there goals. If your not, what can you do to improve your performance.

I leave you with this quote, “Either you run the day or the day runs you.” Jim Rohn

Needing a new property manager I interviewed 5 different companies. I spent quite a bit of time looking into each. I got the names from references and internet searching. I settled on a new company around mid August. I had the agreement signed and was planning on taking the info over after work. Around noon that day, they called to inform me one of their PM’s quit and they could not take on any more clients.

For one, I’m glad they did and am still willing to use them in the future, but it put me in a pickle. In a rush I choose a secondary management company that came recommended. I did not do enough background check on this company. While eager and willing, the new pm was fairly new to the business and happened to be taking over the majority of my old PM’s disgruntled clients. Plus, he took over another some clients from another management company that went bad as well.

Now I became one of many that needed several issues resolved. The new pm simply had to many fish in the pan. After signing the agreement we settled on rent for the area. After two months of several showing per week and no bites (a couple bad ones that I wisely rejected. ie: no job, income or down payment etc. etc.) we determined that the house needed to go sec 8. Unfortunately the basement bedrooms were non conforming. I paid $2600 to have an egress window installed. As luck would have it, this is right around Thanksgiving. It is very difficult to rent late in the year due to holidays. Showings dropped off.

BTW, I have talked with my PM each week since Aug 1. While I don’t have the results to show, I will say that you cannot be passive in managing even your managers.

Fast forward slightly to today. The property is still vacant and I have not had a renter since Aug 1. Plus all the other issues costing me money with the other PM. Yes, I made a ton of mistakes. Everything that has happened so far is a direct result of my lack of knowledge and lack of preparation. That said, had I not had reserves in my account to cover this time frame, I would be up a creek. Don’t for a minute think you won’t make a mistakes or have things happen to your properties. Without the reserves, I likely would have 0 properties today, instead of 4.

Looking ahead. I will be sitting down with this PM and discussing a time table with him on getting the property rented, lowering rent, or finding a new PM. It will all depend on his responses. I’ll let you know my plan with him. Also, we will be out of this house in 2 weeks. We will get it rental ready and will talk to another PM company or take on the rental ourselves. I will be doing a bit of research this week and decide with my wife. Many lessons from the school of slow learning, but we will get it figured out.

I would like to add, when working with PM or tenants, document, document, document. Always have backup records for later use. You may need them for a new PM, for a court date, for taxes, and especially to run a much smoother business operation.

Till next post, I leave you with this quote. “I’d rather live in regret of failure than in regret of never trying” MJ DeMarco in The Millionaire Fastlane

Every landlord has a closet full of horror stories on problem tenant, property managers, houses, cities and anything else under the sun that may keep you up at night. This is my story. Around 6 months ago, my wife and I married and were off to our honeymoon in Napa. Shhhh, that’s not the horror part. I had a longtime tenant at house #1 that was late on rent. June 2010. I was assured by my property manager the rent would be in shortly. (mistake 1) I still believe it was. When we returned from Napa I never verified the rent was deposited and mistook a similar size deposit of mine as the rent deposit. (2)

Next issue, my PM has switched brokers and has applied for address change with Sec 8 housing authority on house #2. It will be 3 weeks before I get my rent from them.

I call and write my PM after the honeymoon to find out why my rent still isn’t in from the housing authority. I’m told they lost the paperwork (very believable with the inept housing authority) and it has been submitted again. 2 weeks later, “they have lost the paperwork again.”(3)

At this time (now July) I get notice from my pm that my tenant will be vacating the lease early on house 1. Checking my lease right away I notice a glaring error. My PM had N/A’d the lease termination fee. (4). Why, I have no idea, but certainly a big no no in my book. I call my pm to start getting the property ready for market. At this point several errors start showing up, responses get slower and my frustration mounts.  I don’t fire people quickly, especially when they have been good in the past.

We chat one last time on getting house #1 ready for market as soon as the tenant us out July 31. That is my last contact with my PM. I called 4-5 times the next two weeks. Agitated no response, I finally get an email telling me the issue. Okay, I am not unsympathetic, but why are no backups in place?  After several more weeks of no responses, I get a email from my buyers agent.  It turns out, I’m not the only one who is having these issues.  Many of his clients have used this gal and he’s trying to help us out.

Head to mid August and I send a termination letter to my PM.  and begin the process of hiring a new one.  In the mean time.  I am out June, July August Sec 8 rent, June rent on house #1 and have a newly vacant unit.  My troubles are only half over. My next post will go into the 2nd half of issues.

I leave you with this quote. “Nobody trips over mountains. It is the small pebble that causes you to stumble. Pass all the pebbles in your path and you will find you have crossed the mountain.” ~Author Unknown

Purchase of 176k. First lien payoff was 170k and 2nd lien was 6k. The sellers agent got them down from above $8500. The sellers paid half and we paid half. The house is 3900 sq ft 5/2.5. Its a monster. Its far more home than we need or will use, but the deal is pretty good. The house needs 40-50k worth of work and will have a conservative ARV of 300k. The lender had to get a 2nd appraisal on the property because in its current condition it came in 30k higher then our purchase price. The closest comp is a house that sold from a rehabber I know. 3200 sq ft 5/2.5 for 299k. I’m pretty confident on the ARV.

The neighborhood was once a parade of homes neighborhood. For those outside of Denver, its a custom home tour of the best new homes in the Denver Metro area. Course that was in the 1960′s. Still for as old as the house is, there are a ton of very modern type features. It must have been incredible back then. Main floor master, country kitchen, oversized bedrooms (all of them), 2.5 car garage on a 11000 sq ft lot, 2 pump boiler, solar water heat with tank backup. Many things in the house were top of the line when they were installed. Unfortunately they have had many years of neglect. More on that in the next post. I’ll also go into repairs and our plan. Were both very excited about this house. For now, here are some photos. I leave you with this quote. “One secret of success in life is for a man to be ready for his opportunity when it comes.” Benjamin Disraeli

check back for pictures when I’m not tired and can figure out wordpress

Besides that, I have gotten 4 bids so far.  I’m getting a 5th on Friday.  They are all about 3k higher then I need them to be.  I’m working with all three to bring the cost down.  We’ll see who wins out.  When I get a contractor decided, I’ll share costs.  Many costs I guessed wrong or did not include on my original estimate.  I’m about 20%-30% over on my estimate.  Not bad I guess, but not great.  What a tremendous learning experience so far though.  I can do this 100% better on my next estimates.  I strongly urge anyone to hire a contractor to just give you a bid on a property.  Even if you don’t plan on buying it.  Just get a better idea of your local costs.  A few local codes will cost me $1000 more then I planned for based on info I found for cost estimates.  I also greatly underestimated the electrical costs by nearly $1000.  On the plus side, I over estimated on cabinetry.

Good news though, I’m enjoying every bit of it.  The frustrations are more like challenges.  Like a puzzle to be solved.  How can that not be fun.

Well that’s it for now.  I leave you with this quote “We are built to conquer environment, solve problems, achieve goals, and we find no real satisfaction or happiness in life without obstacles to conquer and goals to achieve.”  Maxwell Maltz

Finding a new Property Manager

There are two main and very obvious ways. Google and word of mouth.
Google can be very useful when finding information on property managers. I took 15-30 minutes per firm researching before I even called them.
-check out their Better Business Bureau rating and see if there are any logged complaints.
-do a search for reviews on the company. While this is all subject to reading another persons opinion, check for complaints stemming from the same problem.
-check out their website.   Some smaller companies may not have a website, I actually hold this against them. In this day in age, there is no excuse for a customer oriented company to not have a place for their client owner and tenants to gather information. Read all you can. Many of the questions you can ask are already listed. Many companies will go as far as putting their contracts online for you to read.
-Check rental listings and see who has the best approach in your area.

Word of mouth is by far the best way to find a good pm. While many have web pages, their SEO (search engine optimization) could use some help. Hence, you may not find them in a standard search.
-Ask your realtor
-Ask your local REI club
-Ask other landlords you know. Specifically those that have been around for awhile and have several properties.
-As your driving your target neighborhoods (you better be doing this at least weekly), look at the for rent signs and who the PM firm is.
-ask on forums you use. Meetup.com or biggerpockets.com as an example.

Honestly when your looking, you should be doing all these things. Remember your 100K + investments are at stake, are you really going forward on a whim?

Next post, I’ll talk about what you should be looking for in a manager.
Till then, I leave you with this quote “Any man worth his salt will stick up for what he believes right, but it takes a slightly better man to acknowledge instantly and without reservation that he is in error. ” Andrew Jackson

I got 1 other offer out and looked at 4 properties this week. Set to look at another personal home potential tomorrow. Feels good to be busy and actually accomplishing things.

Incidentally, I did not get the probate house. The seller got a last minute bidder that I assume was significantly higher then me or anyone else. Oh well. Least the seller got a better deal. That would have been a monster project for a newbie like myself. I would have eagerly tackled it, but I would be happier learning on a much less steep curve if the opportunity arises.

I talked about networking last post. It happened again. Not that networking ever stops, but I continue to be amazed at the number of people you run into when you simply open a conversation. Talk to Strangers. So I had a home depot rep over to give me an estimate on refacing my cabinets. I had no intention of using them now, but if the price was right I would down the road. Turns out there as expensive as Sears. 10k for my little 10×10 kitchen. I think not.

I gotta hand it to the sales rep though, he merely through out a number and recommended for me to not reface the cabinets. As we got to talking real estate, he started talking about his rentals and flips. Turns out he is a home inspector and only uses the home depot gig to supplement his income during slow times. His knowledge of homes in the area was excellent and he said many key things that led me to believe he does know what he is talking about. I may not have found a good deal for cabinets, but I may have found another inspector to utilize when need be. Always handy.

That’s all for now. Btw, go over to my buddy Scott’s blog Struggling Investor and congratulate him. He’s getting his first MLS offer out this week. He’s a big go getter and I would not be surprised to see him getting 3-5 offers out each week and taking some properties down soon.

I’ll leave you with this quote “Playing it safe is very risky.” Seth Godin, Purple Cow.