House #39 is flying along.  The painter started Tuesday this week and is almost done the inside and about half done the outside.  We should be done at the end of the first week of August and looking forward to getting this house on the market.

I have added some preliminary before and after pictures.  The main things we have left to do are:

Kitchen: we have already bought the cabinets and appliances but they need to be assembled and installed.

Flooring: we were able to save a lot of the flooring on the main floor, but the entire upstairs needs flooring.

Bathrooms: the bathrooms need the most work.  Pretty much everything needs to be completed.

Finish Work: electrical outlets need to be installed, molding needs to be added and the fixtures.

Here are some before and after pictures of our progress to date.

Before

After

Before

After

After

After

Before

After

Before

After

After

I have not written about House #46 yet, but it is a bit unique.  It is one of the few houses we have purchased with genuine pretty bad “location problems.”  Normally, we probably would not have pursued this house at all but an agent we work with quite a bit got the listing from the bank at a pretty good price.

The house is one lot over from a really busy street, with a bar right next door. Directly across the street from it is a pretty big commercial complex.  These are all big no-no’s in the world of real estate investing.

Now that the market is slowing down a bit I am curious as to what buyers will be willing to pay for this type of properties.  There still is very little competition in this price range.  If they can afford 20% more they can by a much bigger house with no location problems (probably not remodeled as nice though).  An investor might scoop it up as a rental, that would be the ideal scenerio in my books.

Here is the aerial view of the house:

The house is under 1,000 sq ft, built in 1939 and 2 bedroom 1 bathroom with a garage conversion.  We ended up adding a 2nd bathroom in the garage conversion so now it is a 3 bedroom 2 bathroom house.  As you can imagine all the bedrooms are really small.

Before and After Pictures

Front – Before

Front – After

Family Room – Before

Family Room – After

Main Bathroom – Before

Main Bathroom – After

Dinning Room – Before

Dinning Room – After

Kitchen – Before

Kitchen – After

Master – Before

Master – After

Master Bathroom – Before

We added this bathroom completely and apparently I didn’t take a picture of the laundry room that used to be here.

Master Bathroom – After

Back of House – Before

Back of House – After

It has been a pretty boring week.  The market is a bit slow, still getting a couple calls on the stuff we have for sale and actually got one or two decent offers so that looks promising.  We are lowering what we’re willing to pay again, pricing us completely out of a lot of stuff, so we haven’t been looking real aggressive.  We put another one under contract, just an okay deal, but will make a good rental (it’s in our main farm where we have many rentals).

Here are some pictures of the latest deal we just closed on.  This is definitely the worst house in a great neighborhood.  It is actually one of the better houses we have owned.  I would love to keep it, but the prices are a bit too high, plus I think I have a buyer who would buy this lined up.

The house is 3 bedrooms, 2 bathrooms, and about 1,600 square feet.  On a good sized lot, and it needs everything. The roof is bad damaged, the ceiling had some water leak through to it, so some of it needs replacing.

Overall, we paid a little bit more then we normally do, but it should sell quickly with a decent profit. The main logic behind paying a little bit extra is, this is a new REO office for us that is pretty big.  We wanted to show them we could perform and hopefully get on their short list.  We already put a second house under contract and now one of the agents is calling us about his pre-listings!  Which is always nice.

Here are the pictures:

Family Room

The hole in ceiling

Kitchen

Have a good weekend everyone!

House #39 is progressing very well. I hope you aren’t sick of me talking about it yet, but it is our biggest rehab to date.  We are passing inspections often, and should only have two left.  Drywall nailing inspection and the final inspection.  On Thursday, we passed the insulation inspections and the workers started dry walling the house Thursday and Friday.  Of course, due to the holiday they took Saturday to Monday off, so they should be back at if full speed this morning.

I took two videos on Thursday that I uploaded to give you an idea of the construction going on.

This project should be complete by the end of July or maybe at the latest the first week of the August.  We have done much of the heavy lifting, permits, electrical, plumbing, etc.

I hope everyone had a great 4th of July.

Upstairs #1

Upstairs #2

We got permit approval on rough framing on House #39.  Our next inspection is Tuesday and should be electrical, plumbing and HVAC.

The inspector so far has been pretty friendly.  So things should move forward quickly.

We are just finishing with the clay tile on the roof, we ended up scoring a sweet deal at a used place and should come in way under budget on the roof. The project is about 3 weeks from being complete, depending on what happens.

House #39 is moving along.  We’re still not sure if we’ll come in on budget, but we’re trying our best!

It took a little while to get the plans approved through the City.  They have outsourced the approval to a private company and only count business days as days they are open (I guess that makes sense).  So that means they’re only running 4 business days a week.

The fun parts, we had to get the plans approved through the school district (to build the exact same house as before) and the home owners association.  So to make a long story short, it took pretty much 5 trips to get the permits fully approved and in-hand.

We have the rough framing done and the roof sheeted.  This week they are finishing the clay tile on the roof and preparing for the electrical, plumbing and HVAC inspections next Monday.

Here are the pictures:

Yesterday we finally did it. We closed our first short-sale purchase. After many offers and many disappointments something came through.

Two weeks ago I called a medium sized REO agent that I have bought quite a few properties from and asked what he had coming up. He let me know about a possible short-sale deal that someone in his office had listed that was falling out.

Immediately, I went to look at it and we were in. We wrote an offer and waited about 10 days. We got an approval letter that said if we can close in 3-days we can get it for that price, otherwise they’re going to foreclose on the house. Good with me.

It is a pretty standard purchase for us. The house is Four Bedrooms, two bathrooms on a 1300 sq ft on a good sized lot.
June is setting up to be a pretty good month for us. We have two closed purchases, one retail sale, and a purchase set to close Tuesday and probably another one set to close Friday. The months keep going by faster and faster.

We are coming up on our 2nd year of working in the rehab and remodel business and our 1st year of being landlords with hopefully many more left!

Well, I can finally say it’s over.  We closed our first pre-90 day FHA flip.  House #32 turned out looking great, we got over 10 offers and picked a buyer that was willing to use our lender.

From there the process did not go smooth at all:

1. The Underwriter Wanted a Copy of Home Inspection Report

I’ve never had this happen before, but they where really anal that we fix some minor things called out on the home inspection report.  A sprinkler-head was leaking and they wanted full contractor approval.  It turned out to be a major pain.

2. The Underwriter Added a bunch of Conditions once we go Docs Signed

I always ask for a list of the conditional approval so I have an idea what it’s going to take to close.    Once the client signed Loan Docs the underwriter added all these Home Inspection conditions.

3. The Escrow Took 55 Days to Close

Due to all the stuff involved the escrow took a really long time to close.

4. Five out of Six Lenders Said they couldn’t do the Loan

I still have not found a lender that I am 100% happy with, I called a lot of them I have worked with in the past.  Everyone except one said they could not touch the loan at all.

5. The Borrower got Charged Extra

Like I said, only one bank would do the loan and they charged the borrower a half point extra to do the loan.

The good news is we got the loan closed and are ready for the next one.

House #45 was one of the deals we closed in April.  Fannie Mae was the owner and this is the first time I’ve ever seen a deed restriction for a resale on a property.

Right in the contract in reads:

“Grantee herein shall be prohibited from conveying captioned property for a sales price of greater than (120% of my purchase price) for a period of 3 month(s) from the date of this deed.  Grantee shall also be prohibited from encumbering subject property with a security interest in the principal amount of greater than (120% of my purchase price) for a period of 3 month(s) from the date of this deed.  These restrictions shall run with the land and are note personal to grantee.

This restriction shall terminate immediately upon conveyance at any foreclosure sale related to a mortgage or deed of trust.”

It doesn’t really concern me as it will probably take more than 90 days for me to sell it.  I think it is unfair for sellers to do this, especially on properties like this.  My repair costs are over 20% of the purchase price, so I cannot sell it for any profit over the next 3 months.

Anyways, I thought this was interesting.  I don’t know if it is even enforceable?  Maybe if the lender catches it they may not loan on it?  Maybe you could record a first trust deed and foreclose on it?

The Details

The house is a 4 bedroom 2 bathroom 1,400 sq ft house on a lot that is almost 1 acre.  The seller was Fannie Mae.  This is a little bit outside of our normal area of business and we followed it because an agent we work with told us we should put an offer in.  Two weeks later the bank decided they wanted to work with us.

Carport  (this will be converted to a garage)

Family Room

Backyard

Kitchen

House #39 is coming along quite well.  We have blueprints at the City awaiting approval and inspections, so we are not going to be able to complete any additional work if we don’t get approval soon.

Southern California Edison approved us for temporary power earlier this week.   This house is just a flat out huge project.  We’re excited about it, it is going to turn out really nice when we are finished.  It sure is a nice change for our workers to be working on a house built in 2004 versus the 1950′s stuff we typically purchase.

Here are some videos:

The Downstairs

The Upstairs

The View