On Aug 5 we closed on House #14 and our renter started to move in yesterday (Aug 23).  The rehab turned out to be a little bit more extensive then originally expected, it turned out be pretty much as nice of a job as the flips.

After reviewing all the paper work and laws I decided to go with a month-to-month lease agreement from the California Association of Realtor’s (CAR). The paperwork seems to be very good and specific to California, CAR has a form adviser which tells me which forms are needed for each transaction.

I have been reviewing tons of information on renting properties I want to start trying month-to-month leases, if the tenant decides to move out and break a lease I’m responsible to re-rent it anyways and they only have to pay the difference (if I can collect it).

The Front

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After

The Kitchen

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Living Room / Addition

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After

Hallway

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Master Bedroom

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After

The Pool

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After

The remodel on our first rental is coming along excellent.  Our contractor is very motivated to move-in so he is rushing everyone along.  The kitchen cabinets went in today, the granite will go in tomorrow.

I am still at a pretty big loss on all the paperwork required to “do it right”.  I have almost finished reviewing the course we got and will start doing some research.  The goal is to have all the rental docs, the deposit in and the paperwork signed early next week.  Rental agreements, amendments, all that fun stuff need to be figured out.  I trust the tenant a lot, but I want to separate the relationships between our work and renting the house to them.

Not much else to post about right now, we are working on closing our purchase escrow on a bunch of properties and selling a bunch of properties.

House #13 got a review appraisal on Tuesday.  My partner met the appraiser out there and she told him “not to worry,” but I am worrying a little bit, based on the comps she could easily come in 20,000 low.  I printed a stack of comps (two of them where our previous sales) and we will see if she ends up using them.

House #4 the appraisal came in at the purchase price and they are working with Bank of America for the loan.  Bank of America is really slow.  The 17 day full contingency removal comes up tomorrow, I sent them the form today and we will see if they send it back signed tomorrow.

House #12 is set to fund Monday, and record Tuesday next week.  If everything goes as planned I will be really happy as that is by far our best deal yet!  The buyer has put all the money they need to escrow (almost 50,000 down on an FHA transaction).  I guess that is what happened when they pay over appraised value.

That’s all for now.

House #14 is finally going to close escrow tomorrow (Aug 5).  We have a renter that will move in on Sept 1 or sooner.  Our main contractor is going to rent it and we said he can move in rent free if he can finish the remodel earlier.

I have an insurance policy that will start tomorrow and I need to get the pool working and full of water before the insurance inspector gets out there, as that is a big require of a property being insured.

One of my tasks this week is to get some information on all the forms required to get this process started.  We bought a course and tapes from Mike Cantu, who is one of the experts on owning and renting property in Southern California.  I am excited to see what kind of data it has in it.

On other fronts, we have been making a lot of offers and connections with new agents.  The market is still very hot out here and tomorrow an REO agent thinks the bank will accept our offer (on a second rental home).  It is a little bit far from our place (about 30 mins south east), but it is a smoking deal.  We are buying it at 10% of what it sold for in 2006, if we get it!

There are two properties we would flip that we are getting close on, one has gone to highest best twice and the top bidder has backed out both times.  We just leave our offer at the same number everytime and we are hoping the bank will give us a chance to close escrow at our number.  We will!

Not much else to report.  I spoke with my accountant today and I am working on some tax planning, if I learn anything that I think is unique or valuable I will be sure to post it.

It took us buying 14 properties flips or wholesale before we where ready to do a rental and this was actually going to be a flip until we took our main contractor to the property.  He liked it so much, he told my business partner that he wanted to rent it!

After much discussion and some budgets we decided that the pros out weighed the cons and we would try our hand at being a landlord.  We are going to close escrow on this property on Thursday and envision about two to three weeks of repairs required and $10-15,000.

The kitchen (pictured on the left) is the worst part of the property.  It is a 4 bedroom 2 bathroom property with a pool.  My least favorite part is that it has a terrible gravel roof that looks terrible, but it still is in great condition.

With the 4 bedrooms and 2 bathrooms, it’s on a 10,000 sq foot lot and has a detatched two car garage.  We really like this property and think it will appreciate really well (and cashflow in the meantime).

Getting ready to rent I am a bit nervous.  This is totally foreign to me, a background check, rental agreements, and all the legalities involved. Having a previous relationship with the renter also complicates matters, in some elements it’s nice, but there is also potential flaws but we have weighed our options and think it makes sense.

As we move forward I will update you with our findings…

Well, after many offers, we finally got an accepted one.  This house is an okay deal and we most likely planning to wholesale it.  We can probably make 60-70% of the profit we’d regularly make fixing and flipping versus wholesaling.

It is a 4 bedroom, 2 bathroom with a pool.  A big house at 1,400 sq ft.  The biggest down, is it has a gravel roof, whoever came up with this concept is an idiot.  Not only are they ugly, but they’re a pain to maintain.

We where close on a rental and another good fix and flip, but the agents called and said we got outbid on the rental (only by about 22,000).  The fix and flip ended up going to auction, I’m sure the bank will get more then we where offering at the auction, but it is a negative becaue I thought we where pretty close, we came up to 5,000 lower then the bank countered us at.  Oh well, we will move on…