House #19 has been on the rental market for about 3 weeks now.  Meeting with potential tenants, asking them the right (but legal questions) has definitely been a learning experience for me.  We got four applications in, the first two had credit scores under 550.  One I turned down and the other one I called and wanted to discuss their credit and asked them to explain a couple things and said we would need an increased deposit.  She never called back, I left two messages for her, so she was out.

Earlier this week we got two solid applications on the same day, we did some pre-qualification and picked the one we liked the most.  Her and her husband signed the lease documents today, paid security deposit, a pet fee and first month rent.

We have two more properties coming up for rent, so I am happy that we got this one occupied.  We ended up using the California Association of Realtor’s Rental Form and their Move-In, Move-Out Inspection Form.

Not much else for this Friday evening.  We are out hunting for properties aggressively.  Not a ton of luck right now, but we do have one large property that should close around the middle of the month.

We are finished House #19, in great timing, we closed escrow about 30 days ago and now we’re finished!  The house is fixed up really nice and we should really flip it, but because 2/5 of our profits would go to taxes we aren’t in a rush to get rid of it.

One of our workers family members is very interested in renting it and we are going working on running his credit and application through the system.

That being said, let’s get to the before and after pictures!

Front of the House

Before

After

Kitchen

Before

After

Fireplace

Before

After

Main Bathroom

Before

After

Master Bedroom

Before

After

Master Bathroom

Before

After

I just got back from House #23 to meet the wholesale buyer and one of the “middleman.”  About a month ago one of my colleagues introduced use do one of the biggest wholesalers in the area.

He helped us sell House #21 and he is working on the duplex (thinking one of his buyers is going to submit an offer tomorrow) and he also brought in a buy for House #23.  This buyer said the deal was a little “too tight” for him personally, but was going to sell it to one of his friends.

Push comes to shove and there is myself, a wholesaler, another wholesaler and the end buyer in this deal.  Made things kind of difficult, but we finally all came together and got the property sold.  No one is making that much money, but it was just enough to make it happen and we are going to move on.

This buyer is going to close my escrow and I am going to give him a copy of the deed in exchange for our commission.  He is going to record the deed at the county himself, that way we do not have to do two escrows.  I am excited that it looks like I can really ramp wholesaling up, and we are working a ton of rehab houses right now.

House #19
We put in counter tops today, we need to put in french doors and it should be rent ready by the end of next week.  We ended up fixing this place up way too nice to be a rental property, but lesson learned, oh well…

House #18
We have almost ten guys working at this property yesterday and today and we finished what we needed to and are going to start painting tomorrow. It probably is 2 weeks from completion.

House #20
This is going to be a rental too and we are really trying to keep a tight budget for this house.  It is huge, almost 2,000 sq ft and really a great property.  We finished our plans and we have a crew starting demo there tomorrow.

House #16
This one is a bit on the back burner… we are trying to finish some of the rentals up and we should have this one ready right around our 90th FHA day.  Demo is done.

House #22
I closed escrow on this one yesterday.  We need to make plans, but one of our workers wants to rent it.  We’ve agreed to a number so now we just have to get it ready for him.

Soon to Be Kitchen

House #19 is going to be our second rental property.  Remodeling should be complete in 2 weeks or so.  The picture to the left is what is going to be the kitchen.

The layout of this house was really bad, it had numerous code violations and the asset manager was seriously debating demolishing it until we came along.  We had our designer do a drawing of the property so we could plan a better layout.  The previous owners added a bad addition behind the kitchen and they added two bedrooms and a bathroom to the garage.

Click for a full screen of the layout:

Click to Enlarge

We are completely removing the additions in the garage and the ATF Living Area behind the kitchen.  This will get code enforcement to take the lien off of the property.  Layout wise, everything else is staying pretty similar.  We are expanding Bathroom 2 a little bit, but it still is really small.

Not much else to say about this property.  We don’t have a renter lined up for this one, so we will see how it goes once it is finished, but I am hoping to have a tenant in it before October is over.

We put our first offer in on House #19 on July 21.  For over 40 days, we called the listing agent every third day to see what the bank was deciding.  He kept saying the asset manager was confused with a code compliance issue and was going to put the property on hold for now.  That didn’t stop us and 1.5 months later, our patience paid off huge.

This is the second house we own on this street, House #18, is maybe .5 mile south on the same street.

To compare how great of a deal our patience got us:

House #18

4 bedroom, 2 bathroom, 1,337 sq ft, just over 7,000 sq ft lot and built in 1950′s

House #19

4 Bedroom, 2 Bathroom, 1,820 sq ft, over 40,000 sq ft lot and built in the 70′s

They both need 25,000 – 30,000 of work.  But we ended up paying over 5,000 less for House #19.  It’s not that House #18 is a bad deal, just House #18 is a very good deal.  We have decided we are going to put it in our rental pool because it has such a big lot (land value is essential zero right now) it will cash flow and it’s somewhat of a newer house (in comparison to what we normally buy).

I just wired funds for this house this morning and we should close our purchase escrow on Wednesday.  I am hoping to have a tenant in the property by the end of October.

When you see a property that is in a unique situation (essentially the asset manager did not understand California title issues, they’re from Texas) remember the opportunity involved.  Follow up is really key in this business, you will miss out on some deals, but keep trying until they tell you to stop calling.

On Monday, I  put another house in contract.  It has a huge lot, with almost an acre of land.  House #19 is on the same street as House #17 and we got it for a bit less than House #17.

Land value right now is worth pretty much zero, the plan is to hold it and hopefully we can get a premium for the lot.  The house needs some work, as they previous owners converted the garage to livable space and the City wants us to fix that.

I will be out of the town for the weekend, so just a short post for today.