House #92 is an interesting story.  GMAC was the bank that foreclosed on it.  We bought it the first time in August of 2010, it was still occupied and we would have been responsible to evict the tenant.  About two weeks into escrow the bank cancelled because the previous owner was starting a lawsuit trying to nullify the foreclosure.

About two months later, the agent called and said everything was resolved again and we opened escrow.  This time it took a month, but they called and said they couldn’t provide clear title this time either.  We cancelled again.

We got pretty excited when she called last month and said the house is ready to go again.  We closed escrow two weeks later.

This is a pretty good house that is a 2 bedroom, 1 bathroom on title; but in reality it is a 3 bedroom, 2 bathroom with a bonus room.

Our rehab was finished in about two weeks.  This house had a ton of tile that is a bit on the ugly side, but we decided to keep it.

This is my first post for July.  June and July have been crazy busy months for us.  Lots of purchases, lots of sales.  I will be posting a summary this weekend.

As we started looking for houses we found an interesting feature in a house for sale.  It was an old two bedroom, one bathroom house that needed a lot of work.  It had a detached garage and behind it the owner added a slab with plumbing and a toilet.  He didn’t have a roof.  He had a make shift interior door tied on with rope.

Too bad I didn’t have time to try it out.

Things have been busy for us and it seems like another month has gone by with me only making 1 blog post in April.

If you have followed the blog for a while, you know we love a good project house that other investors shy away from. In April, we ended up buying two “project houses.”

House #78 is a 2 bedroom 1 bathroom house built in the 1940′s that has no garage.  We are going to be doing an addition and adding a bedroom and bathroom with a two car garage.  The City Code Enforcement Department has an open case on this property and will be ensuring we do a good job on fixing this house up.

House #79 is even worse.  It was converted into three different living areas.  On title the house is 1,800 sq ft, but there probably is over 3,000 sq ft of living area that was added without permits.  This house had been in escrow 3 different times and the buyers could not close, we ended up getting an accepted contract for about 60% of list price.

Our original game plan was convert it to a duplex and resell it.  After discussing this with the City and Code Enforcement Officer we realized that the City wouldn’t be on-board for this plan as they want it to be a single family residence.  Our new game plan is to get as much space as we can permitted and sell it as a single family residence with a “granny living quarters”.

House #48 was a small and average house on a big lot in a decent area of town, we originally bought it and planned to make it a rental house.  The lot seemed good on paper but in realty it wasn’t easily to expand the property or subdivide the property, so we decided to attempt to wholesale the house while it was in escrow.  The good news was the house needed very little work and was as close to turnkey as anything we buy.

We are a bit different than your average wholesalers.  As we are looking at purchasing properties we are focusing on two strategies: renting it or retailing it.  If we put too many houses under contract we start thinking about wholesaling.

For whatever reason (probably the reasons I mentioned above) I couldn’t get any investors very excited about this house.

At this point most wholesalers would cancel the contract and abandon the deal.  Because we do not want to damage the relationship with the REO company that sold us this deal we decided we would do a minor rehab and try to sell it.

The good news is we sold it just before the New Year, our profit ended up being about 4x what the wholesale profit would have been so it turned out to be a winner. This deal really had all of exit strategies in it: wholesaling didn’t work, retailing did and renting it for nice cash-flow was an option available to.

We recently completed the remodel on House #50 and within 5 days of it being listed we opened escrow with a buyer!  Take a look, here are some before and after pictures.

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 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

So Steve, you’ve owned this property for almost 5 months and haven’t sold it or given us an update?  Yes, it’s true, we have owned this property a long time and we just listed it on the MLS 10 days ago.  Why, well a lot of reasons, but no great ones.  We had a lot of different projects that always moved ahead of this one.  Since this was a big rehab that needed permits, we used it as our “utility project.”  Whenever our workers had no other work we sent them here, not the fastest way to finish a project.

This property started out at 1060 sq ft and needed a lot of work.  We added a second bathroom and permitted the porch.  If we bought this property 2-3 months later it surely would have gone into our rental pool.

Now let’s get to the pictures!  PS: a video should be coming soon.

Outside

Before

After

Kitchen

Before

After

Enclosed Porch

Before

After

Bedroom

Before

After

Bathroom

Before

After

We have 5 or 6 offers and it should be flying into escrow on Tuesday (since Monday is a holiday).

Sorry, the pictures are not that great for this one, we have been slacking lately.