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

Here is a house we tried to buy pretty hard. It is in awful condition. It was built in the late 1950′s.  It is 800 sq ft and a 2 bedroom, 1 bathroom on a good sized lot.  The house needs about 25k in repairs to make it rent ready.

At the end of the day we missed out on this one, it was listed at 45k and sold for around ~70k.

We own House #28 about a block from this one and we paid about the same price, but our house is much better.  Built in 1980, 4 bedroom, 2 bathroom, 300 sq ft bigger, and only needed about 8k repairs.  A lot of the price difference probably has to do with the market going up, especially the low-end.

So if this type of property doesn’t get excited you might not like real estate investing!  At least buying the major fixers we do.

36th St – Outside

36th St – Inside

Well, if you read my last post you probably know what I think about most real estate gurus.  I do believe in that a strong team can save you a lot of money, but it doesn’t happen overnight.

For House #16, we put it into escrow on Tuesday.  Last week I sent a informal counter-offer to 5 out of the 8 offers we received.  Basically, explaining how we do things, what we are expecting and what will help their offer stand out above the rest, since the 5 offers all netted us within $2,000.

The three things that would help their offer stand-out:

1. If the Buyer is willing to pay their own closing costs. Since we deal mostly towards an FHA clientele, this is always a tough one.

2. If the Buyer would work with my lender. This is pretty self explanatory, but important.

3.  Escrow must be Seller’s choice.  This is also pretty self explanatory and it is pretty common for the Seller to have their pick of services in this market.

Surprisingly, only two buyers responded.  One raised their offer by $5,000 and the other offered to raise their offer $5,000 and use my lender.  All other things pretty much being equal, you can probably assume which Buyer we choose to work with.

Now the fun parts, this is where things get easy:

1. I call the lender I use and ask him to schedule an appointment with the Buyer and pre-qualify them.

2. I call escrow and let them know the address and the details.

3. The next day the lender calls me back and lets me know the Buyer is easily qualified and he has ordered an FHA case number and had the appraiser give him a verible that she can get the property to come in at contract value.

4. The lender ordered a second appraisal from day 1, so we will not need a review appraisal.  Some banks allow this, since he is the branch manager with a direct lender, his bank rolls with this.

So now we have an escrow with many of my team-mates involved.  If anything goes wrong, I guarantee their loyalty lies with me and they will not delay things.

How did I build this team? Along the way…

1. My escrow lady did a couple purchase transactions early on and simply asked for my business.  I gave her a chance and have not looked back since  (probably 30+ escrows later).

2. Title Insurance I never really get to pick, since I buy Title Insurance Binders that the Seller pays for when I buy property.

3. I have had quite a few loan officers “ask for my business,” this is my second time referring this one a loan, so we will see how it works.  This is always the hardest part to push people on.  But, always, always, always call the loan officer before you do a transaction! You ask them many important questions: “are you a direct lender?;” “are you investor friendly;” “what is the time-frame for a typical transaction;” “how are appraisals ordered;” “how often do review appraisals get ordered, and how;” “what will be the major hurdle for this loan;” “when will you have desktop underwriter approval;” “can you send me a copy of doc and funding conditions when you receive them;” etc…  Can you tell I ask a lot of questions?

4. The appraisers used are usually part of the lenders team, but they often-times do lenders favors.  So, if the lender wants to impress you, they will help protect you from the bad appraiser.

I think it is very hard to build a lot of these team members before you actually start doing transactions.  Everyone wants business, but it is really hard to see how you work together until you do a couple transactions with a person.

Now just for fun, here is the final walk-through of House #16

Things are going better on House #29.  As I posted earlier, the company that sold it to us is very un-organized and in charge with lining up the retail buyer.  We put some extraordinary pressure on them and they had their Buyer do some things that showed us a lot of confidence.

The Buyer removed all contingencies and agreed to make his $40k+ deposit non-refundable early on in the process (before appraisal or loan approval).  He also agreed to buy the property as-is and without a home inspection.  I felt kind of awkward asking for these things and expected a negotiation, but they send the signed docs back shortly after.

Since the Buyer has got loan approval and we should be getting loan docs by tomorrow.  So this house should close by the end of the week.

Here is a video tour I took of the house last month.

Last week our workers completed the rehab for House #24.  We have listed this house for rent and have not got a ton of interest so far, I wonder if it is because of the holiday weekend or if the price is too high?  We will probably keep the price the same for 10-15 more days and if we still get no action we will lower the price.

As for the rehab, we experimented by doing a lot less than we normally do.

• We left the popcorn on the ceilings
• We left the fireplace as-is
• We kept the kitchen cabinets and ceramic tile counter tops
• We did very few changes in the bathrooms (minus a full master shower redo)

I had some time so I experimented by doing the walk-through with the new video camera versus pictures, let me know what you think.

I got the new iFlip MinoHD camera so I could start to add some video blogs to the web site.  The video is pretty shaky but it should give you a good idea of what the house looks like and the damage done.

Video of the Inside

Video of the Pool Area

Let me know what you think.

Happy Thanksgiving!