Progress thread: My first two deals and beyond

[danoodle]

Actually yes. For the first house, here are the income/expenses so far. I had some big expenses right away, but I chalk it up to no one having lived there for over a year and I knew something would come up right away. Go here for the college house numbers. The college kids have been so easy so far; basically no complaints and all the money up front. If you look on my profile, you can check out my blog and I have all the numbers on the sidebar to the left that I try and keep updated on a regular basis.

 

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[PopEmersen]

How much was the hardwood floors?

 

[PHD]

I have 12.8k into this house including purchase price

Wow!! In Aust that wouldn't even qualify as deposit for a loan! Great work on the house, looks much more habitable now.

How much was the hardwood floors?

I'm guessing its a Laminate based on the budget, although I have been wrong before.

 

[danoodle]

How much was the hardwood floors?

I'm guessing its a Laminate based on the budget, although I have been wrong before.

You are correct, it is laminate. The cheapest of the cheap at 68 cents per square foot. If you look on the spreadsheet and click the tab on the bottom that says "rehab costs actual" you will see that I spent $932 on laminate, about $145 on underlayment, and about $650 on allure flooring. I only ended up using about half of the laminate due to deciding on getting allure later, but I will either return it or probably just use the excess on the next house. Allure claims to be the "easiest floor ever" and I tend to agree. It is highly water resistant and I used it in the basement of the college house as well. It works really well on uneven floors and that is another reason why I used it in two of the rooms. It is in the room where all the mold used to be and I got the same "oak" color to match the laminate in the rest of the house.

 

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[roc]

Nice job man!

 

[T&R]

Any updates?

 

[danoodle]

Nothing new really. The 3rd house I just finished is still vacant and I have not started on the 4th house yet. I am having minor surgery Thursday, but will hopefully start on the 4th house this week or the next. I do have some before photos of the 4th house here. I am just calling it the yellow house for now. I am actually going to attempt to "flip" this house. My backup plan is to rent it, and I may rent it for a year or two anyway while I wait for the RE market to improve.

 

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[rc08234]

Great thread! 8k is a steal. This is what we get for 30k around here!
15 Green Street, Pleasantville NJ | MLS# 384807 - Trulia

And thats the hood hood, a place I wouldn't want to walk at night.

 

[shane8399]

the irony in the town name of Pleasantville, and "i wouldnt walk there at night" is amusing.



OP - i have read your entire post, and i too am baffled at how cheap the properties are, i know the dakotas and the midwest states can be cheaper though, especially in smaller towns, further away from big business.

To fetch 1100 a month rent here, the house would at the min cost is prob 150k, would be a bank purchase, and might need a little work.

 

[danoodle]

Just thought I'd give a quick update if anyone cares. I still haven't rented out the "crap" house yet. I have a couple promising young couples with no kids or pets looking at the house this week though and hopefully one of them works out.

We started work on the yellow house last Monday. Making some decent progress and as of right now, it seems as if I'll be way under budget, but who knows what could pop up. If I can have less than 50k total into this house and sell it for 80k+, I'll be a happy camper. Especially considering this is my first "flip". I'm giving myself a March 1 deadline to have this house fixed up and on the market. I also found another house that I really like and hope to pick up. It has a nice garage and I would really like a place where I can store all my stuff without renting a storage unit. Cash is tight though, and I probably won't be able to pick it up until I sell the one we're working on. Might be able to go in on it with my brother, but we'll see. Here's to a successful 2012!

 

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[T&R]

How is the self managing going? No problems (yet) with late rents or other issues?

 

[danoodle]

How is the self managing going? No problems (yet) with late rents or other issues?

So far so good. My first tenants were having some trouble paying on time, but we worked it out where he pays on the 1st and 3rd friday of every month and has not been late since the change. The college kids paid up front so no problems there. I have a tenant moving into the "crap" house this weekend who just got a job in town as a firefighter so that should hopefully go well too.

Making decent progress on the yellow house. No clue if we're on schedule for March 1 or not. I'll probably be able to tell in a week if we're gonna make it. Still projecting to be under budget but something always seems to come up. Apparently while I stepped out for a bit this morning, my worker said a well-dressed lady with a nice truck knocked on the door and inquired about the house. Said that she had been waiting for someone to fix it up and will check back in a couple weeks. Would be great to have a buyer lined up before we even finish the work!

 

[squall74]

If you don't mind can you put the total amount of mortgages and cashflow for all your properties? Google docs is unreadable for me and I found this thread a great read. Congrats on your progress! Being from Hawaii I'm surprised at the prices there in Kansas.

 

[danoodle]

As of right now I have $2100 gross rent coming in and paying $246.42 in mortgage payments. I'd estimate $1500 or so net minus the $246 is around $1250 positive cash flow per month.

I'd say I have around a week left until the yellow house is finished! Updated numbers can be found here. I'm really shooting for April 1st, but it's going to be hard since I am doing all the work and haven't heard from my worker since he cracked 3 ribs and punctured a lung after falling hard on the concrete. Thankfully not on my property! It was while he was taking a walk with his wife and slipped in some mud. If he comes back and if my friend helps these next few days, I think we'll make it for sure! Costs are going well, so far just over 45k. I'm planning on selling it at just under 100k so that would be a very nice profit! We'll see if it sells though....

 

[danoodle]

Another quick update! I made an offer for a house and they accepted; we would close in 30-45 days since it is a HUD home. I will post pics and info later.

I promised my wife I'd be home by April 4th, so the yellow house has to be finished by then. Been working until midnight almost everyday for the past couple weeks. My worker came back! He put in some hours yesterday and will continue to help me these final days. Things are looking good!

Oh, and last Sunday I almost lost my eye to a crazy, one in a million chance involving a finish nailer. I was nailing in quarter round and somehow the nail bent itself, ricocheted off the wall and hit me in the nose about an inch from my eye! I never thought a finish nailer could be so dangerous....needless to say, I am now wearing eye protection basically all day.

 

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[DeletedUser394]

Must. Move. To. Midwest. Cheap. Real Estate.

haha, damn, can't even get a 1 bedroom condo for $100k over here, never mind an entire mobile home park.

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

 

[danoodle]

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

I've often wondered it myself, considering I have tenants paying way more rent than would be a mortgage. I figure it's a combination of things.
-Most of the cheap homes are far from move in ready and require a lot of work.
-This is definitely a "rental" town and a lot of people probably don't have the cash/credit for even these cheap homes.
-The people with money/credit tend to buy the "nicer" homes

There are probably many more reasons, but also, not a lot of people choose to live in Kansas either...Less than 1% of the people in the US actually live in Kansas...

 

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[verial]

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

I move like every year. Of course I could rent out my home, but being a landlord is not exactly passive and you're likely to be sued on-and-off. I also would prefer not to hire an "employee" who plays the landlord. I want freedom -- that's why I don't have a house.

 

[DeletedUser394]

I move like every year. Of course I could rent out my home, but being a landlord is not exactly passive and you're likely to be sued on-and-off. I also would prefer not to hire an "employee" who plays the landlord. I want freedom -- that's why I don't have a house.

Valid reasons, but I'd say you're in the minority, wouldn't you agree? Most people never do anything, never go anywhere, etc.

I enjoy moving around too, but I'll be buying up real estate and outsourcing it to property managers in every location I visit. I don't mind delegating tasks to competent people that are more than capable.

 

[danoodle]

Quick update: So apparently, I was supposed to meet with the guy this week about the mobile home park, and I just found out that he died on Saturday...I mean, he was 82 and all, but it was still quite unexpected. We'll see how this unfolds...

 

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[Money mania]

Wow, I was reading through your posts, very good job so far with the RE. Looks like you are finding your way, good luck with all your success.

 

[AnneC]

Holy cow! That is crazy about the MHP guy. I meant to check in with you for an update, but it's been a little crazy here. If it starts to pan out, let me know...

 

[Yankees338]

Awesome thread! I just read through the whole thing... Thanks for sharing.

Has anything new happened on the MHP front? That was a pretty crazy turn of events.

 

[danoodle]

About the MHP, find out what zoning is accepted.

Here's the scoop on the mobile home park on my non-monetized blog if that's ok to post. Basically it is zoned R1 residential and is currently in non-conforming use. They want it to conform and are phasing it out; they said the only possibility is to appeal the decision (which most likely won't change anything) or apply for the mobile home zoning (which is also not very likely). I think the time has come for this park. It is a very nice piece of land, though, right on a public dam with fishing and my mentor said he would even pay 30k just for the land. So there is still potential opportunity, like ride it out until it dies then subdivide and sell to builders or something. Self-storage would be nice and I hear you can even automate it with kiosks. I have considered it as well as billboards and, of course, mobile home parks.

About the house for sell.... How would the rents be?

I am supposed to get an offer on the house today or tomorrow so I'm hoping it will go through! I could rent it out for probably around $800 and my loan payment is only $246.42 so it would definitely cashflow. Not necessarily in a hurry to sell, but it would be nice as a large family would most likely rent it, and I would hate to see a newly renovated house get torn up.

Also, forgot to ask... any multi-units in your area? if so, have you looked at the price per door? rents?

There are some multi-units around here and I have looked into it some. Would not be a bad return depending on the price. I have focused solely on SFHs that are dirt cheap and fixer-uppers and plan to only focus on 2 bedrooms or less, but I'm sure the return would be even greater on multi-units. If/when this house sells, I am hoping to go in on an apartment complex with a friend in the town where I went to college. Would definitely be lower cap rate, but very stable and housing is always in high demand close to the campus. I am definitely keeping an eye out and even just got my realtor's license so I hope it will open up even more opportunities! At the very least, I will get half the commission when purchasing future homes...

 

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[andviv]

on my non-monetized blog if that's ok to post.

Of course it is ok to post, you have contributed already, so no issue here.

Basically it is zoned R1 residential and is currently in non-conforming use.

What is the lot size?

Zoning R-1 meaning 1 SFH per acre? (what is the minimum lot size per SFH in this area?)

I could rent it out for probably around $800 and my loan payment is only $246.42 so it would definitely cashflow.

I'd rent it if the offer does not show up.
I'd rent it month-to-month so a new buyer can decide what do with it, keep the renters or move in. Adds an attractive point to the mix, now it meets two markets, home owners and investors.

I have focused solely on SFHs that are dirt cheap and fixer-uppers and plan to only focus on 2 bedrooms or less, but I'm sure the return would be even greater on multi-units.

The only reason I mention it is because I am a believer of having all my eggs in one basket and take care of the basket with everything I got.... less roofs to take care, less trips to collect rent, etc etc. But you are focused, so I don't want to become a distraction from what is working for you.

I am hoping to go in on an apartment complex with a friend in the town where I went to college.

How far away?

Remote land-lording is a common challenge for most people (actually, can't recall too many people that have made it work...)

 

[danoodle]

Sorry, I didn't realize you posted this! Quick update: I got an offer on the house and I accepted! Just has to pass the inspection and appraisal and I'll be good to go. I also just closed on the small deal with my mentor. I have learned so much already just working with him, even on this small deal. We have discussed many ideas on how to move forward, so we'll see what happens there. Things are looking up! Not sure what my next deal will be, but I'm always keeping a sharp eye.

What is the lot size?

Zoning R-1 meaning 1 SFH per acre? (what is the minimum lot size per SFH in this area?)

It's a little over 2 acres with 15 units. It is zoned residential and is non-conforming and they want to get it to conform by phasing it out and not allowing homes to be added. I wanted to fill the park back up and get the cashflow going, but this makes it a dying entity. The only way I would purchase it is at a steep discount.

I'd rent it if the offer does not show up.
I'd rent it month-to-month so a new buyer can decide what do with it, keep the renters or move in. Adds an attractive point to the mix, now it meets two markets, home owners and investors.

That's a good idea and if the offer falls through for whatever reason, I'll consider it!

The only reason I mention it is because I am a believer of having all my eggs in one basket and take care of the basket with everything I got.... less roofs to take care, less trips to collect rent, etc etc. But you are focused, so I don't want to become a distraction from what is working for you.

Not a distraction at all. I'm always looking for new opportunities!

How far away?

Remote land-lording is a common challenge for most people (actually, can't recall too many people that have made it work...)

It is about an hour and 45 minutes away. My friend would be able to manage it himself and I occasionally go to the town to hang out with people so I could help as needed. I believe RealOG has many properties out of state and has success in managing them. I believe the key is in finding a good property manager.

 

[tchandy]

Sounds like a great deal. I have properties in other states as well and managed by PMs. Where in Kansas are you located? I just moved to Leavenworth.

 

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[andviv]

the key seems to me to be strong PM

Oh, I guarantee it... this IS the key.

When my properties were under my good PM, they were doing great. When I lost this PM and started going through a bunch of bad one, my business nose-dived in no time flat.

 

[NJRealEstate]

When my properties were under my good PM, they were doing great. When I lost this PM and started going through a bunch of bad one, my business nose-dived in no time flat.

how did u find the first pm? what are the key differences between good and bad? anything you learned from the contrast that you would look out for in the future? if you were getting into rentals again how would you pick your PM, what would you do differently than you had in past experiences? Where your pms IREM grads, or NPMA or some other national organization that certifies property managers?

 

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[andviv]

Responsive. That was the key.

They pick up your calls right away. And your tenants' calls.

Good communication, both verbal and writen.

I found the good one as a referral. The others were usually realtors that I just called.

No certs, just somebody organized and responsive.