The big show is coming to town and I'm expecting it to be a lot like a circus for a couple of days! Tomorrow is the first day of rent collecting - my favorite part of the month. Tomorrow is also the start of a record number of move-ins for me (or at least that's what I'm expecting. To be quite honest, I'm not sure how many we're up to - six or seven.
I almost finished the duplex today. I installed the electrical circuit for the dryer. I installed drain lines for the washer and the bathroom sink. Even the circuits for the new electric baseboard heat are almost done. If I can finish the baseboard heat tomorrow, the duplex will be ready for occupancy. I'll be glad when we're done and everyone is moved in! It's going to be a wild week!
Monday, April 30, 2007
Sunday, April 29, 2007
Busiest Month Ever!
It looks like May is going to be our biggest month ever. With the 12 units we've taken over this month, we had several vacancies to fill. Prior to this month, the most move-ins I've ever had was 5 in one month. It looks like we'll have 6 or 7 for May (and maybe more). I simply can not believe how hot the rental market seems to be right now. We had another applicant look at another 1 bedroom apartment today and they say that are taking it. WOW! To tell the truth, I'm a little overwhelmed by all the activity this past month. It's been quite a while since I've worked this hard, but that is a good problem to have and I'm not complaining!
Today, I started out by changing the locks and installing all new miniblinds in one of the 3 bedroom houses that we are buying. It looks like about 2 days of work will make this house rent ready. I have 2 rooms of carpet to change and the kitchen needs painting. I'm anxious to have time to get this done! Hopefully, I'll have it done by the end of the week.
After completing this work, I went to the duplex I've been working on and ran the wiring for the new electric water heater. I also spent a few minutes deciding how to run the wiring for the washer and dryer, and the new electric baseboard heat. I'm running out of time on this unit and tomorrow all of this wiring will need to be finished! I've done a lot of these projects, so I don't think we'll have a problem finishing tomorrow - right on time!
After 6 hours of hard work , I headed home. I felt bad for missing Church this morning, but the work had to be done. Thankfully, it is a rare occassion that I have to work on Sunday. I arrived home in plenty of time to go to Church this evening for our small group meeting (which is my favorite thing at Church). To make things even better, the weather was absolutely perfect and I called one of the other members of our small group to arrange a motorcycle ride to Church. My wife and I rode our motorcycle to town to meet the other member and we rode together to Church! It doesn't get better than that! Yet another member of our small group is also considering getting a motorcycle. I keep saying that I'm going to start a motorcycle gang at church. Now we need a cool name. Any thoughts?
Today, I started out by changing the locks and installing all new miniblinds in one of the 3 bedroom houses that we are buying. It looks like about 2 days of work will make this house rent ready. I have 2 rooms of carpet to change and the kitchen needs painting. I'm anxious to have time to get this done! Hopefully, I'll have it done by the end of the week.
After completing this work, I went to the duplex I've been working on and ran the wiring for the new electric water heater. I also spent a few minutes deciding how to run the wiring for the washer and dryer, and the new electric baseboard heat. I'm running out of time on this unit and tomorrow all of this wiring will need to be finished! I've done a lot of these projects, so I don't think we'll have a problem finishing tomorrow - right on time!
After 6 hours of hard work , I headed home. I felt bad for missing Church this morning, but the work had to be done. Thankfully, it is a rare occassion that I have to work on Sunday. I arrived home in plenty of time to go to Church this evening for our small group meeting (which is my favorite thing at Church). To make things even better, the weather was absolutely perfect and I called one of the other members of our small group to arrange a motorcycle ride to Church. My wife and I rode our motorcycle to town to meet the other member and we rode together to Church! It doesn't get better than that! Yet another member of our small group is also considering getting a motorcycle. I keep saying that I'm going to start a motorcycle gang at church. Now we need a cool name. Any thoughts?
Saturday, April 28, 2007
Too Busy to Get Anything Done!
These past couple of days have been extremely busy. Yesterday, I did paperwork all morning: paying bills and balancing checkbooks. After lunch, I installed a new electric water heater in our new duplex. However, between working on the water heater, things were simply CHAOS. The phone rang constantly! I showed a couple of apartments and my new three bedroom house to several potential tenants. I simply can't believe how many people are seriously looking for rentals. This may be a record month for move-ins. At this point, I believe that we have 5 people moving-in this month.
Today, I mowed the grass at several of our apartment buildings and at our two new houses. Before I could mow at the houses, I had to clean a bunch of debris out of the yard. Once I finished the mowing, I measured for new mini-blinds and created a short list of the things that are needed to rent the property.
Although I don't like to work on Sundays, I'll be going to church tomorrow evening instead of tomorrow morning. With only 2 days left til the tenant moves into the duplex I've been rehabbing, I don't have a minute to spare. I need to run all the wiring for the new electric baseboard heat; wiring for the electric stove; wiring for the dryer and washer. In addition, I need to run water and drain lines for the washer and drain lines for the bathroom sink. Finally, I need to seal the roof over the kitchen. That should be enough to keep me busy for 2 days.
Today, I mowed the grass at several of our apartment buildings and at our two new houses. Before I could mow at the houses, I had to clean a bunch of debris out of the yard. Once I finished the mowing, I measured for new mini-blinds and created a short list of the things that are needed to rent the property.
Although I don't like to work on Sundays, I'll be going to church tomorrow evening instead of tomorrow morning. With only 2 days left til the tenant moves into the duplex I've been rehabbing, I don't have a minute to spare. I need to run all the wiring for the new electric baseboard heat; wiring for the electric stove; wiring for the dryer and washer. In addition, I need to run water and drain lines for the washer and drain lines for the bathroom sink. Finally, I need to seal the roof over the kitchen. That should be enough to keep me busy for 2 days.
Thursday, April 26, 2007
Cosmetics Done!
I got the cosmetics all done on my rehab today. It's looking pretty good if I do say so myself. Tomorrow, I will be working on the mechanical work that needs to be done. I will install a new electric water heater; a new drain line for the bathroom sink; and the electric for new baseboard heat.
It might seem strange to do the cosmetic work first, but the reason I did that was because people don't notice a missing water heater, especially in a basement they don't have access to. They also don't notice that there is no heat in the house. However, what they do notice is new carpet, fresh paint, and new trim. Doing those cosmetics allowed me to rent the unit for May and THAT IS IMPORTANT!
The rental market has really heated up. That's a good thing because last year was the worst rental year in 15 years, according to long time landlords in our area. There has been tremendous demand for rentals this past couple of weeks and we should have a lot of move-ins at the beginning of May. I sent in paperwork to Section 8 for another unit today.
First thing in the morning, I've got to print a rent-roll and a combined cash flow analysis to drop off at the bank that is doing the loan on the 2 rental houses I'm buying. I showed one of those houses today to a prospective tenant and am hoping to have at least one of them rented for May (before I even own it). It's a great time to be in the rental business!
It might seem strange to do the cosmetic work first, but the reason I did that was because people don't notice a missing water heater, especially in a basement they don't have access to. They also don't notice that there is no heat in the house. However, what they do notice is new carpet, fresh paint, and new trim. Doing those cosmetics allowed me to rent the unit for May and THAT IS IMPORTANT!
The rental market has really heated up. That's a good thing because last year was the worst rental year in 15 years, according to long time landlords in our area. There has been tremendous demand for rentals this past couple of weeks and we should have a lot of move-ins at the beginning of May. I sent in paperwork to Section 8 for another unit today.
First thing in the morning, I've got to print a rent-roll and a combined cash flow analysis to drop off at the bank that is doing the loan on the 2 rental houses I'm buying. I showed one of those houses today to a prospective tenant and am hoping to have at least one of them rented for May (before I even own it). It's a great time to be in the rental business!
Wednesday, April 25, 2007
Rental Market Improving!
Today was another good day in the rental business. I rented the unit of the duplex that I have been rehabbing, starting May 1st. Of course, now I've got to get it finished. So far, I've trashed out the unit; painted the entire interior; replaced a broken window pane; repaired the wood floor in the kitchen; removed old carpeting; carpeted the living room, kitchen, bathroom, and one bedroom; repaired the kitchen ceiling; replaced the toilet seat; painted the stairs; cleaned up the yard; repaired holes in the walls; installed new miniblinds on all windows; rebuilt two interior walls that had been removed by the previous tenant; painted the exterior door and an exterior window; and replaced the kitchen faucet. Still to do: install a new electric water heater; install new electric baseboard heat throughout the unit; install bathroom cabinet, sink, and faucet, install new electric plug for a dryer, and drain line for washer.
With this duplex rented, I'm out of 3-bedroom rentals again (which is a good problem to have). Therefore, I contacted the seller of the two houses that I'm buying and arranged with her to allow me to show them. I already have an appointment to show one of the houses tomorrow. It will be a great plus if I can get both of these houses rented before I even buy them!
I also spoke with the banker this morning. Unfortunately, the lending standards have tightened since I did my last loan. At this point, the bank will only loan 80% of the purchase price. If I want to pay cash and then refinance, I will have to wait 6 months to refi. Ugh! Therefore, I have decided to bite the bullet and go with the 80% financing, although I don't like it.
Finally, I've got an update on my recent blog describing a friend who had an eviction that got out of control. To make a long story short, the tenant got a legal aid lawyer to represent him and made my friend's eviction a nightmare. The legal aid lawyer countersued for damages and requested a JURY TRIAL! I didn't even know that a tenant had a right to a jury trial for an eviction. Anyway, the tenant had to post a bond for the jury trial to proceed and that didn't happen. My friend got a lawyer of her own, who put pressure on the legal aid lawyer. Today, the case was settled with the tenant agreeing in a court hearing to be out by the May 15th and the tenant to pay damages. A clear victory for the landlord after a lot of unnecessary stress.
With this duplex rented, I'm out of 3-bedroom rentals again (which is a good problem to have). Therefore, I contacted the seller of the two houses that I'm buying and arranged with her to allow me to show them. I already have an appointment to show one of the houses tomorrow. It will be a great plus if I can get both of these houses rented before I even buy them!
I also spoke with the banker this morning. Unfortunately, the lending standards have tightened since I did my last loan. At this point, the bank will only loan 80% of the purchase price. If I want to pay cash and then refinance, I will have to wait 6 months to refi. Ugh! Therefore, I have decided to bite the bullet and go with the 80% financing, although I don't like it.
Finally, I've got an update on my recent blog describing a friend who had an eviction that got out of control. To make a long story short, the tenant got a legal aid lawyer to represent him and made my friend's eviction a nightmare. The legal aid lawyer countersued for damages and requested a JURY TRIAL! I didn't even know that a tenant had a right to a jury trial for an eviction. Anyway, the tenant had to post a bond for the jury trial to proceed and that didn't happen. My friend got a lawyer of her own, who put pressure on the legal aid lawyer. Today, the case was settled with the tenant agreeing in a court hearing to be out by the May 15th and the tenant to pay damages. A clear victory for the landlord after a lot of unnecessary stress.
Sunday, April 22, 2007
Dos Mas (Two More)
My plan for today was to go to Church this morning and put some new carpet in my duplex this afternoon. I did go to Church (and ran the projection for the church services), but that was as far as I got with today's plan. The pastor was a little long winded and by the time I got home, I had decided that I was feeling lazy. I just didn't have much energy and decided to take the day off.
At 3pm, the phone rang. It was an investor from my local REIA. This particular investor has been a very successful rental property owner for over 20 years and until recently owned about 50 rentals. About a year ago, she decided to sell her portfolio of rental properties and move to Florida to retire. Obviously, as a sharp investor, she put the properties on the market at retail. During the past year, she sold many of her properties. She has asked me in the past if I wanted to buy any of the properties. I have always said yes, but at MY PRICE (which was about half of what she was selling for). She completely understood that, but of course wanted to get the most for her properties.
The headline in our local paper yesterday concerned a major drug bust in our city. Unfortunately, the drug bust occurred at two of the houses this investor owned. In the same 24 hour period as the drug busts, someone crashed their car into another of her properties, tearing the corner from the house. This investor has already made a bunch of money on the houses she sold and because of the bad tenants is now wanting to get rid of the rest of her properties - NOW! She called today to ask if I was interested in any of her properties. As usual, I said yes, but at MY PRICE. To my amazement, she said that she would sell both of the three bedroom houses that were involved in the drug raid for a total of $50,000 ($25,000 each), which is exactly MY PRICE.
I told the investor that I would take them both as long as they hadn't been destroyed in the raid. I asked when she could meet to show me the houses and sign the contracts. We agreed on 4pm. I grabbed a purchase contract and got out the motorcycle. It was a beautiful day, so I wanted to combine looking at the properties with getting in a nice motorcycle ride. We met at the houses at 4pm and I looked at both. One of the houses is in good condition and will be ready to rent out as soon as it is trashed out (but the seller). The other house is also in good condition, but will need interior paint and one of the rooms has a large burn hole in the carpet from the concussion grenade used by the police. I would estimate that I can have it ready to rent in 3 days.
As it turns out, the seller also arrived at the property on a motorcycle and we proceeded to ride to a local restaurant to sign the contract. Fifteen minutes later, the contract was signed and I was riding home.
So, how did the day turn out? I am buying two single family houses for $25,000 each. The properties have a retail value of $50,000 each. Therefore, at closing I will pick up $50,000 in equity. In addition, I will rent each house for $550 per month for total rent of $1,100. Operating expenses will be about $550 for the pair leaving $550 as the NOI. The mortgage payment on $50,000 will be about $316, meaning my positive cash flow from these two properties will be $234 per month or $117 per unit per month. In addition to the cash flow, I will be doing the management and maintenance, which means I will EARN back about an additional $200 per month.
So, my Sunday afternoon produced $50,000 in instant equity and a total of $434 per month ($5,208 per year) in cash. In addition, I will get whatever appreciation occurs (if any) over the long term; depreciation for tax purposes; and paydown of the mortgage principal balance (with the tenant's rent. NOT BAD FOR ONE AFTERNOON!
The icing on the cake is that this investor still has other properties left that I may be able to buy at the same 50% discount!
At 3pm, the phone rang. It was an investor from my local REIA. This particular investor has been a very successful rental property owner for over 20 years and until recently owned about 50 rentals. About a year ago, she decided to sell her portfolio of rental properties and move to Florida to retire. Obviously, as a sharp investor, she put the properties on the market at retail. During the past year, she sold many of her properties. She has asked me in the past if I wanted to buy any of the properties. I have always said yes, but at MY PRICE (which was about half of what she was selling for). She completely understood that, but of course wanted to get the most for her properties.
The headline in our local paper yesterday concerned a major drug bust in our city. Unfortunately, the drug bust occurred at two of the houses this investor owned. In the same 24 hour period as the drug busts, someone crashed their car into another of her properties, tearing the corner from the house. This investor has already made a bunch of money on the houses she sold and because of the bad tenants is now wanting to get rid of the rest of her properties - NOW! She called today to ask if I was interested in any of her properties. As usual, I said yes, but at MY PRICE. To my amazement, she said that she would sell both of the three bedroom houses that were involved in the drug raid for a total of $50,000 ($25,000 each), which is exactly MY PRICE.
I told the investor that I would take them both as long as they hadn't been destroyed in the raid. I asked when she could meet to show me the houses and sign the contracts. We agreed on 4pm. I grabbed a purchase contract and got out the motorcycle. It was a beautiful day, so I wanted to combine looking at the properties with getting in a nice motorcycle ride. We met at the houses at 4pm and I looked at both. One of the houses is in good condition and will be ready to rent out as soon as it is trashed out (but the seller). The other house is also in good condition, but will need interior paint and one of the rooms has a large burn hole in the carpet from the concussion grenade used by the police. I would estimate that I can have it ready to rent in 3 days.
As it turns out, the seller also arrived at the property on a motorcycle and we proceeded to ride to a local restaurant to sign the contract. Fifteen minutes later, the contract was signed and I was riding home.
So, how did the day turn out? I am buying two single family houses for $25,000 each. The properties have a retail value of $50,000 each. Therefore, at closing I will pick up $50,000 in equity. In addition, I will rent each house for $550 per month for total rent of $1,100. Operating expenses will be about $550 for the pair leaving $550 as the NOI. The mortgage payment on $50,000 will be about $316, meaning my positive cash flow from these two properties will be $234 per month or $117 per unit per month. In addition to the cash flow, I will be doing the management and maintenance, which means I will EARN back about an additional $200 per month.
So, my Sunday afternoon produced $50,000 in instant equity and a total of $434 per month ($5,208 per year) in cash. In addition, I will get whatever appreciation occurs (if any) over the long term; depreciation for tax purposes; and paydown of the mortgage principal balance (with the tenant's rent. NOT BAD FOR ONE AFTERNOON!
The icing on the cake is that this investor still has other properties left that I may be able to buy at the same 50% discount!
Saturday, April 21, 2007
Starting to Look Livable!
I spent another 4 hours working on the duplex today. All the trim pieces are now installed in the living room and the new Berber carpet is installed (55 cents per sq. ft. at Lowes). This was only my second time seaming carpet and I was relatively pleased with the way it came out. This Berber carpet has a very nice diamond pattern in it, but that makes seaming more difficult than a carpet with no pattern.
Tomorrow morning I will be running projection at church. Normally, I don't work on Sunday, but my wife is going out of town with our daughter and therefore I might as well do something instead of sitting around all afternoon. Therefore, I'm planning to install carpet in one of the upstairs bedrooms tomorrow. This bedroom now has really nasty tan commercial carpet in the center portion of the room and some 1960's vintage purple shag carpet around the perimeter of the room - UGLY! Obviously, this is something that one of the tenant's did!
I'm still on pace to have this ready to rent for May 1st, and I'll start showing it this week (after tomorrow's carpet job).
Tomorrow morning I will be running projection at church. Normally, I don't work on Sunday, but my wife is going out of town with our daughter and therefore I might as well do something instead of sitting around all afternoon. Therefore, I'm planning to install carpet in one of the upstairs bedrooms tomorrow. This bedroom now has really nasty tan commercial carpet in the center portion of the room and some 1960's vintage purple shag carpet around the perimeter of the room - UGLY! Obviously, this is something that one of the tenant's did!
I'm still on pace to have this ready to rent for May 1st, and I'll start showing it this week (after tomorrow's carpet job).
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