Wheatie's Real Estate Investment Saga

Finally finished the refinance today.  I was able to get a 30 year fixed, 5.875% note on the property.  I'm pretty satisifed with those terms.

If you've been following this story, you recall I paid $70,550 for this house.  I went through all the receipts a couple of weeks ago and the rehab costs were just under $14K.  We originally thought this would be worth about $130K fixedup, but then revised that downward after a preliminary appraisal.   The before appraisal came in at $120K, assuming the repairs as planned.  The after appraisal came in at $135K.  I know that surprised me and I think it surprised everyone else involved.  Nevertheless, I'm very pleased.  The refi amount was $88K, which covered paying off the HML and most of the costs for the refi.  Altogether I'm out of pocket about $8,000 on this deal and have a $88K, 65% LTV loan.

Now off to the next thing. 

All rents in on time this month, too.  Yea!

Did have a problem with the water bill at one unit.  In Colorado, water is lienable.  So, if the tenants don't pay, it comes back to the landlord.  I've been stuck with water bills before, so I have the water companies send me notice if the bill is deliquent.  I had a notice.  After going around with the water department and the tenant several times, I finally got them both on the phone at once.  The tenant got the shut-off delayed a couple of days.  And then made the payment just in time.  Whew!  Irritating, but worked out OK.

Still no progress on the refi.

Good month this month.  All rents were in by the second.  Did have to go replace a toilet at the new place. It was a continuing problem.  A thorough cleaning with muratic acid would probably have fixed the old one, but I didn't want to spend a couple of hours over there dealing with it.  The old one will get cleaned up when I get a chance and wait around for a future application.

The refi continues to drag.  Turns out having an individual as the hard money lender rather than some entity is a major problem.  At least one bank has said they want one year seasoning with an individual as the note holder.

Unfortunately, the triplex is a bust. Great location, but a ton of work.  Mike though it woudl be $30-70K, but readily admits estimating rehab is not his strength.  I'd put it on the high end. Its an older duplex that's been convereted to a triplex.  Floor plans a choppy.  The best of the three is a 3/2, but you have to go through one bedroom to get to the last one.  The other two have weird floor plans with steps up or down to one of the beds.  I'm sure this made sense at one point, but its been ameture hour at the home improvement store and now its a mess.

Of bigger concern is that its partially rehabbed.  A fair bit of work has been done, but things are half done.  Stripped to the studs in some areas, writing dangling out.  Part of the siding has been covered with OSB.  What's up with that?  At least four of the bedrooms are in the basement and lack proper egress.  Two of the units share electric and gas service.

Mike's thought, and its a good one, is to do a minimal fixup now, get it rented, then scrape it in the future.  Its only about three blocks from a future light rail station, so that's actually a great plan.  Trouble is I don't see how to do a minimal fixup without spending a ton of money.

Maybe I'll have a second look.

Yesterday Mike calls and says he's found a possible triplex. Looking online, it looks worth a closer look. He calls today from the property and says I should come over. So, that's the plan for tonight. Needs work, he says. Hmmm.

Had several minor items to fix in the new house. Diverter (brand new!) on the tub not working. Put a new one on. Yesterday the tenant calls and says when they take a shower, water comes out of the ceiling in the downstairs bath. Oh no! I thought it might be the tub drain, which I was concerned about after the tile work was finished. As it turns out, the new spout was leaking, and water was getting behind it. Minor adjustment and problem fixed. Also had some leaks in the drains for the new lavatories. Just minor tightening and tweaking, but still irritating.

I guess the refi is progressing, but yet other new issues. Something about the investor not wanting to refi a hard money loan for a year (!) because its with a private individual. That's a new one. Supposedly the broker has some plan B.

After spending so much time on rehabbing the new property, and then running away for a little R&R, I HAD to work on my truck. The radiator had been leaking for the last month or better. I had bought a new, all metal, heavy duty one, and it had been in the garage for most of that time. July 3 was a holiday from the day job, and the house is ready to go, so I finally got around to changing it out. And the houses, except the heater hoses which look like real knuckle busters. And, since they were right in the open, all the belts, too. And, my junky old trailer had been blowing fuses, so I rewired it, too. And the leaky shower faucets that have been wasting my water and driving me bonkers got fixed, too. Yea!

To top it off, the weather's been decent and I've been able to ride the last few days since I don't have to haul around tools and materials.

Better still, I had an applicant pass the screening. We met tonight and they signed the lease and handed over the first month and the deposit. Outstanding! Six weeks, less one day from closing to a signed lease. That is a good feeling.

Went to the NW CAREI meeting tonight. It was a good presentation. Bill's brother, Don Bronchick, made a presentation about dealing with contractors. He's been a contractor in the past, and had some pretty good info on ways to avoid getting taken for a ride and to do things properly. One interesting piece was he was really in favor of getting permits if the work that required them. Often it seems investors short cut this piece and try to fly under the radar. This last rehab was paint and carpets and broken windows, nothing that needed permits. But my prior rehab did involve quite a bit of wiring and plumbing and I did pull permits. That's something of a hassle, because that city (Aurora, CO), only allows GCs to pull permits unless you occupy the house. So, I had to get a GC in on the job. At the time, I wasn't very happy with the extra costs and all of the inspections. But in the end the additional cost was fairly small and I know the work is done correctly.

Met with Mike after the meeting and discussed next steps. Time to start looking for the next property.