Mike's Week of Investing (Ending 2/13/15)

Youtube Channel for Before and After Rehab Videos

https://www.youtube.com/channel/UCCc_xpWT498qX5QnJ...

Thought I'd add a link to my youtube videos of all the before and after rehab videos I've done recently on my deals. Sometimes a picture is worth a thousand words. But a video is that much better. Check em out. And then continue on with the blog below. :-)

WEEK ENDING 2/13/15

1) TENANTS
Bourbonnais Hanson. Still haven't heard anything from the healthcare company. They signed the lease so, to me, they're responsible for making the payment. But its just odd they haven't contacted me in over a week....

Steger- Settlement tenant. Still no payment. I texted twice and no response. I hate when that happens. But I know the settlement is real because I actually worked with a settlement lender to help the tenant get a loan and they verify the settlement before the loan can be approved. Just have to wait but I know I may end up having to get an attorney to get this money. The one thing I do know is that the tenant is getting a ton of money for me to go after if it comes to that.

Manteno - They got their return and paid up. Always good to see that.

Bourbonnais and the 10 week payment plan. So I told the tenant last week I would not let them skip this month's rent payment and make it up via some 10 week payment plan she proposed. She sent the $400 last week and then the rest of the rent plus the late fee this week.

This goes back to tenant's believe that "it can't hurt to ask". They'll ask for a lot of crazy stuff. But they're expecting no's on most of em so I don't take it personal when they ask.

New issues. Nothing really new this week. Had a couple of online payments that didn't go through. One was because of a typo on the bank account. Another one the bank said the account doesn't allow ach so the tenant has to work with them.

Had one minor plumbing repair on some drain stuff. My typical plumbers couldn't make it but I did find a new one. He's licensed and pricing is ok. First quote was a little high ($480). Told him I couldn't do that. Came in at $370 so that wasn't too bad.

2) REHAB
The hoarder house will be starting this week with demo. Got the quote from the contractor to do all the demo. Came in at 1700. I budgeted 2k so we're good. Gonna be a ton of really crappy work though and I'm glad I don't have to do it.

Contractor said he had two buddies that were laid off and he had offered the work to them. They were both on board so we'll see.

3) ACQUISITION
It was a great week for acquisitions. Got 2 houses this week. One late last week friday and another today. Fridays have been good for me.

The first one was a hud house in peotone. Nice 3/2, 1360 sq ft house. Front siding is ugly. But the sides are all brick as is most of the back. Needs a new roof. A central hvac system, drywall repair, all new flooring, light fixtures, and countertops.

But mostly cosmetic stuff. I'm guessing 30k rehab. My offer was accepted just over 60k. So 90k all in and it should appraise out between 135k and 140k. 67% LTV.

PITI should be around 900/month and rent about 1375. Right in my sweet spot.
Great schools. Great yard - backs up to open park/field. Nice big deck.
And its on a crawl so no flooding basement and no ugly slab issues.

Perfect rental for me.

The second house was one town over. It was a unique house because its in an executive type subdivision where the lots are 1.5 to 2 acres and a bunch of 300 to 600k houses.

This house was built in 1996. But its only about 1,300 sq ft house. Its got a great lot, screened in back porch plus a huge deck. And a really nice front porch as well.
But its definitely an outlier in terms of space. It does have a partial basement unfinished.

The interesting thing on this one is that it sold in 07 for 270k. Its assessed for 198k (which is down from 255k). But its probably only going to appraise out at about 170k to 180k.

Still, I got it for 90k and its strictly a cosmetic rehab. Although I am going to finish a chunk of the basement to give it another living space. But for people looking to get into this subdivision, this is an ideal house. Just a great house for people that want to entertain during the summer. And great for kids too since there's so much room to roam.

Rehab should be 15k to 18k depending on what I do with the basement and a couple of the walls upstairs. So I'll be all in around 105k to 108k. Appraisal estimate of 170k to 180k - better than 65% LTV.

Gotta work on getting the taxes reduced or this one won't be as good a cash flow property as most. But I've had pretty good luck so far on getting taxes reduced in these counties. This year alone, I contested taxes for all my recent purchases in will and kankakee counties to get the assessments down to the actual purchase price. Believe it or not, I was successful in about 7 of the 12 I contested at getting them down to the purchase price. And the other 5 I got pretty good reductions as well.

But as it stands now, the PITI on this one would be about 1,200/mo. Rent should be about 1550/mo to 1600/mo. Not the kind of ratio I really prefer. Nor the rent amount either. But to have something in this subdivision with this type of living space (outside and in) was just too good to pass up.

And remember, I'll also have a principal paydown on this about 200/mo so even with the tighter margin, there's still money being made. The hope though is that if I am as successful at reducing the assessment on this one as I was on all the houses I contested/bought last year, then I should be really good. Even if I can get it reduced to what I think its worth, the PITI would be more like 1,000/mo with rent at 1550 to 1,600. And then were at that 550 to 600 a month gross profit number. Thats more where I'd like to be on a house with such a high payment/rent amount.

Lastly, that other monee house that I put an offer in on last week. This was the second offer I'd put on this house. Last time it went to best and highest and I didn't get it. But the deal obviously fell through. This time I offered the day it returned to MLS. But the bank (chase?) held on to it until they got more offers. Then told me it was a best and highest again. I wanted to tell them to take a flying leap but instead just let my offer stand. I know I won't get it now (I never win best and highest) but I'll leave it just the same.

Thats the problem with the bank owned stuff. These banks play this best and highest and it almost never goes to the investor unless they're willing to overpay. I hope the deal falls through again and then I might really lowball them just to stick it to them. :-)

4) FINANCING
Lastly, the financing situation. So I've got 2 refi's on recent acquisitions to get them out of the hard money loan and another refi on a house I've had for several years that I want to pull some equity out of.

So far, everything looks good. First appraisal came back on the braidwood house. I was all in at 78k on that one. Appraisal came in at 137k. I can get 75% so after payoffs and refi costs, I should be pocketing 13k on that one.

Still waiting on the appraisal for the other house. But the refi's are approved and payoff letters requested. They should be closing next week sometime. I'm hoping to get about 17k out of the second one.

As for the other house that I'm refinancing, I was told I could get 75% LTV but now they're saying 70%. House should appraise out at about 140k to 150k. I owe 75k so that should let me pull out about 23k to 30k. And even with the bump in the loan amount, the lower rate for this loan should allow me to save $100 a month for the first year and then be about the same amount after that. So net cash flow is the same and I get to pocket 23k to 30k? I'll take that.....

And that was my week.