​Mike's Week of Investing- (ending 5/15)

Mike's Week of Investing- (ending 5/15)

Feel free to check out the link in my profile for the Youtube channel to see my before and after videoes.

1) TENANTS

Quick update on my tenant stuff.

1. Settlement renter still hasn't paid. Broken record. But I went down to cook county sheriff's office to file the order of possession to get the eviction scheduled. Tenant finally has a fire lit under them. But its probably too little late. Still, I'll get that money one way or another. If not now, then thru a collection - given that the Tenant is getting a settlement. Now would be better though. :-)

2. Lynwood has fallen behind on the rent again. Gave them the ultimatum - pay or I'm starting the eviction process. They're like "how are we behind". I showed them the deposits and now they're scrambling. They've always been a problem payer but they've been in the house for almost 5 years since the initial rehab so I can't complain.

3. Karen Dr. Closed on that house this past friday. Picked up hold deposit last week. Its rented. Renter works at the radio station in town so I'm going to get a free tour. :-)

4. 102 house. Crazy storm. Couple of panels of fence came down as did a front piece in the porch. Had to have that fixed.

5. Bradley house. Still waiting on the roofing company to fix the roof. Minor repair. They've rescheduled 3 times. They actually didn't reschedule. They just didn't show up. And then when I asked when they'd be there, they'd give me a day and then no show to that. Luckily, that same company is the one working on stratford that just finished up yesterday. If they don't end up doing that repair, I'm going to make them wait a couple of weeks on their remaining payment (normally I pay the next day).

6. Braidwood Main st. Tenant called. Wanted to renew the lease. Then wanted to talk about the laminate flooring in the living room. It was already in the house when I bought it last year so I left it. Wasn't in great shape so I told him if he stayed a year, I'd replace it. Instead he wants me to re-finish the deck and fix the fence in the back. I just had the deck finished when I bought it but apparently the contractor didn't use the right stuff. Its peeling. So I told him I would refinish the deck and repair the fence in phases. Wasn't going to replace the whole thing - just what I had budgeted for the floors. He was happy.

7. Braidwood Lincoln. This was a tough one. So they called and said that the contractor didn't finish all the repairs. Then they said the new deck that I had done wasn't done right. I went to take a look. Deck was perfect. I was jumping on it in every section and it was as solid a deck as I've ever been on. 

Keep in mind this is the same tenant that complained to me that the contractor that was doing the deck didn't use weather treated wood. And they said that the wood was "green" which they didn't like. I'm like I don't know exactly but if its green, doesn't that have to be green treated as in weather treated? And if its green, it will likely fade back to normal in a couple of weeks. Oh no, they said. Its not. 

Then I had them check the barcode on the wood. It was good. Anyway, so now they're complaining about a closet door not being put back up. A bathroom door that doesn't always shut right, and they don't like some of the other stuff. I said, listen, I understand you guys moved up here from down south and maybe didn't see the house enough. If you want to get out of your lease, I'll let you out at any time. Just start looking for a new place.

Then they started in how they lived in a new construction home before down south. I just knew they weren't going to be happy with a typical rental. And I really thought I should just nudge them out the door because they were going to be headaches but I figured I'd try to salvage this a little. So I said, listen, I'm closing on a near new construction house in a week. It'll be ready in 3 weeks and its just down the road from here - same town same school district. Do you want to see if that is a better fit for you?

Of course they do. Apparently, they had been looking for quite some time and couldn't find anything close to what they were getting where they were. But I showed them this house. Built in 06, near new construction. 9 foot ceilings throughout. It was only 1,400 sq ft with a much smaller yard (compared to 1,800 sq ft they were in) and the rent was 1425/mo  compared to 1225 they were paying. But they loved it. "Now this is the type of house we're used to".

Fine. We'll have it ready by the 1st of the month. Problem solved. It just goes to show that even though they were getting a deal on the other house, sometimes is all about the fit for a house and a renter. You really have to get a sense that there's a good fit for the renter/house or else it probably isn't going to work. In this case, it was a little odd in that I never actually met them to put them in.

He was in town to look for houses. I gave him the code to let himself in because that was the only time he could do it and I couldn't make it. They took it and paid via my online payment service and did the lease via email/scan.

But all's well that ends well I guess. They do pay on time. And the house was in good condition. So now I'll have a month of vacancy on the one they're in now. But the one they're going to will have none.

Some busy tenant time the past two weeks. But overall, not too bad. Some very minor repairs so thats always good too. I typically figure $100/mo per house (or 3,200/mo) for repairs (including the capex stuff like roof, hvac, etc). I'm under 1k the past few months so thats going well too. I expected a lot more a/c issues. So far of the 3 or 4 calls we got, 2 were replace the filter and 2 needed repairs but not replacements. Thats a nice start to the summer. :-)

2) REHAB

HOARDER HOUSE (STRATFORD)

Finally done with all the structural stuff. Floors are in. Beams and joists replaced. I have the contractors working on the inside stuff and got a basement company looking at the crawl and sump so we can keep the water out of there. This should be back on track finally.

PEOTONE AND MONEE DONE.

OSAGE HOUSE

Fun one here. So everything is pretty much wrapped up except we seem to have two key problems. Electrical and water. This house has a well. Well is fine. Either the pump or the pressure tank isn't working right though. Had a plumber guy out there first. He said we needed to dig up the line. Then got a well guy out there. He said the pump had "let go" or something and he got it back working. But something is clearly wrong. Water runs for about a bucketful and then completely stops. 5 minutes later, can get another bucketful out.

Got a new well guy going over there tomorrow. He's confident he can fix it no matter what. The second issue is the electrical. All kinds of crazy going on. My electrician is going over there today to get as much of it done as possible. The real trick is that the contractor that took out the wall had to cut some wires. He tucked them up in the attic but didn't mark them. So half the house has no electric. Need a new outlet in the kitchen for the stove. 

Need two outlets in the bathroom closed off and a new one added because, when I tiled the floor and put the vanity back, the vanity top covered the existing gfi outlets.

And lastly, the countertop for the island just came in to menards today. Island and top are being installed. Did I mention the tenants were moving stuff in tomorrow? :-)

Yea. I already told them to hold off moving themselves in just yet. But they had a day off and wanted to get their stuff in so I said ok. I technically have until the first though as thats what the hold deposit allowed.

I'm actually going over to the house tonight again to help the electrician as a laborer and clean the floors (again) and hopefully get my after pics/video.

EDWIN HOUSE

DONE. Tenants moved in.

Before and AFter videos up on my youtube channel.....

KIM DR HOUSE

Closed on this house 2 fridays ago. Contractor started working on this one this week. Demo is done. Just re-doing both bathrooms, carpet, paint, new countertops and a kitchen backsplash. 

Contractor kind of hosed me on the countertops. The countertops are in a U shape where the one leg of the countertop comes out to the middle of the room so that you can put an overhand on the countertop and allow for barstool seating. Well, nobody carries stock countertops wide enough for an overhand so you have to order those. I told the contractor before I closed to measure those and order them. He told me his buddy makes em and it would be no problem.

Needless to say, a week after the closing, I asked about the countertops. He then tells me his buddy is too busy and I'm going to have to order. Well, menards/lowes, etc are all 3 weeks out. I have this house rented for a June 1 move in. That doesn't work. So now I have to call all over the place and find a company that will make the tops and can get them installed in 2 weeks. And, shockingly enough, I did.

Carpet was measured and cut and waiting for install - one the wife gets the painting done. So this house is on track for completion for that June 1 date again.

BERGERA HOUSE

Closed on this one last friday. All it needs is carpet, paint and someone to change the locks. I'll take out the carpet myself this weekend. Measurement scheduled for wednesday. I have to run to the house on tuesday to stick a lockbox on it so they can get in. This one is going to be a little tight too. The carpet will be the key. But this one is also rented.

The good part of this one is that its a renter in my other braidwood house. So it can be a couple days late anyway. Its truly getting to be a juggling act though. I can't wait til this run is over. :-)

DIVERSATECH HOUSE

I close on this house friday (3 days). Already got a couple of estimates on the roof and the roofer is ready to go. Said he was 3 weeks out but I told him it was leaking and asked if he could do it sooner. Yep. So this crazy house is in move in condition already. I'm going to list it today but not be too specific since I don't technically own it just yet. It'll be ready for move in on the first and I will get it rented by then. They may not be able to move in on the first. But I'll have someone locked in on the house for sure. Its just a great house.

What is really unusual and incredibly is that these two houses (diversatech and bergera) are going to be the simplest rehabs ever. :-)

3) ACQUISITION

Still have Jordan house to close on. Should be in the next 2 weeks or so.

Again, its a simple little house. Smallest one I'd have in the bunch by far (1,000 sqft versus 1,300 is the smallest I have today).

Looked at a house over the weekend. Looked like a house that somebody had started a rehab on and then lost it. New siding,new windows throughout. Thing had been gutted. Oddly enough they painted the place and didn't get to the trim. Has some issues. All the plumbing was run up in the ceiling but the ceiling was all tore out in a line where the plumbing was run. As if they put the ceiling in and then put the plumbing in after? Either that or that put the plumbing in the ceiling and the village told em that was a no-no (my guess).

Garage floor looks like an earthquake hit so it needs to be completely pulled up and repoured. And the yard is a weed patch with a deck that has to go as well. And no bathrooms and no hvac.

Still, its a nice size home. And its discounted pretty good right now too. But it still needs to come down quite a bit to make my numbers work. Its at 108k. I offered 87k. But I included a cover letter on this one and said that since its an all cash or rehab loan offer status only and it needs all that work, thats what it will take. I also stated that I can close on this as I have had 8 houses in the last 4 months - including the hoarder house with no flooring.

I also suggested that as a buy and hold investor, I am typically able to offer a little bit more than any of the other investors (as evidenced by my getting those other deals). Never done a cover letter before. But I really hit home on the fact that I close fast and I'm getting deals because I can offer a little more as a buy and hold investor.

My realtor also helped push that with the listing agent as well. "He closes".......

Given the significant issues this house has, it'd be real easy for another investor to tie this one up and then possibly back out.

I'm also going to see another house tomorrow where the listing has been dropping quite a bit. Price has been dropping 4 to 5k every week. Almost every day. Seems that the owner is moving out of state and needs to dump it fast. We'll see what that one looks like. But might be another opportunity where the hard money lender speed could be the difference in picking up the deal or not.

Aside from that, things have really dried up in my areas. Usually there are a handful of deals I'm watching. Right now, there's just not much out there that is close enough to be watching.

But things change fast. The key is to stay on top of all the listing sources. This time of year, its pretty typical. And to be honest, we could use a break. :-)

4) FINANCING

Monee and Peotone refi's are getting closer. Appraisals were last week. Curious to see where those came in at. Should get a couple grand back from those refi's. Not much as I don't want to make it look like a cash out refi. But enough to where I'm covering the closing costs and maybe pocketings 2 or 3k. It adds up.

Osage and Edwin refi's. Was going to go with a new bank on the refi's for these. But the vp got back to me and said the bank is currently over its ratio for these loan types and isn't able to do them right now. So now I'm going back to a couple of banks I've used before but haven't done anything with for a couple of years. Both said they're doing the loans. I sent them an updated schedule of real estate and financial statement. The one bank ran my credit as well. Hoping to do one refi apiece at each bank just to get them into the rotation again.

And then the next 3 (kim, bergera, and diversatech) are already locked in with my local bank. They said they'd do all 3 which really helps.

Once stratford and jordan are done, I'll have to go digging for the next bank for those too. Might need to work on getting a new lender there.

I checked in with B2r but their program just doesn't work for me right now. I hate all the added overhead their loan program creates (have to create a new entity, escrow all the funds, etc) and their rate is terrible. But they did give me a heads up that they should be getting a new loan by the end of the year where you can refi one house at a time. I'm sure that rate will suck too but at least its an option that will be available.

At this point, none of my existing lenders are saying no so they still have some room. And I think I can probably find some new lender(s) to add to the rotation as well. Just need to get some free time to do some searching.

So thats it. Its been a crazy 2 week run. I'm seeing the light at the end of the tunnel but the management of this many rehabs at once plus the existing houses really makes it tricky as you'd expect. But, for me, the extra effort during this push is going to be well worth it. I just don't know how long the pricing of these homes is going to last. These areas are really going up pretty good and the job market out here has as well. We may very well be seeing the last of the run. But I feel like I did just about everything I could given the circumstances and, more importantly, that I will never have to look back and say I missed out on a great opportunity.

Not to say that there weren't a few houses that got away. There are still some houses out there that, to this day, I still think I messed up by not going just a bit higher to take down. Some of them are 3 or 4 years out from when I was putting in an offer too. You always remember the ones that got away.

And, btw, I have a 4 day weekend coming up this week and I'm going to use a couple days to do some house stuff. And a couple of days to do as close to nothing as possible. :-)