I'm back and working on 5th REO

11 Replies

It's been awhile (life, busy, etc.,) but wanted to pop in and see how all the fellow investors are doing.

We received notice that the bank accepted our offer on what will be our 5th single family house (foreclosure). What is suprising about this one is it's the largest 3bed/2bath, 2 car garage, big fenced backyard) in a great neighborhood and it's thus far the cheapest of all of them. It also needs minimal work to get rent ready. Blows my mind sometimes.

3 out of 4 of our houses are rented on 1 year leases. The 4th we are finishing up since purchasing it. It needed new kitchen/bath/flooring, etc., and since it's just hubby working on it, it's taken longer than we hoped. But that one will be ready in a couple weeks.

What suprises me is that some of these houses that are priced so low, people could buy and pay such a low mortgage payment! But I suppose they are renting for a reason and perhaps they can't qualify due to credit or other reasons.

After this 5th one our goal over the next 1-2 years is to get a total of 10 rentals. We chose that number for the immediate future just based on what my husband can handle as far as maintenance, etc., as he works full time as well. Then we'll see how we are doing with them and re-evaluate and perhaps buy more.

Kel

Kel,
When you get a chance, can you post some pictures of your 5th SF?

Thank you,
Ray

Why not roll these into an apartment? Instead of 5 separate properties everthing will be on one site. The more units you put under one roof - the better off you will be. It may be something for you to consider down the road.

Another idea (not that you asked) if you need to get some more capital for more purchases:
If the rents are much higher thna a mortgage payment would be, why not sell to the tenants on an owner financed note, and since you have a lot of room to play with (judging from your OG post of rent vs. mortgage amount) you could get a high interest rate from your borrowers, then sell the notes to cash out.

Hi Will,

Can you kindly explain more on how you could sell the notes for cash.

Thanks

Tracey,

That is getting off topic. Selling notes is covered quite a bit in other forum posts already, so a search on BP should get you going.

I'll take some pictures when I can. The bank accepted our offer and we are just waiting for closing.

Not interested in Apts and the main reason why is re-sell. If we ever wanted to re-sell I believe single family would be easier and more profitable. With Apts, the only buyers would of course be other investors (:

Yes, we've given a lot of thought to offering a owner-contract to prospective tenants and that has been mentioned to a few, though no takers yet. It's not something we've really pushed heavily though as we kind of like the idea of the re-occuring income that rentals produce and I think we'll really appreciate that income once we reach retirement age and all of the houses are paid off.

Kel

Originally posted by Kel S:
Not interested in Apts and the main reason why is re-sell. If we ever wanted to re-sell I believe single family would be easier and more profitable. With Apts, the only buyers would of course be other investors

Very good consideration. Also, if you only wanted to sell off a portion of your portfolio, you can do that with individual properties. With an apartment complex, you have to sell the whole enchilada (or enter into some complicated fractional ownership structure).

If you have the money to keep buying you should. If you buy right you can pay someone to help your husband with keeping the palces up.

Also, it seems like your rehab takes quite a long time. My longest rehab is usually a month and that is a total gut. I used to do most of the work myself, but found it is cheaper to hire a lot of it out so it it ready to rent sooner. Have you added the lost rent to your husband's saving by fixing it himself?

Sounds like things are going well for you. Keep up the good work!

Jeffrey,

Yes, that has been a issue. ie; taking a long time to rehab this last house. 8 months worth! So expensive (loss of rent) learned. He's going to hire out going forward and it just is too much work and time for him alone to handle. The house looks wonderful but just took too long. I'll post pics when I go over to take some for the Craiglist rental ad.

Originally posted by Kel S:
It's been awhile (life, busy, etc.,) but wanted to pop in and see how all the fellow investors are doing.

We received notice that the bank accepted our offer on what will be our 5th single family house (foreclosure). What is suprising about this one is it's the largest 3bed/2bath, 2 car garage, big fenced backyard) in a great neighborhood and it's thus far the cheapest of all of them. It also needs minimal work to get rent ready. Blows my mind sometimes.

3 out of 4 of our houses are rented on 1 year leases. The 4th we are finishing up since purchasing it. It needed new kitchen/bath/flooring, etc., and since it's just hubby working on it, it's taken longer than we hoped. But that one will be ready in a couple weeks.

What suprises me is that some of these houses that are priced so low, people could buy and pay such a low mortgage payment! But I suppose they are renting for a reason and perhaps they can't qualify due to credit or other reasons.

After this 5th one our goal over the next 1-2 years is to get a total of 10 rentals. We chose that number for the immediate future just based on what my husband can handle as far as maintenance, etc., as he works full time as well. Then we'll see how we are doing with them and re-evaluate and perhaps buy more.

Kel

Kel,

Can you give me an idea of numbers that you are working with. Aquisition cost, rehab, property tax's. rent. Just want to get an idea what your market looks like.

Thanks

I should clarify that in those 8 months we had a number of interruptions where my husband couldn't work on the house including funerals, a tenant moved and had a ton of cleaning on a different house but got that one cleaned and re-rented in about 6 wks, vacation, etc.,) plus he could only work on it during evenings after 7pm and weekends. That house needed a total remodel of the kitchen, bath, paint throughout, railings, flooring, windows, trim, etc.,

Unfortunately, I couldn't be of much help because I have young children. One thing we learned though is to not try and take on a house that needs THAT much work.

Mike,

This house is 3/2 bath and 1600 sq ft. Price 24k. Work: new carpet throughout, paint and basically some small stuff. Fortunately nothing major that we know of. Furnace and water heater look newer. Unless the inspector finds something. We expect rent to be $850/month. No mortgage as we paid cash. But taxes/insurance will run about $150/month I believe.

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