Mike's Week of Investing (ending 3/5/15)

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. :-)

Mike's Week of Investing- (ending 3/5)

Clearly, I'm not going to be one to stick with any weekly time commitments. These blogs will come when I think I have something worth adding. Another good week though for my investing.  The hoarder house is a nuisance right now because of Nicor and how slow they are at re-installing lines. But we're rarin' to go on the rest once they close.

1) TENANTS

So. Lets see whats going on with tenants this week. Had one in a recent rehab that they said they could smell gas when the hvac went on. Sent the hvac guy right away. He fixed a coupling and said that was it. About a week later, it came back. Sent him out there again. Found one more thing on the hvac and also found a coupling issue with the stove (apparently, the tenant moved the stove to clean). But all squared away now.

The healthcare company not only overnighted me the move in check for feb rent and deposit, but I got the march rent the other day as well.

Everybody caught up except the settlement tenant. I gave them the 5 day notice the other day and told her I was just covering myself. I asked where the settlement loan was and she said they had to cancel because she was in the hospital for 2 weeks and couldn't sign. They restarted again.

But the 5 days is about up and no reply from the tenant. Not looking good. I think I'm going to have to file the eviction in order for them to get the money.

I should have be able to collect at some point given the fact they have a multimillion dollar settlement on the way. But its still a pain in the butt.

2) REHAB

Still can't do a thing on the hoarder house. The water in the crawl is frozen. Can't get it out til we can the heat on to unthaw it so we can pump it out. But can't get heat on til we get the gas line installed (nicor removes the gas lines when a house is vacant for over 2 years). And we don't want to do any more work until we get the floors squared away. Just way too hard to demo anything else because the floors are a bit of a hazard at this point given how soft some of that subfloor actually is.

I am gearing up for the closing on the peotone house on the 11th. Got the gas turn on (this one, like most, had gas) set for the 12th at 8am to noon. HVAC guy, who will be installing new furnace/central air to replace the boiler heat will be starting on the 12th and got the village license stuff taken care of this week. Lastly, I'm trying to get the permit ready to go for the roof since we're about to see a 5 day window of 50 degree weather and might be able to get the roof done if we can get the contractor licensed with the village in time.

Once we get heat, I'll put in to have the water turned on and let the plumber fix any leaks.

Since stratford (hoarder houses) is sitting so long, I don't want to be stuck on these other houses. I'm going to hit the ground running on both. Rehab should be going day 1 after the closing. Need heat. Then water. Then go.

Closing on the monee house is set for the 20th. Will have to get that all lined up too.

3) ACQUISITION

Thought these 3 would be enough to keep me busy. Strange thing happened though. After I got the third house (monee) under contract, I send my hard money lender an email to ask if he would do that one. He asked me to call him. He NEVER asks me to call him. Was a little worried. Thought I might have to go to my backup lenders. Instead, he told me he would do that house and asked me to do 10 houses. I said I can't do 10 houses, I have a full time job. He told me to quit. I said, if I quit, I don't think I'd qualify for the end loan financing. He said DON'T QUIT. :-)

But he did say he would do more of these deals with me. I think he financed 10 or 11 in the past 15 months with me and wanted me to push it a little. I said ok, but be careful what you wish for.

Needless to say, the motivation factor kicked into high gear. Nothing better than when someone tells you they have money available for you to use and go find some deals. I'm usually not the one limiting myself in getting deals. So we do what we do and hit the deal sources hard. Set up about 10 showings on some of the most likely prospects and told the realtor we needed to get in immediately to every one.

Funny thing happened though as she set up the showings. She told me that one of the houses was no longer available. I said ok, which one. It was a hud house. I said, no, I can see that house on the hud site today. It was locked up by someone and off the site for a few weeks, but I could see that it came back because it was on hud site. Knowing that I'm pretty good about that stuff, she said she'd check. Turns out I was right. Realtor had put it back up on the hud site but hadn't reset the mls listing yet. So very few people would know it was even available.

I made sure we got in that house first. Thing was a perfect deal. 4bdrm/1.5bath, 1.550 sq ft on a nice size lot. Hardwood floors, great doors, in great condition. Perfect rental. It may be one of the first ones that I think I can get done for 10k or less on the rehab. And that never happens.

House was listed at 102k. I knew it had only been available the last time for about 2 weeks and hud typically doesn't discount much. But I also knew I needed to hit my number so I put in for 82k net to hud. I figured that was just $400 over 80% of the list price and that was probably the lowest discount (i.e. 20%) they'd take given how short a period of time it was on the market. I also figured if another investor was watching hud that day, then maybe they would offer 80% on the money and I would be just a hare above.

Long story longer, and I got the house. With the net of 82k, I end up with an actual sales price of 86k or so. 10k rehab. I think it should appraise out around 140k so its just under that 70% LTV number. As a 4 bedroom in that town it should rent for about 1375 to 1400/mo. Once I refi, the PITI should be right around 925/mo so my gross profit should be around 475/mo.

All because I was watching the hud site that today and possibly because the realtor didn't reset the mls listing back to open in time. I did find out that there was another bidder and apparently their realtor called the listing agent to find out why their client didn't get the house. I guess that realtor didn't understand how hud works. The person with the highest bid amount wins- PERIOD. Cash, financing, doesn't matter. Its the bid amount. Although I would love to know what they bid. :-)

So now we have house #36 under contract and my lender is happy because he now sees me starting up another loan.

The real beauty of that deal is that its such a quick cosmetic rehab that I can hopefully get in and out of there in under 3 weeks and be on to more deals.

Still doing some looking. Have another house I saw that was on hubzu that I offered on. I think I was at 67k and was out bid. But hubzu said the winning bidder didn't meet the reserve but the bank wanted offers to be submitted to see if we would come up. they said we had to be at least at 70k or better. I put in my number of 70k on it so we'll see if that gets it. I'm hoping that 1) I outbid the other bidder on the house from last time and 2) the bank/hubzu wouldn't bother asking me for best and highest with a starting price of 70k unless they'd take 70k..... Otherwise, why waste my time?

Also watching another 2 auction deals coming up in a couple of weeks. And, lastly, still want to see a couple of other houses this weekend with the realtor that might have some promise if they're able to sit another month or two and their bank does one more price discount.

So we are now officially in hyper growth mode. I really thought that the pace of 10 or so a year was not going to last. Well, we're still running at that pace - 16 months later. So we'll see if we can keep it up and/or even ratchet it up now that my hard money lender has given me the nudge.

Other than the hoarder house there in one of the nicer subdivisions in town, these are really all bread and butter type deals. That 3/2, 1,500 sq ft, etc, etc......

The monee one is a little different given its in one of those executive subdivisions. Its a little on the small side for that subdivision given that its only 1,300 sq ft. But its on the standard 1.5 acre lot out there and most of those homes are 300k to 600k. I'm going to finish a chunk of the basement to add another living room and then its also got a really nice deck and a large screened in porch just off the master that make the house a steal at what I paid for it. The house sold for 270k and I'm picking it up for 90k plus another 18k in rehab. Should appraise out for 170k or more and rent for 1600 to 1650/mo.

I'm actually going to list the peotone and monee houses for rent as soon I close on them. I know I can get those two houses rented before the rehab is completed. Great houses in great areas is always a quick rental.

4) FINANCING

Closed on the HELOC from First Midwest. No surprises and thats always a good thing. My payments drop. I get 20k and we keep on moving forward.

Working on the two remaining refi's still for houses that were just rehabbed and rented. Taking awhile but these are with a local bank that vets them like conventional loans. They need every bit the same paperwork. I wouldn't go through all the red tape with them if it wasn't for the fact that their rate is good, their LTV is better (75%), they amortize over 30 years (still a 5 year balloon though), and they're letting me take cash out.

Great cash flow and its nice to get a chunk of money back on a house without having to sell it.

But the worst part is my insurance company really dropped the ball and delayed the closing an entire week. They were asked to provide an updated insurance policy with a new effective date showing the new lender. It took them OVER a week to get it to this lender. Thats the only thing the underwriter needed for the final review. I followed up twice with the insurance agent too. It was killing me. Worst still is when they finally sent me the policy, it didn't even have the new lender on there. Still had the old one.

I told them they had better get me a corrected version today or I was going to pull the insurance on that property and go with someone else who could. Got the updated version back in less than an hour. Not sure what the deal was with taking a week to update the lender name. Normally thats a one day turnaround. But man, it really hurts when its delaying a closing on a refi that I'm actually getting to pocket money like that.

Still, its now over to them today so we should be getting a closing date of next week sometime. And on it goes.

That was another week or so of my real estate investing activities. Can't wait to see if I get any more houses. And can't wait to see these contractors start flying on these rehabs.