Mike's Week of Investing- (ending 3/27)

Mike's Week of Investing- (ending 3/27)

Youtube Channel for Before and After Rehab Videos

Don't want to add it to the blog since, apparently, BP frowns on the outside links. But if you're interested, you can catch the link to my before and after videos (including the before videos of the houses I mention below), you can check the link out on my profile.

Mike's Week of Investing- (ending 3/27)

1) TENANTS

Quick update on my tenant stuff.

1) Settlement renter still hasn't paid.

2) Lynwood renter is now a month late. They've been there since I bought the place almost 4 years ago and I have always had collection issues but I've always gotten paid. I will be dropping off the 5 day tomorrow though. They said they'd have both months next week. We'll see.

3) Crete. Had a scary issue there. Tenant's wife is pregnant. They moved in back in january. Very picky. The wife was having breathing problems so they took her to ER. The tenant, without me knowing, had a mold test done at the house. Great. I was thinking for sure I was going to have some mold company work the tests so they can get more money.

Tests came back today. No mold on the walls (built in the 80's so its not an old house). No mold in any of the air tests they did throughout the house. I was surprisingly shocked. Figured for sure they would "find" some mold. Tenant was out $480 to do the test though. Since he did it before he contacted me, I told him I wasn't going to pay anything unless they found something. But that was a pleasant relief to start the weekend at least. One less thing to worry about.

4) Aroma Park. This was the nightmare of the week, month and year so far. So the tenant had toilet problems a couple of weeks ago. Sent a licensed plumber out there to deal with it. He said it was because of the water pressure to the toilet and the size copper that was there. When they ran the washing machine, there was no pressure to the toilet and it wouldn't flush. Ok. Whats the fix? Run new 3/4 inch copper. Price? $1,400. Thats a No..... Lets just do the cold I told him. $700. I figure the tenant has never complained about pressure and if we did the cold, it would solve the toilet problem.

Plumber finishes the job saturday. I get a call from tenant sunday that there is NO WATER and the plumber told her to contact aqua (our local water utility) as they had a problem. And she did and aqua said their line to the meter was fine. It was on my end. Great, so sunday, as Im driving home from my fantasy baseball draft, I'm getting this info from the tenant. I then call the plumber and tell him there's no water and he better meet me at that house right away. He shows up, shows me the galvanized piping that he had replaced. Stuff was caked solid with rust/buildup.

Shows me the shut off valve where the water comes up from underground into the house. Turns the shut off valve open. Not a drop. My service line - that the morons back in the day ran galvanized for - had to be replaced. Great. Try getting someone to dig up a driveway 5 feet deeb for 60 feet, fill with gravel, run the pipe, break up concrete, etc, etc, etc. All with a tenant who has no water!!!!

Plumber knew a guy. Price tag. 3,500. He was actually at 4k and I told him the most I could do was 3,500. The plumber felt bad and didn't charge me a thing for all the connections he had to do inside the house. I think he felt guilty because he was running all that copper and then, magically, my service line was toast. But I know it wasn't his fault. There is no way to create the kind of rust/build up in those lines other than time.

Tenant went about 3 days total without water. I told them I'd pay for a hotel for them to shower. So it was a pretty penny on this one. But now that house has all new plumbing from the street throughout the inside (the plumber ran new hot for me for nothing too). So that was a monster hit on an existing. No profits for that house for next year.....

2) REHAB

HOARDER HOUSE (STRATFORD)

Roofer gave me a bid and I accepted. I wanted $210/square and got it. Its still an expensive roof (over 7k). Then when they tacked on another 800 for the chimney (it was 900 and I told them the most I'd pay was 800). I was quoted 1k earlier so I was ok with that price.The whole thing was just a pile of bricks.

But now I get hit with another doozy. Roofer went up there and said there was a big mold problem in the decking. I said, really, on a house thats been vacant for over 4 years and that had a crawl space full of water for a year? There's some mold? go figure. He said he needed to see if it all had to be replaced. I said I need him to check to see how big of an area in there is really full of mold. If its small to medium, I'd replace the decking. If more, than I'm just going to see about having it treated.

Now that we have the water out of the crawl, I don't think its really a house issue as much as it was a temporary issue because of the vacancy and the leaky roof.

PEOTONE HOUSE

Got dinged pretty good on the plumbing on this one too. Normally I figure about 750 a house for plumbing to take care of the inevitable leaks that occur on vacant homes and to replace (or more like install) shut off valves throughout the fixtures/house.

No such luck on this one. Again, with the 3/8 inch lines. Plumber said there was a serious water flow issue.

MONEE HOUSE

Contractor that came out to give me a quote about 4 weeks ago completely flaked out. Never called. No quote. I called him about a week before the closing to remind him. Said he'd have it to me. Nothing. So I had someone else come out this week. Referral from my realtor. She also said the guy was interested in how I was getting all the financing for all my houses. He had tried recently and was turned down.

Morning of the estimate, the guy texted me he was sick and couldn't make it. Great another contractor miss. But he'd send his project manager. Come to find out it was a pretty good size rehab company (35 guys?). They mostly did roofs but had a couple of crews for rehab too. When I see a size that big, I knew what that typically means - expensive pricing.

Quote came in. About 20% higher than I would normally get. So I called one more contractor for an estimate. This one was a referral from another investor who said this contractor was trying to pitch him to get his work. Morning of the estimate, got a text that he couldn't make it and would have to reschedule.... Here we go. So I went back to that previous large company and told them I would do it if they could knock the price down a bit. Got em down about 10% which was enough to make it doable. And I'm hoping they can knock it out fast since I know I have several more coming (closing on Osage next friday).

3) ACQUISITION

Will be closing on Osage (bourbonnais) this friday. Still have the hubzu Edwin (bourbonnais) house thats under contract as well. Just waiting for the bank/seller to record their sheriff's deed so we can get a clear to close from the title company. You'd think that would be something that a bank would never forget to do. But oh well.

In terms of offers. I tried bidding on an auction.com house (allowed financing) twice this past week. Wasn't the highest bidder either time and it ended up going for about 5k more than I'd ever pay. And the house popped right back up on auction.com after the auction. So could it be the reserve is too high and auction.com is bidding? Maybe. But I can't do anything at that price. Its a great house though. 2006, 3/2, 1,400 sq ft, attached garage, real nice all brick front. I'll keep trying on it though. Also watching another house on auction.com that the bidding comes up in a week or so. It allows financing as well - most on auction.com are cash only deals that I can't play in.

I put an offer on a homepath house. They had dropped the price from 130k to 120k and had it as price reduced. I came in at 96k which was 80%. They countered at 115k. That would be a NO. I'll let it sit another week and try again.

Put an offer in on a hud house in braidwood. It was the house right next door to the one I just bought back in October. Was a trilevel, listed at 42k. Needed about 35k in rehab. But it was in decent shape. Just needed the flooring redone. Kitchen redone. And needed the drywall taken out in the bottom level and replaced because of a little mold. But it was actually a pretty good deal. I offered 36k net to hud (85%). Somebody else got it. Still waiting to see for how much.

But thats the issue. If someone else is bidding on these houses, I rarely get them. I won't pay above my number. And the only way I can typically get my number is if the seller (hud or the bank) is willing to play ball because nobody else but me is bidding on it. :-)

I will be putting an offer in on that beecher house again. The one with the 1700 sq ft garage in the back. They're at 80k, I was at 68k. I'm going to shoot over another offer at 70k to see if they bite at all. I figure they should at least be willing to come down 10% to 72k. If I can get them there, I'll take it.

This house has been sitting since december and they've already reduced the price 3 times. You'd think they be a little more willing to negotiate.

Lastly, there's another beecher house I've been watching for awhile too. Its been sitting for about 6 months and had 4 or 5 price drops. They're finally getting into my price range though. I may throw out a number on that one this week as well. No 1.700 sq ft garage. But its a 3/2, 1,400 sq ft house which is right in the sweet spot.

4) FINANCING

Finally closed on my two cash out refi's on my most recent rehabs. Pocketed 20k. I was thinking it would be more, but they had to escrow everything so I had to feed that too. Means I won't have to pay taxes/insurance on this year so thats a good thing as they were coming due in another 2 months.

That might be it for now on the financing front for awhile. I'll probably need to start the refi's going in another month or so on a couple of these. I'm hoping to get peotone and monee done in 4 weeks or less and then refi both with one lender.

I might also look to do another First Midwest HELOC on one of my bourbonnais houses. I think I can pull out about 15k to 20k on that house and still keep the payments the same because of the current rate/terms I have on that loan (20 yr am, 6%). We'll see.

And thats it for the week. Got hammered pretty good on plumbing this week. Aroma Park was a complete fiasco. Peotone was a bit expensive too but luckily, I had some savings on the roof so that really helped me even steven the overage. But we're cooking with gas on the rehabs. Nothing is going to sit now. And hopefully, we can get one or two more houses under contract in April to keep this streak alive. :-)