Blog #1 - Mike's Week of Investing (Ending 2/6/15)

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. :-)

So here we go.

1) Tenants. 

Some quick notes on my existing 32 rentals. Right now, everything is full up. I don't have any vacancies. But I do have some collection issues going on.
Steger. This tenant hasn't paid in 6 month. They won a huge million dollar injury settlement but have been dealing with some serious health issues. This is one of my 3 cheapest rentals at 1050/month and I really have been letting this one slide. But sometimes, just have to believe we're doing this for more than money. This one is kind of my "charity" rental right now where I'm trying to help good people in a tough situation. But the business side of me also sees the settlement coming so I know I'll be able to collect this eventually. And I'm tacking on late fees every month albeit at a reduced rate.

Bourbonnais Hanson. This is my money pit house. Had so many issues on this one, I don't even want to get into it. But the thing is finally done. Its basically a brand new house. Inspections are passed and I'm renting it to an assisted living organization at a pretty good amount. But the beauty of this deal is that its a 5 year lease so I won't have any turnover.  However, we're about 4 weeks in and I still don't have a payment yet even though they signed the lease.  I got the tax form over to them early this week and should be getting this payment soon. But the waiting on this payment is killing me given how long this house has been eating away at my profits. 

Manteno. This one the renter has some significant medical issues. I've been pretty vigilant on them on the late payments and just when it looked like I was going to have to evict, their tax return came in and they're getting caught back up.

Bourbonnais. This is a nice 4/2, 1,600 sq ft house that the tenant has been running late the last few months (and paying the late fee) and just this week they asked if they could work out a 10 week payment plan for february rent. I kid you not.   They said they simply couldn't catch up but if I let them pay feb rent off some payment schedule for the next 10 weeks, they could.

It was a no. I know what this tenant makes for salary so I know they have the money. They just aren't being smart with it. I told them I'm not getting into managing payment plans like that.  If they wanted a loan, they needed to go to family/friends.

As for repairs, nothing too bad this week. Did have a plumbing leak that just came up in the house in herscher that the rehab was just completed back in december. Leak was there when we bought it. They took out the drywall, fixed the leak and it appeared to be fine. But not its back. Hate having to pay a contractor twice to do the same thing. And its even a bigger pain once a tenant is in. So these are always discouraging.

Thats about it for tenants this week.

2) Rehab. 

Nothing in rehab mode right now. 

3) Acquisition. 

I'm closing on a hoarder house today actually. Its in one of the nicer subdivisions in bourbonnais - which is one of the nicest areas around here for me. Great schools. 

Its a 3/2, 2000 sq ft house. Looks perfect from the outside. Nice brick exterior in the front. Then we get to the inside. The floors are all messed up because the former owner - who was a hoarder - had stored so much stuff in the rooms for so long that the joists eventually started to give.

Two of the bedrooms literally have floors that have caved in. Worse yet is that its a deep crawl so its going to be real fun cleaning that out (glad I don't do the work myself). 

But I have a really good rehab budget that includes replacing most of the joists and subfloor in the house. Should bring it back to new. Contractor already double checked (I was pretty adamant) that all the main support beams and the structure itself was sound. So its just joists and subfloor.

But the garage is loaded full of stuff still so we're going to need to do some serious demo to get everything out of this one.

I had been watching this one for awhile. But the house was simply listed for too much. I think it was 120k and my realtor had another client put in an all cash offer and the seller (who was the hoarder's brother) wouldn't budge off their number. Then on xmas eve, the price dropped to 85k. I told the realtor I needed to get in there to see it now since I figured they really wanted to get rid of it with that kind of price drop. 

The day after xmas I went there and put in an offer at 69k the same day.  Seller responded with a counter of 80k and the seller's realtor told mine that was the lowest they would go and not to bother going lower. My realtor says this guy doesn't budge off his numbers. I told my realtor to counter at 70k and tell them that was the highest I would go. And that if the floors start going any more, I wouldn't be interested in the house at any price.

They accepted.....  70k purchase, 45k rehab. Should be worth about 175k to 180k when done. But I keep everything and this would be one of the absolute nicest subdivisions I'd be in so I'm going to rent out it for about 1550. After PITI, I figure I should be making about 450/mo gross profit. Right about where my target price is.

Other offers I have going. I have several hud offers out there right now. Based on what I'm seeing, they're going 2 months and then dropping their list price 10% and the discount to 80%. Another month and then another 10% drop and discount to 70%.  If so, I think i'm another week or two away from picking up one or two more houses.

Also put in an offer on a house in monee. 3/2, 1,800 sq ft house. I had put in an offer on it about 2 months ago but someone else got it. Deal fell through. As soon as the house came back, I had an offer in on it the very same day. Its listed well below market so we'll see if that one comes in.

Also saw another house pop up yesterday that was listed awfully low. Typically this town only has houses built in the early 1900s that go for this low but this house is a 3/2, 1600 sq ft house built in the 50's.  Still a little older than I like to do these days, but this is a great town and I've been trying to get rentals here since I started but haven't had any luck. This may be the one.....

Going to take a look at it saturday morning (my realtor couldn't do it this morning or I would have looked at it and offered somewhere near list if they would).

So thats about it for my week. Some tenant stuff. Some acquisition stuff going on. 

I also have 3 refi's I'm working on as well - all 3 of which are letting me pull money out of the deal. Financing is getting better. Maybe I should add a section for financing to this thing. But I think this was a good start.  We'll see how things go next week in "Mike's Week in Investing". :-)