All Forum Posts by: Jim Goebel

for cash flow

bought house for 36k cash

put 8k into it and 2 months of my life, actually right before getting married.

has rented for $1300/mo since that time

26% return cash on cash

somewhere in the 40-60% return on equity range depending on house value

beautiful house, amazing location in des moines, but not an equity winner because of some people's perceptions of the neighborhood

I think we've had some success which has been a combination of hard work and some fortuitous timing.  

We own 6 rentals, about to become 8 (already own the 2 others but they are coming online in next 2-4 months).

1 of these is owned under a Self Directed IRA.

They are nice properties that we've taken a lot of pride in, and we've been able to generally speaking find the kinds of tenants that I think will lend to our places keeping up over time.

We've been fortunate to build approaching $900k in equity over the last 3.5 years.  Not anywhere close to all of that is 'accessible' at any given time...  Based on current financing options, anyways.  

I feel like in some respects I am enjoying aspects of all this - it is incredibly rewarding taking a dumpy/distressed property to where people say wow.  That said, sometimes personally I feel that I could use a change of pace.

The prices that we are seeing are inflated compared to past expectations.  The same house we might buy for 30-40k seems to now be commanding more in the 70-85k range here in the Des Moines market.  It almost becomes not worth it anymore.

I've thought about moving over to the timber industry, getting back into corporate world (I am/was an engineer), among other things.

I'd love to hear from people that have successfully transitioned into making their real estate portfolio a pure passive investment.  How did you do it?

What did you do after?

Did you miss it?  Did you go back?

Make a STINK.

It worked for me when they wouldn't stand behind the Ryobi junk battery chargers we were using.

They made it right.

Yes, there's still the rule of law here in the US and their run-around will only get them so far.

I also had a very negative experience with their supposed FREE INSTALLATION carpet promotion.  Was just a giant mis-representation and way to screw un sophisticated buyers into buying carpet for 50% markups....

Jon to answer your question - yes we had discussed specific services that she was game for with regards to her trees getting trimmed, and not just the ones that were close to the property line.  I offered what she would probably pay more than $1000 for if I had to guess.  She was game, however priorities took over and when she asked for a specific timeline I was non-committal on when I could get to 'that' work.

I understand that mentioning the upside of what we're doing is not helpful for her in her current mindset.  I don't mind the conflict with her, I'm thinking more about perceptions of others if any disputes became more public or more impactful - and it's hard for me to imagine a judge or other body not working to understand the context and I am confident that I spoke the truth.  We're not Good Samaritans in fixing up the property, but having a fixed up property next to yours is a lot better than having a run down vacant nasty, un-safe place next door.  I guess I just have a hard time understanding how someone couldn't see that.

We have averaged probably 3-5 other neighbors per day, from around the area that drop by and have nothing but good things to say about the work and are excited to see the place get rehabbed.  It's just so strange that it's the next door neighbor here.

She's pointed out that I appear smug when talking to her.  I try but really can't help it.  I almost feel sorry for her, that this is her life.  

I think the harsh feedback is what I need to hear though.  I need to keep my negative thoughts to myself when it comes to sharing things with workers.  It just muddies the water.  Even my tree guy now seems to be mired down and afraid to work over there!

Oh and the question was asked about what our plans are for the property... We have planned to live in it when it's ready - it's a ways out though as it's a complete gut job.  Not sure how long we'll live there though.  The neighbors don't help but the house, the lot, and the location are really special.  We're family of 3 with one on the way.

Especially compared to our current neighbors which are super friendly and cool, this one neighbor definitely detracts..  However, if they are truly selling then perhaps we have a chance to turn a new leaf.

To clarify the 'request for information' regarding my statement in all but one instance little to no actual effect - this was the one instance in which I could see a measurable effect, and I've since apologized.  She had to go to a visitation or some sort of a funeral related event and I had started doing some tree trimming at roughly 10AM on a Sunday.  Some limbs had fallen on her driveway and when she came out I was apologetic and took about 10 minutes to get them off her driveway so that she could pull out and go to her event.  The issues didn't arise all 'after' that event but it certainly didn't help.  She chose to confront the situation and remind me later that it was absolutely not OK for that to happen.  I understood, did my best to move on - but it was only after numerous occasions where it was clear she was operating in such a way to wait until I was gone and then get into 'busy body' mode by chatting up my workers in very unhelpful ways.

These folks I was paying by the hour, and I've since transitioned over to paying people more 'by the job.'  Believe it or not she has been able to command an illogical negative impact on productivity.  I felt a lot of passive aggressive under-currents and finally decided to confront her and call out the conflict in the open.  That was when things completely deteriorated.  I didn't see or hear from her for about 3 weeks which was great.

There's maybe 2 more relevant items here.  Before it seems the relationship went 'south' I had offered the services with the bucket truck.  She's not much of a 'construction' or 'handy' person and disclosed that she grew up in a perceived well-to-do area around here.  I'm not sure why she disclosed that, but I thought maybe she thought that was supposed to impress me or something.   Anyways, she also disclosed that she was looking to sell their place and actually offered it for sale (to me).  I declined partially because of our current financing situation but also because I felt I didn't want to have an adversarial relationship with the neighbor!  Haha!  She also disclosed a few things about her house, including a leak that is causing lath/plaster issues in an upstairs bedroom.  I have been up in my bucket truck a lot and noticed someone caulked the old roof (yes, white caulk) so there's a lot of deferred maintenance and band-aids.  I again was trying to help in offering my opinion that she needed to think/budget for a new roof, and sent her down pictures of how someone had used the wrong product to silicon/caulk her roof shingles...  But after talking with her it became clear to me that she doesn't have much experience with handling issues around the house and appears to have the expectation that if she's going to pay retail prices for things like tree services, then everyone will!

 Ironically in one of the conversations she stated that she thought I bit off more than I could chew!

Looking back I don't think it was the most considerate thing to tell her about her roof (the messenger has been shot) given her expressed timeline to sell the place.

So, wow.

A neighbor next door, let's call her Jewel-EE - seems to be on a mission of sorts.  That mission so far as I can tell is to be as silly and petty as she possibly can be during the process of us renovating the house.  Most of the items so far have been related to property line disputes, and a 'stay the F off my property' was muttered (from her). This is after in good faith early in the project I've offered use of my bucket truck, and free tree trimming, among other things.  Now I feel like threats are more apt after some of her behavior.

In addition to needlessly 'chatting up' my workers, she seems to be obsessed with things of little consequence such as limbs falling slightly on her property line during the process of us doing tree work.  In all but one occasion the actual consequences of these actions have resulted in slim to no actual effects.  

Today when bringing up the fact that the renovation of the 5 year vacant adjacent property (our project) was increasing her property value by north of $10,000, that was met with a predictable 'Don't act like you are doing us any favors!'.

I am of the opinion that this Jewel-EE has some sort of a complex that has resulted from growing up with a silver spoon in her mouth coupled with the realization at some point that her silver spoon in her mouth has no ability to help her deal with actual reality.

Has anyone dealt with busy-body neighbors during a rehab?  How do I properly ignore and tune her out (or is this the right thing to do)?  I'm seriously considering trimming a tree on our property just on our side (limbs encroaching our house) and leaving the rest of the limbs that are encroaching on hers simply to signal that we don't HAVE to help her and I'm feeling awfully... unfriendly right now.

By the way, how do I do the @'person' thing and is the main advantage of that, that it lets someone know that I'm replying to their thoughts?

That's helpful for me to understand.  I was afraid I was just slow or something!  Unfortunately there's not a high degree of confidence in outside help right now - we've really struggled with integrating good resources and keeping them around.  Honestly the outlook right now is to just hunker down and do a lot of stuff myself.  It seems lately that my wife and I need more time together and less stress to get back on the same page, so it just seems like the right thing to do to kind of 'slow down' a little bit.  One of those 'get the house in order' kind of moments, I guess.

Hm

Not sure what to say here about the wholesaling piece.

We haven't gone that route.  I haven't had much interaction with wholesalers either beyond getting on their mailing lists.  The thing I've struggled with is getting access and such when we get the emails that come in from wholesalers........  Buy and rehab and hold has worked for us.  

I'm amazed you are thinking about this right out of school.  Keep that kind of thing up firstly.

I looked at properties in Chicago as rentals, and WOW, property taxes are crazy.  There are some very solid well built homes on the south side that you can get all day for $25-45k last I checked.  However, after a $6-8k property tax bill per year, that eats into nearly all the profit.  However, if you buy and then rent out rooms, that may be a good bet - I'd have to look at the numbers though.