Louisiana Deal Is Over!

Well, not 100% yet, but it is close enough now that I feel comfortable writing about it.The last time I wrote about this, the mortgage holders had a conference call to determine how we should proceed at the foreclosure auction and what would happen if no one bought the properties and we ended up with control of the buildings. The auction was supposed to happen on December 5, however I fully expected "Joe" to file for bankruptcy and thus delay the...

Lucy Van Pelt Has The Right Idea

I was watching A Charlie Brown Christmas the other night with my wife and daughter and was surprised by the shrewd financial savvy of Lucy. This is an exchange she has with Charlie Brown:Lucy: I never get what I really want. I always get a lot of stupid toys or a bicycle or clothes or something like that.Charlie Brown: What is it you want?Lucy: Real estate!You can see it for yourself in this YouTube clip at around the 6:50 ma...

Any German Readers Out There? Need Assistance

The Louisiana deal is still dragging on.. Hopefully it will be done today and I can post what's been happening..In the meantime, I am asking for some help, particularly from any readers in Germany.My father-in-law was in the Air Force and when my wife was growing up, she spent some of her teen years living in Germany on the U.S. Air Force base there. She also loves Christmas and while living there,...

Flipping LLCs Update

Anonymous asked for an update on the four LLCs I am invested in that flip properties in the San Francisco area. There is not much news that is different from my last update on these. Three of the four are now ended and the fourth one ends in the next six months.The real estate slowdown has really put the brakes on these investments. Although the terms of the LLCs are over, they are still operating. Why? Because the properties they own have not yet...

Wii Update

My experiment in reselling a Wii for some extra cash is now over. I am a bit disappointed in the results, but I still came out ahead, so it wasn't a total failure.My eBay auction ended with a high bid of $450, plus $39 for shipping, handling, and insurance. I was hoping for closer to $500 though. Here's all the details:Sales Price$450Shipping, Handling, & Insurance$39eBay Listing Fee- $4.35eBay Final Value Fee- $15.13PayPal Fee- $14.48Cost of...

Christmas Present From The Tax Assessor

I got my tax bill in the mail for the next year's property taxes at Rental #1 and got a nice surprise. When I was analyzing the property before purchasing it, I used the tax estimate calculator at the assessor's website and had estimated my yearly property tax to be $989.00, based on my purchase price for the house. But the tax bill is currently still being figured using the seller's purchase price, which means my tax bill is only $376, just a bit...

Another Christmas Money Making Venture

Last year, Tickle Me Elmo was the hot Christmas gift and Kenric did what many others did to capitalize on the craze - buy a bunch and resell them. This year, the hot gift seems to be the Nintendo Wii, at least so far in the holiday shopping season.Working for a video game maker gives me something of a unique insight into the world of video games, but I didn't need any inside information to know that no store can keep these things in stock. I just...

Phoenix Housing Prices

Things are slowing getting back to normal here. After being gone for a week and coming back and having to rebuild my computer after it crashed, I'm slowly starting to gain control over the items that piled up while I was away. One of the things I am catching up on today is my blog reading.Last week, Kenric posted about the housing price drop in Phoenix. One thing he said was "If you have cashflow or breakeven you can survive this. That’s why cashflow...

Louisiana Conference Call

Phew.. I just got off a 1.5 hour conference call with the other mortgage holders on the Louisiana mortgage that is going to foreclosure a week from today. We basically went over the various options we have open to us and how we want to instruct our attorney to bid at the auction. The opening bid at the auction starts at an amount equal to the foreclosure auction costs, which is less than $2,000. We will instruct our attorney to bid the price up to...

Going On Vacation

I'm heading off to Kansas today for the Thanksgiving holiday, so there won't be any posts for a while. My PC also crashed and I'm having an extremely difficult time re-installing Windows, so even when I get back, it might be a while before I can post again..Two quick notes:Goldman Sachs today announced that mortgage lenders may need to scale back lending by up to $2 trillion dollars which could lead to a "substantial recession."In response to the...

Another Louisisana Update

The foreclosure process on the Louisiana properties continues to move forward. The property will go to the Sheriff's sale on December 5. I fully expect Joe to file for bankruptcy on December 4, thus stopping the sale. Joe wants to speak with the minority holders of the mortgage note, but no one wants to talk to him and, to my knowledge, no one has. He's turned over some financials, but just his records - nothing official like a K1 or anything that...

Good News On The ID Theft

We've got some good news on the identity theft issue. My wife got a call two days ago from the police department saying they caught a woman trying to pass a bad check with her name on it. Not only was the woman arrested, but she was singing. No kidding. The police actually said "she's singing" and naming all the people involved in the scam. I thought police only talked like that on TV!Anyway, I guess there were several people involved and they are...

It's Gonna Be A Long Walk Home

Nothing about real estate this time, but this is so cool, I just had to share..Back in 1985, my friend Jim and I were 16 and on a YMCA summer camp trip that traveled up the coast of Southern California, from Orange County, where we lived, to San Fransisco and back again. On the way north, we stopped at the town of Solvang. As we did when we got to any new town, the first place we went was the local...

October, Please End

This has not been the best month for me. It started off nice. I bought a new bed that cost a couple thousand dollars. My wife needed it for her bad back, so we had to bite the bullet and buy it, even though I would have preferred to wait a bit. Shortly after that, the wheel bearings on my car needed to be replaced. $800. Then I got the oil changed and was told my power steering hose was leaking. Took it to the dealer and it turns out the news is...

Identity Theft! (Updated)

It appears my wife has been a victim of identity theft. We got a letter last week from a check approval company saying a check had been bounced. The account number was not ours and it was written at a store we never shop at. Further, my wife never writes checks. I mean, like never! I pay all the bills with our joint checking account and she has her own checking account that she only uses a debt card with. So when we got this letter, we figured it...

Damaged Doors At Rental #1

I received my September statement from my property management company today and was unpleasantly surprised to see a bill for $150 for some door repairs to my property. The bill states one bathroom door was repaired and two other doors were shaved to fit properly.My lease states:Lessee will, at lessee’s sole expense, keep and maintain the leased premises and appurtenances in good and sanitary conditions and repair during the term of this lease…Major...

General Update

My tenants in Rental #1 have opted to not renew their lease. On Monday, my property was not yet listed on my property manager's website, so I emailed her to ask if they put it up as soon as the tenants give notice, or if they wait until they have moved out and they have cleaned the place. I never got a response, but my property is now listed on their website. And the PM must have felt rents could be increased, because it is listed for $775 a month,...

Rental #1 Tenants Have Given Notice

My management company told me today that the tenants in Rental #1 have chosen not to renew their lease, which expires on November 1. This stopped me from making a decision I wasn't really looking forward to making - should I continue to rent to them or not?The reasons for not renting to them were fairly clear - they paid their rent late several times. Given that the management company keeps the late fees, there is really no benefit to me to accept...

Foreclosure Papers Filed For Louisiana Property

When I last wrote about the Louisiana commercial property I'm invested in, the buyout of "Joe's" interest in the property had fallen through and he was once again late on his payments. We (the other mortgage investors and myself) had decided to start the foreclosure process as soon as possible.I received word yesterday that the process has begun. On September 15, Joe was officially late for the September payment and late fees started accruing. A...

Real Estate Slowdown Hurts My Cashflow

For the past four years, I've had some investments in four LLCs that flip properties in the San Francisco area. As you might have guessed, 2004 and 2005 were pretty good years for these investments and every couple of months, I was receiving checks for hundreds of dollars - and sometimes over a thousand. Now, however, the resale market has slowed down dramatically. Instead of the checks for $1,000 or more I was getting, the last check I received...

Got The Bug

I'm feeling the urge to buy another rental property and the blame lies squarely at the feet of Trisha for recently posting about two properties available in Tulsa. The problem is I am looking at a lot of upcoming expenses in the near future - we need a new bed, we're traveling for Thanksgiving, Christmas shopping time is quickly approaching, and next year, we're going on a cruise. The cruise is a birthday present for my 40th birthday, which will...

Garage Town

Sorry it's been a while without any posts.. I was in San Francisco on business.The other day, one of my co-workers was in my office talking about a new property development in Mesa, Arizona that she came across - Garage Town. It's a development consisting entirely of garages. Unlike a rental storage space, at Garage Town, you actually buy and own the garage, just like you would buy a home. The community is gated, you have 24/7 access. The garages...

Bankrupt AMH's Property Tax Checks Bounce

I heard about this from Savvy Saver - American Home Mortgage, the subprime lender who is in serious financial difficulty, has apparently been bouncing checks that it sent out to pay mortgage holder's property taxes in Maryland. Curiously, I can't find this story on CNN or MSNBC, but there is an article here. I did find a story from three days earlier about Freddie Mac trying and failing to take over loan servicing from AMH. However, AMH filed for...

Commentary On The Subprime Meltdown

...from the comics pag...

Louisiana Update

This investment is a textbook case of why you should always know who you invest with and make sure your objectives and styles are compatible. (Although in our defense, I will say that when we went into this deal, the problem person was not the majority partner. He only became that after buying out someone else.)The last time I wrote about this, it appeared things were looking up - our investment was brought current, a new team had bought out the...

Nevada Extends Charging Order Protection To S-Corps

This one was brought to my attention by Diane Kennedy's tax Loopholes Updates newsletter. LLCs and Limited Partnerships have enjoyed protection from charging orders in many states for some time. A charging order is a legal instrument that says if a creditor obtains a judgment against you personally, the creditor can attach a claim to your interest in an LLC or LP that you are part of. The protection comes from that fact that the creditor does not...

Early Prosper Payoff!

When I logged in to my Prosper.com account over the weekend to check things out, I was surprised to see that one of my loans was being paid off early. This was a nice contrast to my two loans that have defaulted. Once this loan has been paid off, which should be in a day or two as the transaction settles, I will be left with one remaining loan, which is at 8.8...

Foreclosures Up Again - Government Bail Out?

CNN is reporting that RealtyTrac says foreclosures were up another 9 percent in July over June and up 93% over the same month last year. They originally predicted a 33% increase over last year in foreclosures for the year, but have now raised that forecast to 60%.But more ominous is this story from msnbc.com. Congress is looking at bailing out homeowners and lenders. Right now, it seems most of the possible action seems to be related to modifying...

Natural Disasters

Growing up in Southern California, I rarely experienced the full force of Mother Nature. We had the occasional earthquake and once in a while the El Nino winds paid a visit, but for the most part, the weather was pretty idyllic. And now that I live in Arizona, I still don't really experience much bad weather. We get some pretty intense thunderstorms, but they typically don't last for too long - hours at most. So when I bought Rental #1 in Oklahoma,...

Cashflow Day

Got my rent check today from Rental #1. I am pleased to report the tenants have finally paid the $200 they never paid back in May. No need to evict them.I'm of two minds on this. These tenants have a history of late payments and I have already decided that I will not renew their lease when it is up in November. After reading what happened to Trisha's property after her tenant was evicted, I'm not really looking forward to having to evict someone....

Reverse Stock Split Arbitrage Revisited

Several months ago, I wrote a couple of posts about some reverse stock split arbitrage plays I made. I've still been making them, but they have been a little harder to find. I've made about 6 or 7 of these trades and all have been successful except for one. That one failed because the terms of the split were altered so that small shareholders were affected instead of not being affected, which this technique relies on. In my comment here, I speculated...

House Swapping

When I need to put gas in my car, I usually stop by Costco on my way in to work in the morning. I get there just around 6 AM, when the place opens, and usually spend a few minutes chatting with the guy who unlocks the pumps. He knows I'm a real estate investor because my car has a license plate frame that says "I Buy Houses" and we often talk about local real estate trends.This morning he told me he has seen stories of people who are trading their...

The Mortgage Meltdown Fallout Continues

Reuters reports that American Home Mortgage Investment, a REIT, could no longer fund loans and may be forced to liquidate its assets. This comes after last Friday's announcement that it would not be paying its quarterly dividend to shareholders. The company is unable to fund $300 million of loans it already committed to make on Monday. It is expected to be unable to fund another $450 to $500 million in loans today. Shares of the REIT closed at $1.04...

Foreclosures Skyrocket

According to this report on CNN, the number of foreclosures rose 58% during the first half of this year. One in every 134 households is going into foreclosure. In Nevada, it's even worse - 1 in every 40 hous...

Louisiana Update

Another conference call for the Louisiana investment just concluded and it looks like TMG, the investment group that is taking control of this project, is giving us investors a pretty good deal. As usual, there are lots of details, but I'll try to keep it simple here.Those of us that are currently on the first mortgage for the commercial properties in Louisiana have the following options:Get cashed out. Your investment will be paid off and you'll...

Summertime Slowness

Nothing much seems to happen in the summer. Here in Arizona, it's just too hot to go outside and do anything and with vacations and family visits, it seems like real estate has taken a back burner for a moment.My Louisiana investment has finally been brought current. Actually, more than current since I've already received the payment for August. That brings the mortgages up to date. The other aspect of this investment - buying out the old majority...

Subprime Mortgage Meltdown Begins To Gather Steam

The meltdown in the subprime mortgage market is gathering steam and beginning to be widely felt. Yesterday, Bear Stearns told its clients that two of its hedge funds were now worthless.Bear Stearns, the nation's fifth-largest investment bank, began disclosing in March that the two hedge funds had sustained heavy losses tied to subprime loans extended to risky borrowers. At the time, its High-Grade Structured Credit Enhanced Leveraged Fund was worth...

Rental #1 Final Numbers

As I promised a while back, now that the refinance of Rental #1 is done, I'm able to post the final numbers for the property.Purchase CostsEarnest Money Deposit$1,000Funds Due At Purchase$1,438Funds Due At Refinance $13,335Property Management Maintenance Deposit$250 Total Purchase Costs $16,023 Monthly Income Rent $750 Monthly ExpensesManagement Fee$75 PITI $486 ...

Louisiana Update

I took part in an hour long conference call this morning with the other mortgage holders on the commercial property project we've got going on in Louisiana. There is really too much to cover in a blog entry, but I will attempt to give the highlights. You shouldn't assume these are the complete details.The majority holder, I'll call him "Joe," that has been causing everyone else so much trouble, has come to us asking to be bought out. Joe is in over...

Update On All My Projects

I'm back from Vegas, poorer, but relaxed...Looks like my feeling that things might be improving at my property management company was correct. I've found out that the company is being bought by an employee and that they have ramped up the staffing and efficiency of the office. That makes me feel better.I also finally received the Release of Mortgage for my refi of Rental #1. I got that notarized and will send that back today, so my private money...

Keeping Late Fees Seems To Be S.O.P.

I've been away on vacation for a couple of days, but upon my return, I picked up some messages from the other property management companies I contacted last week. Turns out, keeping the late fees is standard operating procedure at management companies, at least in the Tulsa area. I don't like it, but it appears I don't have much choice.I'm off on a other little mini vacation to Las Vegas tomorrow, so expect another slow week here on the blog.I still...

Looking For A New Management Company

I mentioned a while back that I discovered the late fees in the lease I inherited with Rental #1 were a bit low - $35 if not paid by the 5th of the month and $3 a day thereafter. Turns out, for me, it's even worse than that.I received my check from the property management company over the weekend and had some questions about it. Mostly, they were issues still left over from their screw-up last month of only charging partial rent to the tenant in...