Hard Money #6 Cashflow Day

I got my first payment from Hard Money loan #6 today. I also got copies of the paperwork - mortgage, loan servicing agreement, etc. One thing that is slightly different about this loan is the payment due date and overdue dates. Normally, payments are due on the first of the month and overdue if not received by the 15th. This loan however, has payments due on the 7th of the month and overdue if not received by the 17th. No big deal. Just a bit different....

Full Disclosure

I have a confession to make. I have not been fully honest with you. When I said this was the reason I wanted passive income, that isn't the only reason. There is another reason: I have multiple sclerosis. The majority of the time, you would never be able to tell. I typically have no symptoms. Occasionally, however, I will have a flare-up, or "exacerbation," as they are called, where symptoms appear for a while and then eventually go away. This is...

Working On A New Project

I have had some more free time since I was laid off from my day job, so I've started work on something that was suggested to me back in 2005: write an ebook. I'm taking two of the rehab projects I've detailed here (House #3 and House #11, on this blog, although they were labeled as such before I was using tags to mark the entries and before I switched to a new numbering system) and adding some additional comments to them, based on what I have learned...

Multi #1 Monthly Udate

I just received the latest monthly update for my investment in the apartment complex in Houston. Believe it or not, occupancy has increased AGAIN and is now at 97%. This is phenomenal and beyond my expectations. It surely cannot be maintained!Total revenue has increased to over $195,000 last month, which is the highest revenue figure yet. As mentioned last month, rent concessions are down, which resulted in rental income increasing by about $7,000.Some...

This Is Why I Want Passive Income

A week ago today, I was laid off from my day job of over 3 years. No warning, of course. I did survive two previous rounds of layoffs, so I suppose I can't ask that my luck hold out much longer. I did get a decent severance package and I already have a couple of interviews lined up. However, I don't like the idea that my income can be taken away at a moment's notice. Hence, my quest to get multiple streams of passive income.Luckily, another opportunity...

Multi #1 Monthly Update

The monthly update for the Houston apartment complex arrived today. Things continue to go well. Occupancy has increased to 96%, making this the fourth straight month of increases. Occupancy has gone up every month since we took over the property and I don't expect it to rise any further.The damage caused by Hurricane Ike came in at around $25,000, which is less than the insurance deductible, so we will not be making an insurance claim. Payments will...

Hard Money #3 Finished

As expected, my hard money loan #3 was paid off today. The funds were wired by the escrow company today and my check will be in the mail tomorrow. The investment only lasted three months and I got the promised 10% annualized ROI. I'm on the lookout for the next investment n...

REI App For The iPhone

A week ago today, I got an iPhone. I don't know how I lived without this thing before! It is far more than just a phone. There are hundreds of applications out there, many of which are free, that provide useful functionality, good entertainment, or both.One free app I found is called Buy That Duplex Lite, or BTD Lite for short. This is a simple little investment property analyzer. You input the property price, down payment amount, loan interest rate,...

Early Loan Payoff?

Got word yesterday that a title company has requested a payoff amount for hard money loan #3. This was a 1 year loan that paid me 10% interest. The loan has only been open for 3 months, so this will be paid off real early if the sale of the collateral property actually goes through. I'm a bit disappointed because I was looking forward to several more months of payments. However, this just means I'll get my principle back and can start looking for...

"Official" Vigilantism

I came across this story on CNN.com today. In a nutshell, there is a sheriff in Chicago who thinks there are too many foreclosures and will stop evicting "innocent" renters from properties. I can surely empathize with him. It would not be fun to evict people for no fault of their own. But enforcing the law sometimes means doing things that are not pleasant.I agree that the tenants are not to blame for the foreclosure - in most cases. It's the landlord,...

Home Sells on eBay for $1.75

Now this could be a sweet deal. A woman bought an abandoned home for $1.75 on eBay. She'll have to pay an additional $850 in taxes and yard cleanup costs. From the looks of the place, she's probably also got some serious rehab work to do. Still, I think she's got a good chance at making some money on this one. If this truly was a bank-owned property, I wonder which bank is selling their inventory on eB...

This Is Why I Like Passive Income

Last Friday, I was driving back from lunch and my co-worker noticed steam and liquid coming out from the front passenger side of my car's hood. A check of the temperature gauge showed my car was close to overheating. Luckily, there was a Toyota dealership nearby, so we pulled in there and dropped it off for repair. Turns out, I need a new radiator and some other repairs. The estimated cost is just over $1,200.Yesterday, I came home from work and...

Multi #1 First Payment Arrived

A couple of days ago, I received the monthly investor's accounting report for the apartment complex in Houston via email. About two days later, I received my first quarterly profit distribution. The amount was what I expected - the equivalent of a 9% annual ROI. That was our guaranteed minimum return. The good news is that the occupancy, as predicted, has risen another point to 95%. This is the third month in a row that occupancy has gone up and...

More Problems For Those Being Foreclosed On

I wrote two weeks ago about what appears to be a burglary ring that targets people who are losing their homes to foreclosure. Now another scam targeting people in foreclosures is hitting the news. Truth be told, this isn't a new scam and I've heard about it before, but this is the first time I've seen some serious media coverage of the issue. This scam involves stealing the equity out of people's homes. The article details how this is done, but in...

Hurricane Ike Damages Multi #1

Regular readers may have guessed this, but for those readers that don't also read Kenric's blog Live Learn Invest, I should point out that both he and I have invested in the same apartment complex in Houston. On his blog, it's Houston Apartment #2 and here I called Multi #1. I was out of town for the weekend, so he beat me to the punch on posting pictures of the damage Hurricane Ike did to this property, so I'll just link to them instead of reposting...

Details of Rental #1 Repairs

As I mentioned Monday, I was waiting for the hardcopy paperwork and refund check from the property managers for Rental #1 in Tulsa. Good thing I saved the scanned images they emailed me, because they did not mail me the actual invoices, only a check. Here's the breakdown of what they did to get the property ready for sale. Figures have been rounded to the nearest dollar.MayManagement fee - $75 - This was for a partial monthMaintenance - $30Lawn Maintenance...

Many Updates

The big news in the real estate market this weekend, of course, is the government takeover of Fannie Mae and Freddie Mac. I'm not sure what to make of this, other than the fact that I think they waited too long. If they were going to do something, I think it should have been done long ago and maybe some of the damage to the housing market could have been avoided. I think we'll have to wait to see how things play out before we know if this is a good...

Kicking Them When They Are Down

Late last year, I wrote about a co-worker of mine who jumped on the real estate bandwagon and bought a house and rented it for negative cashflow, assuming it would eventually go up in value. Of course, the market crashed and he lost the house. He managed to sell it for a loss, but unfortunately, the losses were too great and he ended up getting behind on the mortgage payments for his residence too. That went into foreclosure and the auction date...

Automatic Income

I received my first payment from Hard Money Loan #4 last night. What is really nice is that the borrower has set me up as an automatic payment from his checking account. Each month, the bank will automatically send me a check. No need to worry about him forgetting to mail it or getting lost in the mail or any of the other excuses people make when payments are la...

Loose End That Just won't Get Tied

Three weeks ago, I requested the return of my deposit from the management company. On July 19, I was told they were waiting on final bills for utilities to arrive before they sent me a refund. Keep in mind, escrow closed on this property on July 14. We are now one month and a half months passed the sale date. All monthly utility bills should have come in long ago. After a couple of unanswered emails, I called the property managers today to see what...

Hard Money #5 Deal Is Dead

It seems I spoke too soon about my latest hard money deal. The deal never happened. Les, the guy putting it together, was only willing to lend up to 70% LTV and the borrower wanted 80%. The property would still cashflow at 80% and it was still a good deal, but Les wanted the extra 10% cushion as security for his investors. The borrower didn't want to do that, so the deal has been canceled. On to the next o...

Winning In Real Estate In 2008

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Multi #1 Monthly Update

The second monthly update for the Houston apartment complex has arrived and I'm pleased with the way things are going. As they thought last month, they were able to get the occupancy up another percentage point to 94%. And this is even with the rent increases they have implemented, which they say are being received favorably by renters. They still believe they can get it up to 95% or 96% over the coming months. I guess the improvements that are being...

Another Hard Money Investment Made

This weekend, I got another opportunity for a hard money lending opportunity from my partner in some other deals, Les. A contractor has purchased a duplex all cash for $355,000 in Livermore, California, which is a bit south of the San Fransisco Bay area. He's coming to us for a first mortgage of $285,000, giving an 80% loan to value ratio. The property was a bank REO, but it is in fairly good shape. ROI is 10% net to me. Interest only payments and...

Saturday Was Cashflow Day

I received my first payment from Hard Money Loan #3 on Saturday - a nice check for a little over $400. It's nice to be receiving passive income checks aga...

Multi #1 Producing Income

Yesterday, I got my first check from my apartment complex investment. It's actually not from the operations of the complex, so it's not very big and it is no reflection on the investment itself. If you recall, I invested in the property, but then the principles of the project were having difficulty raising all the funds needed for purchase. It took them 2 months, but they finally did it. Well, that two months they had my money and the money of other...

Loose Ends (Updated)

Just trying to wrap up the loose ends on the sale of Rental #1. I canceled the home insurance last week and the refund check for the unused portion of the policy arrived today. The only thing left is the return of my funds from the last property managers. On July 19, they said they were waiting to make sure all the final bills have been paid. I'll give them another week and if I don't get anything from them by then, I'll give them a call.Update:...

Opportunity Knocks And I Answer

The other day, I was sitting at my desk talking with a couple of my coworkers when one started talking about his credit score and how it had dropped about 40 points recently. This guy subscribes to a credit monitoring service and keeps a close eye on both his credit score and credit report. It turns out, his score dropped because of a motorcycle loan he recently took out to get a new motorcycle. He got a special low rate, but must not have read all...

Multi #1 First Month Report

The first month’s figures from Multi #1 are in and things look to be progressing right on track. The improvements we plan to make have been started – new signage has been installed and the re-sealing of the entry parking lot has been completed. Other improvements are scheduled for the coming months. Occupancy is at 93% and management feels that traffic has been increasing and can rise to 94% or 95% over the next month. Figures are tracking pretty...

Rental #1 Has Been Sold

Well, in a rather depressing turn of events, Rental #1 closed escrow last Monday and I sold it for a loss. I haven't run the exact numbers yet, but it looks like I lost about $30,000 on the deal. As always, the last day of escrow was not without its drama. This time, I got a call saying the escrow company had not received my funds that I had to wire to them to make up the difference between what was...

Approval Obtained!

Just heard from the escrow officer that her attorney has agreed with waive the requirements for closing and we can move forward. Docs are being emailed to me tonight. I'll sign them and overnight them back tomorrow and we should close on Friday.It still seems like whatever title problems there are are still not fixed. We're just overlooking them now, just like we did when I bought the place. But it won't be my problem any more...

Title Issues Still Not Resolved

Title issues are still delaying the closing of the Rental #1 sale. My title company has contacted the president of the title company I used when I bought (and when I later refinanced) the property. Turns out, he had waived some requirements when I bought the place, presumably to allow escrow to close. I'm sure the intention was to then go back and fix the title issues (even though I was told they were all resolved). That apparently never got done....

Title Issues Delay Closing

Does anyone in Oklahoma know what they are doing? I just heard from my title agent that there are two issues with the title to Rental #1: There is a previous mortgage listed in the names of some people I've never heard of. Why is this being discovered now? This should have been discovered when I first bought the property or again when I refinanced the property - two previous occasions when title work was performed on this property.The private mortgage...

Sale Of Rental #1 Moving Forward

My agent and the buyer's agent all got quotes for repairing the roof - I think I've seen about 6 different quotes. All are around the $7,000 to $8,000 range. The roof is not damaged enough for insurance to cover it, so that's out. The buyer and I have renegotiated and we are now back to their original offer price of $50,000. That $5,000 less than the original contract price, but it's still less than what it would cost me to repair the roof, so I'm...

Good News For Flippers!

Here is some good news for anyone flipping properties. The FHA is waiving it's anti-flipping rules and will now insure mortgages on properties that have been owned by the seller for less than 90 days. The waiver is in effect until June 2009.Full details he...

Roof Problems

The roof on Rental #1 is quickly becoming a big problem. Got this email from my agent today:Termite damage under the house to the supporting rafters. Around $2600 to repair/replace, buyer has enough to do this himself. Roof has 3 layers on it. Original layer is wood shingles, two are composition shingles.Inspector did notice some shingles missing on one side of house, suggested we try to get insurance claim as you know. He informed the buyer that...

Pointless Contract Verbiage

The buyers for my Rental #1 had the inspection done and they found a couple of things. There is some roof damage that appears to have been caused by the storms on June 4. Some floor joists are rotten and need to be replaced and there are some other minor issues. The buyer is willing to do all the repairs except for the roof. My agent suggests that I file a claim with my insurance to get the roof repaired.Now, you may recall this offer was as-is....

Another Investment Made

Today I made another real estate investment. I'm a hard money lender in a first mortgage on a single family home in Oakland, California. This was a property the buyers picked up at a foreclosure auction. The amount owed on the defaulted mortgage was $495,000. The bank set the opening bid at $202,000 and the buyers got it for one cent more than the opening bid. There is probably about $25,000 worth of repair work to be done to it and three independent...

Offer Received On Rental #1 (Updated)

I received an offer today on rental #1. I'm not going to list the details until we get a signed contract (or until we walk away from negotiations). This is simply because I know there are people who read this blog that know where this property is located and I don't want to give away too much during the negotiating period. I will say however, that the offer was for below my asking price, but it was for as-is condition. That's a big plus for me, given...

I'm Back ... But Only For A Short Time

I've returned from my cruise and am trying to get caught up on everything. Unfortunately, my mother-in-law is critically ill and probably will be passing any day, so I expect to be taking off again sometime soon for her funeral.The cruise was fantastic! We went to several cities in Italy, Barcelona, Monaco, and Tunisia. This was my first cruise and now that is the only way I want to vacation! It's...

Set A Course For Adventure

I'm leaving for my two week cruise this weekend, so I'm spending the remaining time packing and getting ready. No posts for a couple weeks and, since comments are moderated, any comments probably won't show up until I get back either. Bon voya...

This Guy Is NOT A Real Estate Investor

Despite the headline, this guy is a gambler, not a real estate invest...

Update On Everything

I've been remiss in posting the details of what's been going on with my real estate investments, so here's a catch-up post.I've decided to sell Rental #1, since it seems no one wants to rent it and it's in a bad part of town. My new PM company figures it needs about $1,500 worth of work to get it ready to sell. The new company is set up to accept payments over the internet using PaymentServiceNetwork.com. That service really seems to be geared more...

Old PM Company Still Causing Problems

Bryan Properties, the property management company that I fired last month, is still causing me problems. I checked my P.O. Box today and found they had forwarded a bill to me from the City Of Tulsa - the electric bill. The due date on the bill is April 21, so it is now overdue. Let's look at the timeline:The bill was printed on March 28. I fired Bryan Properties on April 4. That's just one week after the bill was printed. OK, it's possible they...

What Part Of Property Management Don't They Understand?

I've been trading email all day with the property management company I was going to hire. Basically, after speaking to some other PM companies and getting more details from this PM, I've decided to just sell the property. I asked the company that turned me down for managing it yesterday if they would be willing to list the property for sale. Here is their response:I am sorry . We would not be interested in listing this property. It needs to managed...

Now I'm Pissed

After two weeks not returning my calls, I received email from the property management company I was going to hire saying they cannot manage my property after all. This after they already drove by the house and the woman spent 30 minutes on the phone with me telling me how she was going to market it. Furthermore, the email was from someone I have never spoken to and whose name I did not recognize. The email did not have the name of their company either,...

When Life (And Death) Intervene

It's been a while since I have been able to post here.. I've been very busy at my day job and I was also out of state for four days last week, which created a big backlog of things I had to take care of upon my return.I finally got the letter I requested from my old property manager stating that she was letting me out of the management agreement early. She claimed she never sent it to me before because she thought I just wanted a letter stating she...

A Property Management Company To Avoid

It's been 2 weeks since I faxed my property management company. Despite my written request and several phone calls, I have not received the written confirmation of the management agreement cancellation that I asked for. I needed this so the new management company could take over. Without it, I have to wait out the 30 day period specified in the contract. Because the current company is not making any money from me when the property is empty, there...

You Know There Are A Lot Of Foreclosures When...

...people start giving tours of bank owned properties.On the other hand, this does show some creative thinking from a couple of Realtors who must be looking hard for some ways to drum up business these da...

Potential Windfall For Foreclosure Investors

CNN is reporting that the Senate has passed a bipartisan bill to address the foreclosure crisis. Among the provisions: a tax credit of $7,000 for people buying foreclosed properties! Wow! It's unclear if this will apply to investors or just owner-occupants, but..holy cow.. A $7,000 tax credit! Not a tax deduction mind you, but a tax credit. That will certainly spur a wave of buying from investors if they can claim it!Of course, this is just the Senate's...

Changing Management Companies Is A Pain

Last Friday, I fired my property management company and hired a new one. Unfortunately, my contract stated that I have to give 30 days notice that I am canceling the contract. I had hoped that they would not enforce that, since they are not making any money from me. I don't pay them a monthly fee is the property is vacant and it is, so there is really no point in them holding on to the contract - unless they think they can get it rented in the next...

Good News For Multi #1

When I first started posting about my potential investment in a multi-unit rental complex in Houston, much of the comments warning me against it mentioned the horrible economy and how the Houston market is deteriorating. Just thought I'd pass along this article that says the opposi...

Rental #1 Under New Management

After five months of sitting vacant, I have fired my property management company and moved to a new one. Hopefully, this one will be able to get some tenants for me.The contract I had with the old management company specifies I have to give them 30 days notice to terminate the contract, but I think they will waive that since they aren't getting paid anything while it is empty. The new management company is allowing me to just start with a leasing...

Multi-Unit #1 Is Still Alive

Despite my earlier pessimistic outlook for this deal coming to fruition, it appears it now stands a good chance of happening. There is a group of investors that will be coming in to fill the funding gap that the loss of the mezzanine loan created. They still have to raise the money from their investors, but they have analyzed the deal and have a "high confidence" it can be done.I know some readers don't feel this is a good deal. Everyone is entitled...

Possible Trouble For Arizona Landlords

This is an email I received from the ACLU today and it applies directly to all landlords in Arizona.Currently, the Arizona House of Representatives is considering a bill that, if passed, would restrict housing for Arizonans, and cost the state of Arizona millions to enforce. HB 2625 would prohibit landlords from renting to undocumented immigrants. Private landlords are not trained in immigration-related document review and verification, yet this...

Time Is Running Out For Rental #1

Well, the potential renter never panned out and my rental is still empty. There have been some other people who looked at the place and, according to the property manager, the problem is with the trashy neighbors. Not only do they have a habit of throwing their trash into my yard, but apparently they don't keep their yard too tidy either. So, in an attempt to fill the place, I've lowered the asking rent back down to $750, which is what it was rented...

Fear Mongering Comes To Mortgage Commercials

Mortgage companies must be hurting for business right now because I was shocked at a commercial I heard on the radio this morning. In an attempt to get people to refinance their mortgages, it used fear-mongering tactics that would have made the President proud.The ad started off by saying that private mortgage insurance, or PMI, is required on all loans where the loan to value ratio is greater than 80%. That's true. However, the ad then went on to...

Update On Multi-Unit #1

Time for an update on my potential multi-unit investment.The short version: I don't think it's gonna happen.The longer version: The buyers have not raised enough money to be able to buy the place. They were looking to get a mezzanine loan for about $500,000 and the lender they had lined up decided not to make the loan. They are looking for a new loan or additional investors to provide the additional capital.Escrow was supposed to close at the end...

The Case For Foreclosures

I was pleasantly surprised to see an article titled The Case For Foreclosures on Slate.com the other day. Finally, someone was taking a critical look at the recent desire by Congress to "do something" about the wave of foreclosures sweeping the nation.The article doesn't touch on one of my pet peeves, namely that capitalism, by definition, requires some businesses to fail, or in this case, some loans to default and go into foreclosure. Capitalism...

Tulsa Rental Still Not A Done Deal

I spoke with the owner of my property management company yesterday to get a status on the potential renter. Turns out, both the leasing agent and the potential tenant have the flu, so no paperwork has been signed yet...

They Start Them Out Young

My daughter is 4 years old and she will be getting her tonsils out soon. Yesterday, the doctor gave her a comic book that explains the procedure. Apparently, they are preparing her for a career in the adult entertainment industry. Check out the title...

Tulsa House Is Likely Rented!

I say likely, because it's not official yet. A potential renter saw the property on Saturday and wanted to make sure I was ok with his dog before he signed a lease. Actually, he asked if I was ok with his malamute. My first thought was what is that, a ferret or something? A quick wikipedia search showed me what he was talking about. This dog doesn't bother me. I charge a $250 pet deposit, which should be enough to cover the extra cleanup that will...

Slow February

It's been a slow week, mostly because I caught some sort of bug that knocked me flat on my back for a couple of days. I'm still getting over it, but the worst appears to be behind me. My energy level is still pretty low, however.No new news on the apartment deal. I suspect the principles are working away busily as escrow is set to close at the end of the month.I also had a couple of leads on two new potential hard money lending deals, but those fell...

Flipping LLCs Having Hard Times

Time for another update on the four LLCs I am invested in that flip foreclosures in the San Fransisco area.Times are indeed hard in the California real estate market. I received a letter from the LLC manager stating what everyone already knows - the market sucks. Prices are depressed due to a flood of inventory, especially REOs and short sales. The LLCs have not been able to sell any properties. Since the companies are paid by taking 25% of the sales...