10 Cheap Home Value Boosters

With all the rehab I've done, I think I have a pretty good idea of what fixes you should make to a house to get it to sell quicker and for a higher price. However, just to show you can never know everything about a subject, an article on MSN taught me a few new tricks. Some things I didn't know:

Tip #2: I normally replace the appliances in my houses, but if the existing ones are still in good shape except for cosmetics, I didn't know you could just flip the panels over.

Tip #5: Add a closet to a den to make it another bedroom. This is an interesting one. It adds another bedroom, but it decreases the bathroom-to-bedroom ratio. I wouldn't want to turn a 3 bed, 1 bath into a 4 bed, 1 bath, but turning a 3/2 into a 4/2 might be worthwhile.

The other stuff they list is pretty much standard info.

Trading One Job For Another

I've been thinking about this for a while, but when I read the latest post on one of the real estate investing blogs I follow regularly, I had to write about this.

I follow several blogs of people who got started in real estate investing. Over the past several months, three of them have decided to get their real estate license and become Realtors. It seems to me that this is just trading one job for another. I will admit there are some advantages to being a Realtor, but I don't think they are advantages that couldn't be gotten other ways - such as having a working relationship with a good Realtor.

I remember an article I read in the Arizona Republic earlier this year about the glut of real estate agents. Referring to the real estate boom, the article stated:

Suddenly, helping other people buy and sell houses looked like an easy way to make money, maybe a lot of money. How hard could it be? With investors amplifying demand, houses practically sold themselves, often for thousands of dollars more than the asking price.

People poured into the real estate business: The number of licensed agents in the state increased from 53,478 in July 2002 to 80,210 at the end of March [2006], according to the state Department of Real Estate. But now that the market has cooled and the prospect of quick money is gone, the newbies are starting to pour out, brokers and agents say.

It goes on to say that 80% of new agents quit within a year and 90% quit within 3 years. From my point of view, being a Realtor is even worse than having a 9 to 5 job because agents tend to work a lot of weekends and are on call basically all the time.

I really do hope that all my blogger friends enjoy success as Realtors. Perhaps their REI-based viewpoint will help them succeed where others so often fail. For me, however, I'll stick with being an investor.

2006 Financial Year In Review

The end of the year is fast approaching and it is looking like I'm going to be too busy for the remainder of the month to get much going in terms real estate deals, so I thought I'd look at how I did in 2006.

Real Estate:

I rehabbed only one house this year. My goal was to do at least two, so I fell short there. In my defense though, I was asked by my investors to stop for a while until I could conference with them. That took me out of the market for a bit. I am still waiting on the additional funds they said they would invest, but those funds are coming from a probate trust and it is taking longer than expected for that to settle.

I had wanted to buy at least one rental property this year and I did not achieve that goal. However, I did make an investment that provided two firsts for me: my first out of state real estate investment and my first commercial property investment. I have invested in part of a $1.75 million dollar first mortgage on package of commercial properties in Louisiana. Income from that investment has been on-time and there have been no problems so far.

Personal Finance:

I increased my financial education by attending a meeting in March of other real estate investors and fellow RichDad.com community members. That was an eye-opening experience and actually led to the commercial investment I just mentioned.

I experimented with person-to-person lending via prosper.com. I've pretty much soured on that concept: two of my loans are delinquent and two are current. However, it was an interesting idea and I thought it was worth a try. I might be ok for other people, but it's not for me.

The blogosphere also taught me a new investing technique called reverse merger arbitrage. I'm two for three on these deals so far and am up about a thousand dollars. I've got two more plays in the works and I think this will be a technique I continue to use throughout the next year and beyond.

This year also saw the retirement of our only car loan, which was paid off a couple months ago. The $300 a month that was going to that is now going into our savings account to be used for our next investment. I also continued to save 15% of both my and my wife's paychecks, which will also go towards our next investment. Of course we continue to pay into our 401(k), although only enough to get the full company match.


Next year:

I have a couple of goals for next year. First, I want to rehab at least two properties. This is the same goal as last year, but this time I'm going to achieve it :-) I think I've got the contacts now of people who can get work done in a timely manner, so the only thing that may cause me to miss this goal is if the houses take longer than expected to sell.

I also want to either buy a rental property or make another real estate-backed paper investment, similar to the one in Louisiana. I haven't decided which yet. I like the rental property because of the tax benefits it gives, but the paper investment requires a lot less effort on my part. Time available to me may be an issue because my daughter is turning three and there seems to be more and more things to do with her that require my time. (That's not a complaint though!)

Home Sales Up, Prices Down

Back in September, I wrote about a news story that said home prices had declined for the first time in 11 years. Today, there is another story out: Home sales are up, but prices are down.

The National Association of Realtors has announced that sales are up one half of one percent - the first rise in eight months. However, the median price of a home has dropped 3.5% from last year, a record decline. They also state there is still seven months worth of inventory for sale. (If you look back at the story from September, you'll see back then there was 7.5 months of inventory, which was a record backlog.)

So home sales are up by the tiniest amount, prices have dropped by a record amount, and some people are saying this means the market is stabilizing. Personally, I have to agree with what economist Joel Naroff said in the story: "The housing market is far from the bottom." The story makes no mention of the fact that, not only have housing prices continued their decline from September, but the decline is accelerating.

Once again, real estate investors really need to stick the basics to have success in this market, whether you are rehabbing or renting. Your money is made when you buy, so make sure you get a good deal.

Whitney Houston Faces Foreclosure

From CNN: Whitney Houston's New Jersey mansion is set to be sold at a sheriff's sale on January 4th because she is more than $1 million behind on the mortgage and still owes this year's property taxes.

Now that's an auction I'd like to be at!

DLCV Reverse Split Just Days Away

This press release from Dolce Ventures indicates their 304.44 for 1 reverse split should be completed on or about November 16. This is the arbitrage play I wrote about earlier. If you are making this play, I would start checking your brokerage account daily. Based on my experiences with Schwab, once the split happens, you'll probably see their ticker symbol, DLCV, in your account replaced by a number. About a week or so later, depending on your brokerage, you should see the new ticker symbol in your account. (I don't know what the new symbol will be, but the new company name will be Sino Gas International Holdings, Inc.) Again, if you own less than 15,222 shares, your shares should not be affected by the reverse split. You may want to call your brokerage's reorganization department to make sure they handle this correctly. It helps to have their SEC Schedule 14C filing in front of you when you call so you can refer the person you are talking to to the official document.

Credit Report Corrections

A couple of months ago, I requested our annual free copy of my wife's credit report from Equifax. There was nothing seriously wrong with it, but there were several old accounts that I wanted removed. I filled out the correction forms and sent them back. By law, Equifax has to respond within 30 days. A couple weeks after I sent in the corrections, I got a letter back from Equifax saying the three accounts they listed were verified to be correct and no changes were made to the credit report. The problem was, the three accounts they listed did not belong to my wife! In fact, they did not even show up on her credit report at all!

Someone obviously made a mistake. I decided not to do anything. First of all, dealing with credit agencies is a major pain in the rear. Practically everything has to be in writing and they most likely would want to talk to my wife instead of me, since it was her credit report I was talking about. Second, their letter said nothing in her credit report was changed. Given that, I figured we were pretty safe. I didn't want to open a can of worms over this and since the errors I was trying to correct in her report were very minor to begin with, I decided to just let this one go.

So yesterday I received another letter from Equifax, this time giving me the results of their investigations. They correctly identified the accounts I had requested corrections for and they did in fact remove four accounts from her report and two others they marked as closed. (One of the things I complained about was accounts that were closed were showing as open, but with a zero balance.) They also included a new copy of her credit report and all looks good. Those three accounts they said were hers in their previous letter were not listed. Although their response took longer than the 30 day limit set by law, I'm just happy they got everything sorted out.