Sep
3
Back in the Land of Barbeque
September 3, 2007 |
Got back into town last Friday after a week or so in LA doing another poker tournament reporting gig, and I have to say I’m pretty glad to be home. The trip was fun, though, and definitely not as stressful as the July trip to Las Vegas for the World Series of Poker. It was much easier to settle into the routine the second time around, and I didn’t have the spectre of an unfinished house hanging over my head. It also helped that I ran really well at the poker tables myself, making enough in poker profits + salary for the reporting gig to make enough to cover the down payment for House #2.
It wasn’t quite as smooth sailing getting a loan for House #2, but also not quite as doom and gloom as the general media would have you believe. We ended up getting a 95% financing package, with a 30 year mortgage with an interest rate just a smidge over 7%. I’d resigned myself to 90% financing at best (especially since House #1 is still on the books, isn’t rented, and sucked up some of our cash for renovations that’d otherwise be in the liquid assets column), but my wife and I have pretty spotless credit and a decent chunk of monkey stashed away, so in the end we did manage to secure 95% financing.
The closing date in the contract is on or before September 15th, but we may try to bump it up a bit, just to get everything funded and done. All the clamor and hoopla seems to be subsiding a bit in the mortgage lending industry, but with all the jumpiness and unease I don’t want to drag my feet too much, although it would be nice to have another week or two to catch up on stuff around the house, without another house to work on.
Drove by House #2 yesterday and poked around the outside. I’d be lying if I said I didn’t have one of those “What am I getting myself into moments?”, as it definitely needs a lot of work, but it was a fairly fleeting moment. This one is a bit more of a gamble than House #1, as it not only involves much more substantial renovations, but the finished product will be in the higher-end of homes in our area, both limiting the potential pool of buyers and more risky if we have a complete freak-out in the coming months in the lending arena. I also haven’t sold House #1 yet, so it’s still up in the air as to whether I’m completely crazy or not, as far as buying house, fixing them up, and making money.
Like House #1, though, I’ve got plenty of outs, if anything goes awry. House #2 would be just about break even if I rented it, and House #1 would be slightly cash-flow positive. Even after paying for renovations on House #2, we could carry the notes for all three properties (House #1, House #2, and our home) for 12-24 months if necessary, without any serious lifestyle adjustments. Since I’m doing much of the renovation work myself on both House #1 and House #2, we can discount them pretty severely if absolutely necessary, writing off my labor costs, and getting out from underneath them at break-even. The housing market here is still pretty strong, and I just don’t see it deteriorating that quickly, so I’m not too worried (and hopefully not too crazy) as far as taking on another fixer at this stage.
This is it, though, for this year, no matter what promising properties might appear in the future. Hopefully I’ll have both houses sold by the end of the year, and will have rolled osme of the profits over into a couple of rental houses, with enough cash in reserve to buy another fixer in late winter/early spring. 2-3 fixers a year is likely pretty much my limit, as long as I have the day job, as otherwise I’ll drive myself crazy by staying so busy all the time. I hadn’t really realized how stressed I was until the last week, when I could finally breathe and unwind after rushing to get House #1 finished and listed.
No nibbles on House #1 yet but it’s barely been on the market for a week, and things definitely move slower here where we live. I’d be pretty happy if it moved within a month, but anything within 60 days would be nice.
