Apr
8
No News is Good News
April 8, 2008 |
Not much to report on the house front, as everything is ticking along with House #2. We knocked out the fairly short list of repairs and changes the buyers requested this weekend, including replacing a few doors, patching and staining some of the concrete skirting around the house, and other odds and ends. It’s down to the last tiny odds and ends, touch-up paint, installing smoke alarms, etc.
The buyers are scheduled to do another walkthrough on Thursday and hopefully everything will be to their liking and we can get serious about setting a closing date. Since they’re paying in cash we can blessedly skip underwriting hell, so I’m keeping my fingers crossed for a pretty quick close.
It’s been kind of nice to gear down slightly over the last week or two, with stress levels dropping dramatically and a chance to recover physically a bit after a fairly intense 3-4 weeks there tiling, grouting, and refininshing hardwood floors. My hands are actually clean and grout/paint/stain-free for the first time in, oh, probably a month or two.
As far as future REI scheming, I’ve been mulling that over in my head a lot of late. The short term plan is definitely NOT to run out and buy another house, as I have to get House #1 rented and re-financed, and there are a ton of upgrades I’ve been promising my very patient, very awesome wife to do on our own house.
What I’m unsure about, though, is just how far to go with upgrading our house. I’m considering tackling some pretty substantial projects, such as a complete kitchen upgrade, adding a workshop/guest house in the back, adding a deck, etc., and am currently rolling around the idea of doing all of that and then refinancing our house as well to extract some equity to build up more capital in the war chest to go after REI pursuits.
I can’t get as excited in the past about the prospects of flipping more properties, but some of the foreclosure listings out there are pretty dang attractive right now. There’s too much economic uncertainty floating around for me to feel comfortable tackling another flip like House #2, but I think with the right game plan I could make a go of picking up beat-to-hell foreclosures for cash, rehab them to the point that they’re rentable, rent ‘em, do a cash-out refinance to get my cash out, and rinse, lather, and repeat.
I looked at a couple of foreclosures the other day and one was listed at $30,000 cash for a 3-2 1400 sq. ft. house on a .3 acre lot. It’s definitely beat to hell but it’s far from a scrape and I could probably get it for $25,000, put $15,000-$20,000 into it, rent it for $700/month, and get a loan to get my cash out, as similar houses in the neighborhood appraise for $80,000-$90,000.
I’m pretty bullish about the long-term prospects of property values in our area 5-10 years from now, and picking up a bunch of rentals at (hopefully) artificially depressed prices could be a very good thing. I’d be giving up any short-term dreams of flipping houses for a living as a full-time job, but that’s increasingly a bit of a pipe dream in the current market that we’re in.
I ran all of that by Contractor #2 and he’s pretty much on board and willing to scope out potential properties with me, so we shall see. The biggest issue is speed, as far as cranking out projects like that, and while I’ve been happy enough with Contractor #2’s work, I’m not completely convinced that he can scale up and hire the folks to knock out a complete remodel job in 3-4 weeks, but he claims he’s run crews of up to 18 guys in the past, cranking out 25+ houses/year, doing exactly the sort of work I’m considering, so we shall see.
That’s obviously getting way ahead of myself, though, as all of the above (selling House #2, renting and refing House #1, and upgrading our own house) has to happen before I’m allowed to even contemplate buying another investment property.
Comments
1 Comment so far
I’m also in central texas, and bullish about the long term property values in this area. I’ve heard that nearly 500 people a week move are moving to Austin.
I recently bought a new residence and turned our old home into a rental. I’m debating trying to grab a couple more as well.