Not much to report on as far as any actual REI news. Our tenant moved out of House #1 a few days ago, so we’re trying to get it rented. We couldn’t have asked for a better tenant, as not only did he pay rent a week in advance, like clockwork, but the house is actually cleaner than when he moved in, and he left various curtains that he bought, a toilet seat cover, a nicer shower curtain and rod than what was in the house, etc. Definitely sad to see him go but we did bump up the rent by $50 and have already had a few calls, so hopefully we’ll get it occupied soon, with a little extra cash in pocket.

I spent much of the weekend trying to get the new garage organized, with about 90% success. The biggest problem is that assorted stuff that needs to go to our storage unit can’t, as that thing is packed to the gills with crap, so I need to break down and spend a day or two de-cluttering and organzing the storage unit, in order to finish up clearing out the garage. Which probably will mean shifting more crap from the storage unit to the garage. And thus the endless never-ending crap cycle is perpetuated.

On the bright side, I went from having 0 tape measures to having 9 tape measures (one of which is still in its packaging, which amused me to no end, as far as losing all my tape measures and breaking down and buying a new one, then somehow losing it). I also found a brand new, never-used tool belt, for keeping track of such things as tape measures. And so it goes.

But the lender seems to think we should close in a week or two, so hopefully all those assorted balls will soon be rolling. The REO property I was eyeballing immediately went under contract, so no luck there. There’s not a lot on the MLS at the moment that looks very appealing, so I may try the route of contacting out-of-town owners of abandoned properties. Spent a few hours yesterday trolling through decent neighborhoods in town and came up with three prospects, grabbing the contact info for the owners via the county appraisal district records.

From what I can glean on assorted REI forums, there’s typically a very, very low response rate to shooting off letters to out-of-town owners in cases like that, but all it costs is a stamp and a bit of time to give it a shot, so why not.

Talked to the tenant in House #1 last week to let him know the appraisal was happening, and he wants to go month to month when the lease ends in late October, as he and his wife finally sold their house in Dallas and will soon be looking for a house to buy locally. We’ll be sorry to see him go, as you couldn’t ask for a more perfect tenant. I went inside with the appraiser and it honestly looks unoccupied and spotlessly clean as it is now. He just needed a temporary, short-term place to live, so there’s like one chair, a table, bed, couch and TV in the house, and absolutely nothing else.

Sucks to lose him as a tenant, but we’ll probably bump the rent up when he leaves, as the house rented almost immediately when we put a sign in the yard and no one balked at all at the price. If we bump it up to $900/month, with the refinance it’ll be cash-flowing about $325/month after PITI, which isn’t too bad. Can’t say this was my plan for House #1, but its far from the worst spot in the world to be in.

We’re also charging ahead with renovations and improvements at our principal residence, with the new garage 95% done, and a good chunk of the interior painting and re-arranging out of the way. We’d been using the den as an office but I finally bit the bullet and shifted all the office stuff to one of the spare bedrooms (after painting and adding crown molding/trim to the bedroom-soon-to-be-office), so that we can add French doors to the den, leading out to a new deck in the backyard.

It’s actually a little harder for me to motivate to get stuff done on our house as opposed to when working on flip projects, as there’s not the same pressing need or potential payoff, but it does feel good to get our house into shape, completely crossing off entire rooms, etc. We’ve got a pretty nice chunk of equity in the house and aren’t opposed to the idea of selling it to move to the next potential fixer-upper, so the closer we can get to it being in condition to immediately list, the better.

As far as assorted real estate stuffs, we actually managed to get House #1 rented about a week ago, while I was still in Vegas. It’s only a six month lease but it was pretty spur of the moment, as the guy renting it is re-locating from Dallas and his other plans fell through at the last minute, so he needed something quick and easy for six months while he can sell his house in Dallas and find something to buy here. Not optimal but his application and credit was pretty spotless, he just got hired as a manager at a local plant, makes good money, etc. I’d have preferred a longer lease but it’s a decent band-aid to get it rented and get a tiny bit of cash flow moving, and a good bit more once I get it refinanced.

The sale of House #2 is still chugging along. The buyer’s had their inspection done and it didn’t turn up anything too major. They requested some repairs and nearly all of it has been knocked out, except for some electrical stuff their inspector was just flat out wrong about. He noted several things that he considered not up to code but it only applies to new construction, and the city has already passed us on everything he noted, and we called them out again just to be positive that the stuff he noted was in fact kosher and fine. So now we’re going back and forth a bit with the buyers trying to get the electrical stuff excluded that should have never been in his report to begin with (but which they’ve obviously seen and are concerned about).

All in all, though, the inspection report was pretty clean and all systems are still go for hopefully closing in the next week or two. Which will be a pretty huge relief, financially and psychologically, as I’m really, really ready to be done with that place.

1) Contractor #1 is gone as of last Friday. Contractor #2 is now on the job and finishing up the last bit of framing, door casing, and odds and ends that Contractor #1 was supposed to finish two weeks ago.

2) Inspection situation isn’t as bad as I thought. I talked to one of the city inspectors and because we didn’t add any new foundations or any major new framing (other than the two walls we added to sub-divide existing space), there was no need to get the framing inspected, and everything else (mechanical, electrical, plumbing) is up to speed and fine. All we need to do is call in for our final inspection when we’re ready for it.

3)  Everything should be wrapped up in a week. (Hah).

 I’m too tired and worn out for a detailed accounting of all the fun, but things had been heading south over the last month with Contractor #1. He and his crew were good at framing and similar nuts-and-bolts work, and I was happy enough with his work over 80% of the project, but I never should have let them tackle the sheetrock and other finish work, as it became pretty clear they weren’t experienced with that. I didn’t want to switch contractors mid-job so I kept listening to assorted excuses and promises that it’d get done for too long.

He also insisted on trying to get by with hiring family members, friends of family members, etc., for his crew, even if they weren’t that experienced. It became pretty clear that a lot of the delays were due to him not being willing to pay top dollar for fast, experienced men on his crew. Again, I should have let him go a month ago, as all the signs of trouble were there.

When he showed up on Friday with yet another set of extended family members, telling me that his son-in-law (who had been the only really productive person on the job site for weeks) had quit and was off the job, that was pretty much it, and I told him to finish things up and that we’d call it quits. Tried to keep things fairly civil, and told him that I’d be bringing in Contractor #2 to finish things off, as well as possibly his son-in-law to help me with the remaining tile work, as he’s still the general contractor on the permit, so I felt like I was obligated to let him know.

I ran off to haul some trash off, came back 15 minutes later, and he was on his cell phone. Turns out he was calling Contractor #2 and his son-in-law (who’d he nearly gotten into a fist-fight with twice the previous day on the job site), asking them to come give him bids as sub-contractors to finish the work. That’s about when I semi lost it, and said something along the lines of: ”Dude, you’ve got awfully big balls to try to sub the work out that you couldn’t get done at this stage, right after I tell you you’re basically fired and that I’m bringing other people onto the job to finish your work.”

He said he was just trying to watch out for me, that he felt bad about not finishing the job so he called them as a favor, that he’d stay on them and make sure they got the work done, yada yada yada, with absolutely no sense of the irony that was pretty thick in the air.

I finally managed to pry him out of there late last Friday and things have been rolling along ever since. Obviously pretty disappointing and frustrating, but, like much of this, a good learning experience. Pushing hard to just get the damn house done now, so pretty long nights, but the end is in sight.

We’ve got a good lead on renting House #1 and are just waiting for the lady to return the application. Again, kind of disappointing that we didn’t get it sold but them’s the breaks, and renting it out should cashflow a couple hundred bucks a month, and hopefully I can refi it after House #2 is sold and get some of the repair expenses out, and have a decent little rental property.

I’m still alive, still plugging away, and all that good stuff. House #2 has pretty much sucked up my will to live, which leaves me less than motivated to update here. Well, I exaggerate, as I’m not completely beaten down yet, more that I’m running at max capacity trying to juggle all my freelance work, work on House #2, the day job, the husband job, and who knows what else.

I’m probably 1-2 weeks away from finishing House #2, which is exciting, true ’nuff, but I’m way too tired and jaded for backflips. And even that finish date is conditional on, yes, you guessed it, the plumbers finishing their work. 

Apologies to all the wonderful plumbers in the audience (or significant others of wonderful plumbers), as I’m sure you exist, somewhere, all two of you, but I swear, hands down, dealing with plumbers has been the absolute most frustrating thing I’ve done in recent memory. They finished all the rough plumbing weeks ago, it passed inspection, htings were flying, and they just had to come back to finish up a few things, just “an hour or two” of work, and bam, they were done.

And, of course, it’s been weeks now, and they aren’t done. To be fair (and I’m taking them at their word here), their father has been in and out of the hospital, and it’s just a two brother operation, so there’s a very valid reason for some of the delay. That said, I made the mistake of paying them 90% of the total amount due when they were last there, which is a fairly valuable lesson I’m learning on this project.

No matter how nice they are and how hard you’ve just watched them work, don’t let any contractor or subcontractor leave, no matter what. Use brute force and bribery if necessary. While rational, logical folks might think (and respond to) a statement like “We’ll be back tomorrow to knock out the last hour of work”, odds are great that you won’t see them again for weeks and weeks, if you ever see them again at all.

Especially if you give up any financial leverage you have and paying them what seems fair, as far as payinh 90-95% of the total amount due if they’ve completed 90-95% of the work. Because that last 5% will always cost more if you hire someone else, yet they have little incentive at all to come do the 5% left, as they’ll always make more money on other jobs. Don’t let them leave, but if they do, make sure they’ve got a financial incentive to come back.

So we’re waiting on the last of the plumbing to pour concrete in the new bathroom, which’ll let us finish the last of the Sheetrock in there, which is the last big thing other than painting and switching out outlets and 9 million other small little things.

On the brighter side, the wife of the furnace/electrician has been by twice more to look at the house, bringing her mom and sister to see it yesterday, and she’s sounding more and more serious. They’re looking for a house in town to move their family to, and her mom is going to move in with them. They’re looking for at least a 5/2, which is pretty damn hard to find, especially one that’s reasonably priced. She’d discussed converting the rest of the garage of House #2 into a small kid’s bedroom with her husband and they seem to think it’d work, thus the renewed interest in House #2.

They own the pre-fab house they’re currently living in outright, and their mom also owns the house she currently lives in, so other than the timing of selling/renting those houses, they’re really good prospects as far as getting financing to buy House #2. Don’t know about their credit but both have good jobs, income, all that jazz.

They didn’t seem too scared when I mentioned wanting to sell the house for around $145,000, which would net me about $25,000 in profits after taxes and commissions and all that. I’d take that in a heartbeat, as I’d really like to move this thing quickly. There’s also the possibility of bypassing agents and commissions entirely, as they’re pretty reasonable and savvy about real estate, so I could potentially give them a price break by going the FSBO route. So yeah, fingers crossed.

We did get an offer on House #1 from the lady interested in building a hair salon on the property, but, umm, it was less than stellar. I actually felt like Steph’s  seller from awhile back who just countered with a huge handwritten “No!”. Which takes a bit, as I’m so ready to be done with House #1 at this stage, so I’m not exactly the pickiest of sellers.

Their offer? (The house is listed at $89,500; you’ll just have to take my word on it that even that is a bit low based on the comps, and of 3/1s in that price range, it’s definitely a nicer one, and their are some complete junkers listed at $90,000-$92,000).

They offered $60,000, a full $30,000 below list price, but that wasn’t even the best part. They wanted a closing date of July 31st, an option fee of $5, and a 90 day option period.

So, umm, yeah. “No!” I get the idea of lowball offers and that doesn’t insult me all that much, but the other terms were the ones that set me into fits of giggling. They did request that we counter their offer, though, and I wanted so badly to use reverso Homer Simpson logic on them and counter at something like $120,000, with a closing date in 12 hours, and an option fee of $5,000 and a 30 minute option period. I pretended to be a mature adult, though, and countered at $87,000 with reasonable terms, and they disappeared and we never heard a peep back.

I’m going to give it until the end of February but I’m pretty resigned to renting it at this stage and hanging tight for a few years. I’ll recap the whole sordid deal with actual figures and numbers when it’s rented/sold, but needless to say it’s been a pretty frustrating, especially since it’s entirely my fault that I didn’t make some quick cash on this one many months ago, or immediately rented it out and produced some cash flow.

I should have known that the eternal thorn in my paw — plumbing — would rear its ugly head one last time before I got done with this project. Or, err, re-insert itself in my paw, I suppose, if you want to be picky about it. I was feeling pretty upbeat about the last remaining plumbing project, which was running the drains, vents, and hot/cold lines for the bathroom addition. Granted, it was the biggest job yet, but I’d hung out with the plumbers a good bit last Saturday, built up a certain amount of rapport, discussed my goal with these projects, my general life-state, and I felt like we were in a really good spot, as far as them giving me an estimate for the last bit that made them some cash yet wasn’t outrageous.

Oh naivete, though art my name…

They shot me the bid over on Monday night and I nearly stroked out. I was expecting it to be something around $2,000-$2,500, as it’s a fairly big job, it involves tapping into existing galvanized lines and tapping into the old cast-iron sewer line, digging out a trench for the drain that ties into the sewer, so it’s not exactly a stroll in the park for them.  But all the concrete removal has been done and a hole dug underneath the footer to get outside for the main drain line, so a lot of the heavy lifting has already been done. So I was pretty slack-jawed and apoplectic when I saw their bid was for $5,400.

It did, though, include a lot of stuff I planned on tackling myself, as far as installing the vanity and toilet, fixtures, etc. And we’d also discussed that I could likely save money by getting my general contractor and crew to do the trenching, and their bid included them handling all of that. I’d also not haggled at all on the previous stuff they’d tackled, and they knew that I’m pretty anxious to get this job done, so I honestly don’t really blame them for shooting a bit high in their estimate, as we’re all in this to make money.

Spent most of the week dickering back and forth, but we finally agreed that I’d handled all the monkey work (trenching, hooking up fixtures, and basically everything else non-technical) and they’d handle all the tricky stuff, for $2,000 in labor and $300-$400 in materials.  So I was pretty happy about that, and hopefully they can get out next week to knock that out.

Other than that, just trying to wrap up everything else. There’s some trim left to put up, as well as Sheetrock in the rooms that need to be exposed for the rough plumbing and electrical inspection, and still a good bit of painting. There’s also tile work left in the front living room, as well as the decorative stuff I’m going to do outside. And some cabinet hardware to instal, a few more light fixtures, and, oh, you know, 172,946,172 other small things.

As far as House #1, the title company finally caved and sent us the $500 check for the earnest money from the previous contract on the house. No real explanation from them, as apparently the buyer’s lender still hasn’t paid the appraiser, but I guess they finally decided it maybe wasn’t the best customer service in the world to remain stubborn about paying us the earnest money.

There’s also a potential offer lurking for House #1, as another woman is interested in it, but she wants to get approval from the city to build a salon on a portion of the lot and live in the house. The layout is pretty conducive to that, as it’s a long narrow lot with a big drive way beside the house, which basically divdes the lot in half, with the other side currently just unused grassy space. It’s also getting shown quite a bit of late, so hopefully a decent offer will materialize soon.

1) As part of the contract, the buyer deposited $500 in earnest money with the title company.

2) Deal falls through.

3) The buyer and the buyer’s agent sign the earnest money release form, as do my wife and myself.

4) The title company refuses to release the earnest money to us, however, as the buyer’s lender (who ultimately bailed out and didn’t approve the buyer’s loan) has still not paid for the appraisal they requested. The appraiser invoiced the title company for their services.

5) The title company’s rationale for not releasing the earnest money is that because the appraisal occured on the physical property, the appraiser could potentially file a lien on the property, seeking payment from either the title company or the property holder.

For all you smart folks in the audience, a question: is this standard operating procedure in a case like this? I haven’t encountered this before or heard anything similar, but I’m having a hard time understanding why releasing the earnest money has anything to do with the core issue here, which is the fact that the appraiser hasn’t been paid, and the title company was invoiced by the appraiser, with the expectation that the appraisal fee would be paid by the buyer’s lender at closing.

I get why the title company is trying to cover their own butts by refusing to pay us the earnest money, but I can’t help but think it’s pretty poor customer service, as it seems to me to be mixing apples and oranges, and they’re withholding it simply because it’s money they can withhold, slightly mitigating any financial exposure they might have if the appraiser ultimately comes after them for the money due.  

Is that standard operating procedure in such cases, as far as how the title company is acting? I’m honestly not sure if I’m getting screwed over or if it’s just the way things are in a situation like this. Many thanks for any insights.

It’s looking like the deal to sell House #1 is pretty much dead in the water. Despite being “pre-approved” and many reassurances that the buyer’s lender was just finishing up the final paperwork to close, they apparently can’t find an investor willing to take on her loan. They were trying another investor the last we heard, but no one is answering phone calls now, and the contract has officially expired. Our realtor told them that we’d be more than happy to sell it to them if they can get something done, but that we’re going to actively market the house for sale again. We also told them we’d be willing to do a lease/purchase agreement if the buyer needed more time to secure financing, but again, dead silence from their end for five or six days.

Pretty frustrating all the way around, and it’s taken a bit of wind out of my sails at a bad time, as far as pushing to wrap up work on House #2. While we’ll at least get the option money and earnest money ($600), I spent nearly $2,000 to completely update the plumbing, with the assumption that it’d come right back to me when we closed on the house and rolled those costs into the increased purchase price. And yeah, updated plumbing is a nice selling point, but not exactly the scenario I wanted to have happen, with all the money I’m pumping into House #2.

House #1 is at least attracting some interest, though, in the four or five days it’s been back on the market. It’s been shown three or four times and another showing is scheduled tomorrow, with a cash buyer looking to pick up some rentals in the area, so, you know, fingers crossed. If we don’t get another offer in a month I’m going to throw in the towel and actively market it for rent, as the carrying costs are pretty much eating away any remaining tiny profit.

House #2 is lumbering towards completion, with nothing too noteworthy going in. Trying to push hard to get everything but the flooring completed by the end of the week. Well, that and the new bathroom addition, as the plumbers won’t be back out until the 25th or so to plumb all of that. I’m hoping to get nearly everything else ready to roll, so that we can bang out the bathroom addition and finish up the flooring.

The potential buyers interested in House #2 dropped by again this weekend, and seemed pretty happy with all the progress and changes. Still trying to not pin much hope on them, but this is the 3rd time they’ve stopped by, so there’s definitely some level of interest there. They’re still not actively trying to sell their own house, though, which worries me a bit as far as the timing. But, who knows, and it’s better to have someone interested than no one interested, so I’m still looking at it as a good thing, even if it doesn’t pan out.

Enthusiasm for all of this is ebbing to a low point, which is sucky timing, as we’re hitting the end stages of House #2 where I’m over there pretty much every day, working on it at night after work, putting in 12 hour days on the weekends, etc. Can’t blame anyone but myself, as I’m the silly monkey who kept blazing ahead and took on House #2, but I’m definitely looking forward to wrapping things up on my little real estate investing adventure, and seeing where the cards fall.

I’ve basically been juggling life, multiple houses, day job, and an equivalent of a second day job for nearly a year now, and it’s getting pretty dang old. And I don’t really mind the juggling or staying busy part if there’s some tangible reward for it, but real estate hasn’t yet demonstrated that for me. So you’re officially on notice, real estate. Get your dang old act together.

I did manage to sort out most of the existing electrical as far as what circuits feed what, and should be set for running new circuits for the laundry room addition and the 4th bedroom, as well as getting everything wired in the bathroom/closet addition in the new master bedroom. I’d planned on hiring this out but it’s reasonably simple and the budget is getting ever-tighter, so I’m going to devote most of this weekend to electrical fun. I tend to shy away from such stuff but this job is pretty straightforward, as it’s largely just relocating existing circuits (that were either unused or made unnecessary due to changes I made), which I can hopefully handle.  HVAC guy needs to come back for a few finishing touches for the new furnace anyway and he’s a master electrician and said he’d check up on all the rough electrical work and make sure nothing is screwed up.

Still haven’t closed on House #1, which is obviously frustrating. Apparently the buyer owns her hair salon, so the lender is taking forever to approve her loan as she’s self-employed, yada yada yada. She also went with a smaller local lender (she does the hair of one of their mortage bankers)  and they originally pitched her loan to an investor who got cold feet about the general market as a whole, decided to pass on it, so another investor is looking at it now, etc. She apparently wants the house pretty badly (and has even packed up all her stuff and is ready to move) so we’re going to wait until the lender decides something shortly, then pursue a lease/purchase option or something similar if they turn her down. I’d like to get my money out of the house and move on but I’m also fine with some variety of lease/purchase or owner financing, so I wouldn’t be too crushed if their lender backs out.

The couple that had previously been interested in House #2 touched base again last Friday with our realtor, letting him know that they were still interested, what my timeline was for finishing the house up, which is pretty good news. I’m trying not to count on them, as stuff can always happen, but it’s not a bad card to have up the sleeve, as they didn’t bat an eye when I said before that I was looking to list it in the 145K-150K range, and they actually requested that I not spend a lot on landscaping and similar stuff, as they wanted to do all that themselves. I want to get the house put back together more before talking more seriously with them,as it’s still currently a scary shambles now, but it could definitely make my life much easier if they turn out to be serious buyers.

Still trying to close on House #1, which is getting a bit frustrating. The buyers’ lender is apparently dragging their feet a bit but everyone swears we’re on track to close before the end of the year. I’m not holding my breath, as that basically means next Monday, so we’ll see.

House #2 is basically on hold until I get back on Sunday, then it’s a mad push to try to get things wrapped up there by the 15th. That’s probably over-ambitious, though, but we’ll see. Our contractor was supposed to have gotten in a week’s work while we were in Tennessee but that didn’t happen, as he got stiffed by a client for a pretty big job and claimed he didn’t have the cash on hand to buy materials while I was away, and I had no way to get cash to him.

A little annoying but I’m on the fence anyway about being absent when big jobs get tackled, as we’ve already had a few hiccups here and there where he and his crew have finished stuff up before I wanted it done, such as the new sub-floor in the laundry room getting put down before the plumbers ran their drains and supply lines, etc. Some of that is probably unavoidable but there’s no substitute for actually being there, as far as making sure things are done correctly and in the order you want.

Hard to believe that it’s nearly 2008. Jebus.