After a stressful 3 weeks here... we filled my vacancy in the 6 homes.
Rent is $75 less but with winter and holidays coming we felt it was the thing to do. If we did not find someone soon it might be weeks with the snow and holidays.. And it is a good potentially long term renter.
Also we separated out the 3 car wide garage as of this month so are looking to rent that separately for $100-150 either to the current (new) tenant or to someone else. Garage has own access. This may make up some or all of the loss in rent.
Also switching landlords policies to Allstate for some good savings... not all quotes in but estimating $700/year across the 6 homes.
We will go around in the next 45 days and put all the 6 homes on new leases that end in Spring or other times besides the winter.
Feel good we got this filled!! YAY
I have a property manager and we are still getting used to each other. good to learn how we work together.
Archive for October, 2013
After a stressful 3 weeks here... we filled my vacancy in the 6 homes.
Networth update.. $132,611. I am 43 and trying to rebuild as fast as I can..
I buy the 2 3-units TOMMORROW!! scary/exciting stuff
If my plan works (got almost 5 years to go) I will have $5500 cash flow from the rentals in 5 years..
No word on my own house (the short refinance. I need to clarify that ASAP).
Paid off the warranty this month. Still paying extra on the car but want to get that paid down ASAP.
Fully funded 6 homes large expense fund and moved to interest bearing account
$4000 total in emergency fund (need $15,000)
Cut auto insurance (yesterday) by $480 a year
Re quoting 6 homes and then the 3 units to see if I can lower them.
If hte house works out (where I live) I will get $400 offset on the policy cost because of multi line
Here we go
I completed setting up my 6 homes emergency fund and my emergency fund into a Barclays account earning .9 interest.. so feel good.
Now looking to pay off the car FASSST .. was looking into selling excess stuff on Craigs List..and seeing if I can get some extra income. Car loan is now $20k at 3.15%. I currently make double payments $1008 a month which is crazy to have such a high bill in a month. If I can get another $1000 a month I can have it paid off in 10 months.
I did animal communication and behavior work on the side which I really enjoy. I did an event 2 weeks ago and made $440 and it was fun..
Goals thsi week:
1. scan house for things to sell (so far ellipical, tahoe seats, cage banks, other stuff.. do small things sell on Craigs list too (like under $10)???.. too cold for a garage sale
2. finish up draft for website for the above animal behavior/communication work and starting taking clients. I charge $120-150 an hour (but people can do less than an hour) so potentially I could reach $1000 a month on that. I did more than that before. It would be great to feel less burdened with monthly payments. HUGE.
I am also eating IN more and watching my money so feeling good.
and this month will be my first 'sweep' where I sweep available cash/coins into my account or savings? (unclear).. maybe into my account and then deposit into online savings or towards the car
I have a warranty (owed $1650, 0% interest) and the car $20k, 3.x%).. Which should I knock out first? I think Dave Ramsey would say the warranty just to get it out of the way then apply that money to the car?
I so like this site!!
K I am working on my emergency funds. Also thought I should start a Christmas fund and other funds (working out what I need to save for.. vacation sounds like a good fund to have) but I do not want to put them in the bank at 0% (especially the emergency funds which are larger and more long term). Any thoughts on where to park them for 'some interest' but still fairly accessible?
and love the autowithdrawal to savings ideas that some of you have.
Lots of questions on the 6 homes deal.
Here are the details.
I bought 6 homes as a 'package' from one guy 4/26/2013. . He was a senior real estate investor who had 'made his money' and just wanted out and was moving to Las Vegas. I used an 'old time' realtor who knew the town and headed up the Landlord Association. He was very well known in town and 'knew everyone'. All homes were rented. 4 had renters who had lived there 7 years or more. 2 homes had renters who were a year old (rental status). Seller owned these homes for 12 years. One home was fully rehabbed (fire years ago). Homes were maintained reasonably well. All homes were Section 8 and are in working class areas. Homes are approximately 1000-1400 square feet. Most have basements.
Purchase price $275k
I put down $30k
SELLER CARRIED the loan (agreement for deed) .. $245k at 3.15% over 5 years (the loan will be fully paid off in 5 years)
I am not able to pull out any cash flow on these in the first 5 years in order to meet the short amoritization. In fact (per chart below).. I may have to put in up to $1000 a month. *I have the income to do this** Currently I have to put in less than $1000/month
Safeguards built in the deal
1. If I default I have 60 days to cure. If I do not/can not cure,. seller can only take the homes back.. no recourse against me personally
2. I worked in the deal that I can pull out 'fully paid off deeds' every 14 months . So in another 8 months I will get a deed to one of the homes and can sell it or do with it as I please at will and it will NOT be encumbered by any debt. If I default. the seller can NOT take these homes (that were pulled out) back. I am 6 months into this deal already.
3. Section 8 gives me some more confidence with rent (thought it comes with pitfalls too)
4. I retained a local management company who runs all 6 homes for me
5. I have placed $6,000 in escrow for large repairs not to be used (this is based on reviewing prospective large costs, roof, water heater etc and the current shape of the homes)
My plans with the homes
1. Remove 3 homes from Section 8 as they come up and folks move out. Section 8 has a rent freeze and homes can attract non S8 renters. We are removing one now -in process
2. Separate out the 3.5 car wide garage and rent it separately (in progress). I get no rent for this garage currently and it not used.
3. Baseline costs and get maintenance repairs slimmed down as much as I can
4. Hang on. This will be tight and scary the first few years.
Continuing to get motivated by this forum.
I am considering opening a ROth IRA.. Any suggestions as to where to open it (online preferred,, low fees.. good options) and investment options. I believe these can go 'self directed' as well. I use to have Sharebuilder account.
Limit is $5500 for the year but I can contribute up til 4/15/2014.. so I may wait until I hear back from my accountant friend or year end so I can determine if I have any income phase out.
So fun to read other peoples successes and results.
Anyone here invest in tax deeds??
Hi all. I feel so much better reading these blogs and hearing from REAL people with real ideas, answer and situations. Need to blog/read regularly.
Ok here. is mine.
Attorney called.. 3 units close 11/1. Scary. These I am taking on a 7 year term and will try to pay off in 5 (*will need a $69k 10/2018 payment to do so)... otherwise will keep on the 7 year term,
Whole plan calls to sacrifice now.. have income later.. (goal is to create $8k monthly rental income by the end of 2018) so these will NOT add any income now. My plan is scary to me but I have worked with people and made it as safe as I can.. These are the last homes I will take on an extremely short amortization. Anything else will produce cash flow now.. but will let these settle for a while and get under control before taking anything else on. I am retaining the existing property manager so any hiccups should be 'less'.
Did my networth and here it is... I used to have $125k in a 401k so feeling a little bad but feels GREAT to start and do it right/safer this time. I want to build up my cash so my networth is more cash or accounts vs real estate and will gradually trend towards that.
Value in 6 homes $52,802.51
Value in 3 units $5,000.00
Emergency Savings $4,000.00 (added $2k more!)
401k-3% $135.31 (started as of 10/15)
Net worth $145,097.97
Feeling a little down this am. I get this way when I am overwhelmed or 'stuck'. I found the Dave Ramsey book (good easy reading and sound advice) made me feel I am not doing enough. On top of that one of my 6 homes has a vacancy that we are trying to fill for the first but have not 'nailed someone down yet'. Feeling stressed. I do have 3 months 'vacancy built in' across the 6 homes but feels bad to 'use it'. In either case.. also $1200 costs across the 6 homes last month and the fix up on this one (we sortof threw this lady out.. good move though.. just wish it had not happened this time of year).. .. anyway the fix up on this house is probably near $1000 too.. but I am keeping her whole security. Just upsetting.. lots of costs this month.
Anyway.. Dave Ramsey (and folks here) have given me lots of motivation to Track my Money which I am still not doing and to get 'gazelle intense'. I have basically 2 debts .. the car $20k and a warranty on this other car.. proobably less than a $1000. Also building the emergency fund to $16,000 (only have $2k).. and feeling stresed that I still can not log on to that Obamacare website (has anyone been able too.. insane!)
Anyway .. thanks for listening to my rant here a bit. I need to focus on the positive and will see if I can write down some positive things each day or when I am on a 'high'.. so I remember them for later.,
I am wondering if I can pay off the 6 homes, 3 units and a HOME (my house 'short refinance' has not gone thorugh yet though. no definitive word).. in 5 years.. maybe extend the house to 10.. but want to build up more cash. Feel my income is tapped out. I do well but when I worked before (5 years ago). I made $20k more. I work in network project management. Contracts are less now a days and this job I can work at home..
I think I need to destress and relax(have this not for profit that I need to close and it has been weighing up me for literally years (95% of my stress comes from that) and work has been crazy this past month)
Have a great day everyone.
Not sure if these are snowflakes but trying to cut costs here. Feel pretty accomplished.
Discontinue unusued Norton auto renewal. got $21 refund
Discontinued dating subscription.. $59.95 refund
Cancelling auto bill for Planet Fitness, $19.95 month savings- no refund
Cancelled auto bill for Bally's Fitness.. $11/month-
Ballys refunded too. $11.73.. dialing for dollars works!
and $263 refund on credit card processing (run my own small business too.. )and reduced monthly fees on processing by $10
Hi all.I have been motivated (and shamed) by reading all the other blogs here.. lots of people hard at work!. I am going to start tracking money and forming a budget. I have a budget (sortof) except I do not track specifically to it.. but if the house refinance (short refinance goes through) I really need to get tighter and everyone else is escalating their goals.I may as well too.I will start to track as of today and then maybe 'enter' some of the challenges other have posted.. snowflakes (need to get a handle on what those are), 365 day thing and then No Spend Days and Low Spend Days.
This is the current budget including the 2 flat and is a 'rough budget'. I do not include the 6 homes here but will share that as well as how the deal came together for folks who want to know.
I wanted to clarify that before the downfall. I had a (or so I thought) $500k equity across my homes (all fake I know) and $400k cash or cash equivalent mostly in 401k or stocks. All of that was essentially lost and I was driving this 2003 Saab 9-5 (which I loved!) but was breaking all the time.. so the 'change' started for me in 2011 when I settled with all my minor debts ($15k across cards, medical, attorney) and then filed Chapter 7 to protect myself from the homes and constant late pay reporting on my credit while I attempted loan modifications. I then returned to work in 8/2012 and started gathering up what I have now. In June of this year I began my 5 year plan. I had not bought much or done much for ME in from 2009-2011 so the first thing I did when I got my job was to replace the 'on its last legs' Saab and my creaking Ford Expedition. I love cars and love to drive.
I used to go to Dunkin Donuts every day and be afraid my card would not go through. I still feel this fear come up today.
Quick note on current status towards goals
Goals are numbered to the left. My whole plan is based on the idea of 'sow seed/sacrifice' now.. 'reap later'.
1. I have acquired 6 homes in Joliet a few months ago..they are on a 5 year amoritization. Pay off date 5/18. They would net $3500 if paid off now so I will assume they will net that amount then.
I close on a 2 3 units also in Joliet that are on a 7 year amoritization and with $60k will be paid off in full in 5 years. I plan to come up with the $60k 5 years from now to do this. They would net $2300 now if paid off and will assume they will net the same then.
Both sets are fully managed and have an associated budget. I can share that if folks are interested. Both will require between $300-700 cash outlay each month to meet the amortization. In other words. they are negative cash flow and may be through the entire 5 years though we are already raising rents on the 'joliet 6'
**these are the last buildings I will fully amortize over 5 years, though I plan to buy more because I am short of my $8000 target in 5 years. Note my plan is calling for no cash flow now.. all cash flow in 5 years
2. I have $83,000 cash. $45k will go towards the 3 units in 3-4 weeks
3. I have health insurance. Federal exchange
4. I am trying to work out a 'short refinance' on my own home right now w the bank. A 'short refinance' is a special sort of loan like a short sale except YOu keep the house. It wipes out all overages and allows you to buy the house at market rates, market value. House is prob worth $430k. We are negotiating at $350k right now. (fingers and toes crossed and prayers).. Note: this extra expense was not in the 5 year plan right now.. so still working out how to do this so as to not impact the rest. I need to 'plant seeds' now and not take on excessive monthly payments. I would buy the house however as I will have built in equity, it is really nice and it is 'known'. New roof, furnace etc and I know the house.
5. On the 2 sets of homes/buildings alone at current market value (price I paid) I will have $500k equity in 5 years
6. I have 2k in this fund and need $16k. I work on contract and was just extended til June 2014 so will work on this in the next 6 months. I can not take on the home (my own) without this fully funded by then
7. I have properly escrowed the 'Joliet6' as I call them w $6k cash and a monthly $500 allotment. Need to escrow $6k for 3 units by Dec 1. Monthly repair allotment already built in to 'budget'
8. 2008 Tahoe paid off. Genesis on track to pay off 8/2015 at doublepayments but I may delay that.. unclear??
This is the current status. I will update each month. Note if I extend out the 5 year plan..I am short on income (which will translate to that $300k savings) so any more real estate will be bought with the idea of cash flow now . I am also seeking ways to gain more income. I make $110k now at work and have $2k/month coming in from a rental (which I am going to let go.. and will likely lose between 6 months-2 years from now.. to the bank).. currently with an attorney who is attempting to delay the foreclosure suit as long as possible.
HI All. This is my first entry. I have been lurking for a while here but thought writing may help me. I have a serious 5 year goal and am striving as hard as I can towards it.
I lost almost everything about 5 years ago and am basically rebuilding from scratch (scary!!!). I went into a 'slight' depression during that. (haha). Also got divorced, lost 2 homes to foreclosure, lost restaurant, closed other business...I sortof was on the mountain peak and tumbled all.. the... way .. down (very loooong fall) .. on and on. We will just call that period 'the dark years'. I am now up and out and reaching towards my goals.
I work in IT Project Management and have been back to work for a little over a year. I filed for bankruptcy in 2010 to stop the continual bad reporting from the homes and start rebuilding my credit. I do not regret it. All that was discharged were the homes. 2 rental homes were lost. 1 is still hanging in there and I may 'short refinance' my own home. Will know this in the next week or two. My credit score is now 713.
I am concentrating on real estate as my avenue to freedom.. looking at 'monthly income' vs savings. I want to have enough monthly income in 5 years (see my goals) to feel 'safe' and like I have choices. I am in good shape and health so do not feel I will quit working but will certainly enjoy any job I do more knowing I do not 'have to' work.
More tomorrow. First entry.