Where have all the good deals gone?

I've just about finished up the work on the Discount House. The kitchen is in and operational as of today. This is the first time I've put in stainless steel appliances. I was a little concerned about how it would tie in with the other colors of the countertop, flooring, and walls. But it looks great and I'm very pleased with the overall look. In the bathroom the tub has been refinished, so left to do is some caulking around the tile and installing the toilet. The rest of the to do list consists of some minor electrical work, one bifold door to install, caulking, and touch up paint. Then it's time to clear out all my stuff, clean it up and get this baby ready to show.

Right now I'm thinking I'll get this up on the MLS sometime next week. Bear in mind that I've just now held the property for 60 days, so it's got to season for another month before being available to an FHA buyer. Ideally that would give me a good three weeks to show the property, hopefully to many interested buyers that will find my house so appealing that I'll have my pick of several solid competing offers. I'd be a lot more confident of that happening if it wasn't November. But at least the tax credit was extended and expanded.

Both the budget and the schedule look very good at this point for this project. I could have probably worked some longer hours and finished up a week sooner, but with the FHA 90 day rule I'm very comfortable with this taking just over 60 days to complete. There's still some a few numbers that will come in, but budget-wise it's looking like I'll be about $1k under budget on materials and labor. That will make this my best deal to date, assuming I can sell it quickly for what I expect to.

Purchase price $42k
Rehab expenses $10k
Soft expenses $7k
==============
Total investment $59k

Expected sale price $89k
Potential profit $30k


Serious work begins on the Crazy Deed house next week. The windows are in and also the materials for the deck, so that work will get started. And I'll be working on some drywall repair and start getting the interior prepped for paint. I anticipate this being a relatively quick project compared to the others I've been doing. I could probably have this one done in about 4-5 weeks, although there's not a big rush since we don't plan on listing it until after the holidays.

Now that could all change if I could find another property. It seems like every offer that I put in I hear back that there are multiple offers and they want highest and best. Let me tell you right now, I am never going to be highest and best. And if I was, it would be because I offered too much. They might as well be asking for "inexperienced and stupid" instead of "highest and best" because that's what these other investors are that bid these properties up over list price. Or maybe their risk tolerance is just much higher than mine. Possibly they are just satisfied with under $10k of profit for a full rehab. Times are tough, so maybe that's it. I don't know. I do know that the days of having a dozen reo's, that meet my criteria, just sitting around to choose from seem to be over. I've been hearing for eight months now that the "flood is coming" and I will struggle not to laugh in the face of anyone else that tells me that.

Where have all the good deals gone?
What is the "low hanging fruit" now, if it's not reo's?

Who moved my cheese?

Busy Busy Busy

For all that time over the summer where I sat piddling around with nothing, it has caught up to me. Rehab on the Discount House is entering the final stages. Tile work is complete and I've got carpet going in on Friday. Then I've got the kitchen cabinets and countertop being delivered on Monday and my guys installing that later next week. So once I get the kitchen put together I'll be down to electrical, doors, and trim work. Then cleaning and the punch list of minor things that always come up. I plan to be completely done and on the market by mid November. That's still 2 or 3 weeks before my FHA 90 days is up, but I want to get it out there with the potential for a buyer to be into a new home by Christmas.

I've decided to list the house for $89,900 and with comps in the 90's in the area there shouldn't be a problem with it appraising. That's one of my concerns because I only paid $42k for this property, so in order for it to sell for more than $84k I will need to get two appraisals. The budget hasn't taken any hits so far and actually I expect to finish this project under budget. With that in mind I'm planning to hire out a few things that I really hate doing myself. I hate installing doors, especially exterior doors. So I've got a guy that's done some things for me before and I'm going to have him do the doors and a few other things. This is actually a big step for me since I'm kind of a control freak about doing everything myself so I know exactly how it's done. But I know if I want to accomplish my goal of always having three properties somewhere in the process I definitely need to relinquish some of this control and start managing the projects more and working on them myself less.

We also closed on the Crazy Deed House (this is the house with deed trouble that dragged out all summer) a couple weeks ago. The demo work is done and we went ahead and did the landscaping since the weather was turning cold and Lowe's had all their bushes 75% off. Then we found a big mess when we had the water turned on. Lots of busted pipes, valves popping off, and just a big mess. Spent a couple days finding all the leaks and ended up taking out a good bit of drywall. We're down to one small leak and a bad valve that needs replaced and we should be good to go again. Friday will be a big day at this house. I've got deck materials being delivered from Home Depot and appliances, drywall, and hot water tank from Lowes. Then I've got a garage door opener being installed and a window guy coming out to replace the glass in one decorative window above the door. All the other windows are being replaced and those have been ordered and should arrive next week. We are replacing one of the windows on the back of the house with a sliding patio door which will open up to the new deck. This will be a huge selling feature because there's a very nice park right behind this house. We've seen deer out grazing in the park several times, even close enough so they were almost in the back yard at one point.

Aside from these two properties I am still looking for another to get into contract. I've had a few offers rejected but no takers yet. I'm still finding acceptable properties few and far between. I'm still waiting on the flood of reo's to hit.

Have a happy and safe Halloween!

What have I been up to

At least every day this week I had good intentions of posting an update here. But between long days of rehabbing the house, my daughter's 4H meetings, my son's cub scout functions, and trying to just do a better job of making time for my family it hasn't happened. And it's not going to get any better this weekend. My daughter is showing her white pigeons at the county fair for her 4H project and my son's cub scout troop is selling popcorn in front of Lowes on Saturday. So with my wife working much of the weekend, I won't be spending time rehabbing.

The work at the house is going very well. I tracked down my mystery smell. Turns out one of the downspout drain pipes was cracked and had holes in it about 6 inches below ground. Not a big deal. I spent about $6 to buy a couple pieces of pvc and with a little excavating, made the repair. Now all the water drains off the house to the curb where it's supposed to go and even after a good rain my house smells warm and dry.

As far as progress, the walls and ceiling are painted. Most of the doors and existing trim is painted. I've been trying to get some of the exterior work done since the weather seems to be turning cold earlier than usual. So I added on the railing to the deck steps and built a stone retaining wall in the front landscaping. Still to be done is planting some bushes, straightening the mailbox, painting the trim out front, and doing something with the driveway. Unfortunately the weather forecast is for heavy rain the next few days so I'll have to work inside until the weather clears.

Plans for the next week are to get the kitchen floor laid, new faucet, toilet, and flooring in the half bath, and then prep for tile in the full bath. I'm going to tile the floor and the shower area, but I haven't picked out the tile yet. Also next week I'll have to get the kitchen cabinets and countertop ordered and have my carpet guy come out and measure.

So all in all, I'm making good progress and happy with the timeline and the budget so far. As far as the other property where the deed is in no man's land, we did get a bit of an update last week but it didn't really tell us anything. For once it will be nice if the timing works to my advantage and we don't close on it until early November when I'll be finishing up the work on the current project.

I got another offer accepted earlier this week on a property that I've been pursuing half heartedly for some time. It's a nice property and they finally came down to my price. I was playing hardball with them and didn't really expect them to meet my price, which was pretty low. But they did. Instantly I was suspicious. Normally I check the sheriff's site for sexual predators much sooner but I didn't on this one...until yesterday. Thankfully I did because I found out that a tier III convicted felon for rape of a female minor resides at the property right next door. Needless to say I backed out of the deal and didn't buy the property. I have a nine year old daughter. The whole thing left me feeling bad. I will certainly perform this check much earlier in the process going forward.

So I'm still in the market for another property. I'm hearing again that the flood(of reo's) is coming soon. But I've been hearing that for months and I don't really believe it anymore. However I do see the market cooling off now that the summer season has drawn to a close. And that's good for me and my low ball offers.

That's all for now. Have a great weekend!

Update on all fronts

I don't have anything exciting to share, but I thought it was time for a general update and report on the state of affairs. Rehab on the "Discount house" is coming along, albeit slowly. I had a bit of car trouble earlier this week that kept me from getting much done for a couple days, but I should start putting paint on the walls starting tomorrow. I've spent more time cleaning in this place than any other property that I can remember. It's definitely got a funky smell. I think I may have it tracked down to a bad seal around the basement toilet that may be letting some sewer gas seep back up into the house. That toilet is getting replaced anyway, so hopefully that will resolve the main funky smell issue. But just in case I've been cleaning a lot and I'll mop down the entire basement floor with Pinesol.

Still no big surprises here and things appear to be mostly on schedule and possibly under budget so far. I'm still undecided on what to do with the driveway. I think I may just fill in the low spots and then seal the whole thing. It won't look great, but being on the market in winter it may be snow covered much of the time. And then if I want to cap it in the spring I can still do that.

We signed another extension on the other property that we have in contract. It takes us up through 10/15 and at this point the longer it gets extended out the better as far as I'm concerned. It would be great if we could close on this one in late October. That would put us in a good spot to put it on the market in early spring. Depending on how we end up pricing it, that house will attract a lot of interest and should get competing offers.

I've got one offer out on a property that I visited about a month ago. I actually offered on it right after I looked at it. The bank countered and I countered back, but we were about $8k apart. Then about two weeks ago I get an email from my agent that says they want to know my highest and best and what will it take to get the house sold. I didn't budge from my last offer and I didn't hear anything back. I noticed a price reduction today so I asked my agent to submit my offer to them again. If they accept my offer I will try to wholetail this property. It needs some exterior repairs(new gutters), windows, carpet, and paint. Depending on when I would take possession I may do this one completely hands off. That is, hire everything out and be willing to settle for a lesser profit. Here's the potential numbers.

My offer price: $33,800
Repairs: $7,500
Comps: $75k - $88k
Wholetail price: $59,900

Not a huge payday by any means, but if I can get this done without getting my hands dirty it would be well worth it. I'll post much more on this deal if I get it.

Photos!

Just a short post to share progress and a few photos. Demo is done and I'm working on drywall and smoothing out the walls now. I hope to be painting by the end of this week, but mudding and sanding the walls always seems to take a day or two longer than it should so I'll be happy if I'm putting paint on the walls by Monday.

Only one surprise so far that's going to strain the budget. It appears that the price of asphalt has gone up considerably in the last year and so far the best quote I've gotten to recap the driveway is about $800 higher than I budgeted. I'm going to keep calling around to see if I can find a better price. If it comes down to it I may just hold off on it completely and offer a credit to the buyer. After all this house will be on the market in winter.

Everything else seems to be going well, so here's a few photos of the demo.

Drywall repairs in progress

Shower before removing the green board.

Down to the studs and ready for concrete board

Main living area with plenty of pet stains on the subfloor.

Kitchen