House #39 is flying along.  The painter started Tuesday this week and is almost done the inside and about half done the outside.  We should be done at the end of the first week of August and looking forward to getting this house on the market.

I have added some preliminary before and after pictures.  The main things we have left to do are:

Kitchen: we have already bought the cabinets and appliances but they need to be assembled and installed.

Flooring: we were able to save a lot of the flooring on the main floor, but the entire upstairs needs flooring.

Bathrooms: the bathrooms need the most work.  Pretty much everything needs to be completed.

Finish Work: electrical outlets need to be installed, molding needs to be added and the fixtures.

Here are some before and after pictures of our progress to date.

Before

After

Before

After

After

After

Before

After

Before

After

After

Hey Jon Long, of Liberty Acquisitions stop sending me automated offers.

I have gotten an offer every 24 hrs on all of my houses in a certain city.  Clearly they are automated and come in at the same time.  The offer is about 40% of the list price.

I am writing you today in response to <My Property Address>.

Liberty Acquisitions. is an investment company that purchases properties for cashflow purposes. After analyzing the property from a cashflow perspective, here are the numbers that we came up with. These numbers are estimates based on statistics of the local market, your listing area and the offer price below. We welcome a conversation to discuss this or any other property that may be purchased for an investment value.

Possible Annual Rent:	$4,257 (that is 354.75 a month lol)
Less Ann. Mortgage Payment:	$3,105
Less Taxes:	$776
Less Insurance:	$388
Less Management:	$388
Less Maintenance:	$388
Total Annual Profit/Loss:	($776)
Total Monthly Profit/Loss:	($65) (why would you want to lose money?)

Below you will find an ALL CASH Letter of Intent with no financing contingencies. We are prepared to offer you a guaranteed closing date. Initial Offers are purely based on purchasing formulas. Your property has been selected as one that may fit our parameters. Once this LOI has been reviewed by the Seller, please fax the executed contract along with any additional information to (323) 255-9915

You may also email any further questions to jonlong@libertyacquisitionsinc.com or reach them by telephone

at (562) 304-0801

Regards,

Jon Long – Buyer Associate

Liberty Acquisitions, Inc.

What a waste of time, the only people that respond to offers at 40% of list price are the properties that no one wants.    The property in question would rent for $1,100/mo (his software estimates $350).  So if I help him fix his formula I wonder if he would pay 3x as much for the property?

I hope this guy is not sending these offers in REOs too.  He would instantly loose all credibility with the entire office.

Good luck Jon Long.

I have not written about House #46 yet, but it is a bit unique.  It is one of the few houses we have purchased with genuine pretty bad “location problems.”  Normally, we probably would not have pursued this house at all but an agent we work with quite a bit got the listing from the bank at a pretty good price.

The house is one lot over from a really busy street, with a bar right next door. Directly across the street from it is a pretty big commercial complex.  These are all big no-no’s in the world of real estate investing.

Now that the market is slowing down a bit I am curious as to what buyers will be willing to pay for this type of properties.  There still is very little competition in this price range.  If they can afford 20% more they can by a much bigger house with no location problems (probably not remodeled as nice though).  An investor might scoop it up as a rental, that would be the ideal scenerio in my books.

Here is the aerial view of the house:

The house is under 1,000 sq ft, built in 1939 and 2 bedroom 1 bathroom with a garage conversion.  We ended up adding a 2nd bathroom in the garage conversion so now it is a 3 bedroom 2 bathroom house.  As you can imagine all the bedrooms are really small.

Before and After Pictures

Front – Before

Front – After

Family Room – Before

Family Room – After

Main Bathroom – Before

Main Bathroom – After

Dinning Room – Before

Dinning Room – After

Kitchen – Before

Kitchen – After

Master – Before

Master – After

Master Bathroom – Before

We added this bathroom completely and apparently I didn’t take a picture of the laundry room that used to be here.

Master Bathroom – After

Back of House – Before

Back of House – After

It has been a pretty boring week.  The market is a bit slow, still getting a couple calls on the stuff we have for sale and actually got one or two decent offers so that looks promising.  We are lowering what we’re willing to pay again, pricing us completely out of a lot of stuff, so we haven’t been looking real aggressive.  We put another one under contract, just an okay deal, but will make a good rental (it’s in our main farm where we have many rentals).

Here are some pictures of the latest deal we just closed on.  This is definitely the worst house in a great neighborhood.  It is actually one of the better houses we have owned.  I would love to keep it, but the prices are a bit too high, plus I think I have a buyer who would buy this lined up.

The house is 3 bedrooms, 2 bathrooms, and about 1,600 square feet.  On a good sized lot, and it needs everything. The roof is bad damaged, the ceiling had some water leak through to it, so some of it needs replacing.

Overall, we paid a little bit more then we normally do, but it should sell quickly with a decent profit. The main logic behind paying a little bit extra is, this is a new REO office for us that is pretty big.  We wanted to show them we could perform and hopefully get on their short list.  We already put a second house under contract and now one of the agents is calling us about his pre-listings!  Which is always nice.

Here are the pictures:

Family Room

The hole in ceiling

Kitchen

Have a good weekend everyone!

If you’re a regular user, you probably know we self manage all of properties.  When getting started I wanted the ability to accept ACH payments so our tenants could pay electronically.  After much research I decided to go with Buildium.

First of all the Landlord edition is cheap, it’s only $9.99/mo for the first 10 units and $29.99/mo for 50.

There are not a lot of good reviews online from real landlords, so I figured I might as well write one.

Pros:

• Buildium allows you to accept ACH payments..
• It provides a login interface for your tenants to make maintenance requests and make payments.
• It does a fine job of tracking went the rent was received, when leases are going to expire, and tenant contact information.
• They seem to provide quite a few tutorials on how to use the system.

Cons

• Clearly, this software was not built for the single family residence landlord.  It seems to be focused on apartments, full-time property managers and Home Owner Associations.
• It has a bit of feature overload.  Full bank account tracking, etc.
• The reports do not seem to be very flexible: for example I would like to be able to print a tenant list, which it allows me to do, but I would like whatever I input in the notes field on that list somehow.
• Not everything works as it should in my mind.  For example, the name of my property management company has a logo.  It shows all stretched on the admin interface, but it displays fine on the tenant interface?  Weird…
• They also force you to click extra buttons to get reports on all your properties, I think this is an effort to make it easier for the multi-unit property managers.

Conclusion & Summary

It is kind of a love-hate relationship and at times I ever debate if I should completely turn it off.  The system is not really made for small property managers, so if you are under 10 units it’d probably not worth the extra work involved to set stuff up.

As you can tell this is a little bit of a mixed message review.  Hopefully, they will make some minor improvements along the way that will make things quicker and me much happier.

I recently listed one of the houses we purchased on the MLS with no repairs, asking for a cash-only investor. Trying to wholesale real quick via the MLS.  Sure enough, I got a ton of phone calls the first couple days and some interesting things happened.

The lock-box combo is not in the agent remarks, they have to call or email to get it.  In the first 3 days I got 4 or 5 offers, only one of them had looked at the property.

• One was for exactly 50% of the purchase price, and was very template offer looking… hmm… I wonder how well this strategy works.
• One was 20% down, the Seller carrying the rest at 4% for 30 yrs.
• Another one was for $30,000 under list price, again they didn’t even look at it.

I also got a bunch of interesting emails.

Investors, if you are presenting this stuff to the bank you will never get any of these accepted.

Be sure to read all the notes and write very clean offers.  Include your proof of funds, articles of incorporation, copy of the earnest money deposit check and anything else the listing agent asks for.  You need to make a good impression on them to get the offer presented!

The times keep getting even more interesting for all the Real Estate Investors out there.  It seems like pending sales have crashed and retail buyers interest is slowing down.  Most investors haven’t got the memo and are still putting out tons of offers.

At this time we don’t have a ton of retail inventory and we are still getting calls and showings on what we do have.  I am thinking inventory is going to start going up, prices will stop increasing and probably slightly drop.  There will definitely be even more of a “two tier” market.  Entry level stuff, or stuff that cash flows probably won’t get hurt as bad as the middle class, to high end houses (300k+ for us in the Inland Empire).

Does this change our strategy?  Not really.  We are still happy to buy, probably going to lower our purchase prices a bit.

I think when times will really get interesting is December/January when the market is already pretty slow.  But who knows, by then the government could add some more incentives back-in.

Buyer’s agent seemed burned out right now, they sent in hundreds of offers for some clients and now they’re disappointed they couldn’t pull in the tax credit.

House #39 is progressing very well. I hope you aren’t sick of me talking about it yet, but it is our biggest rehab to date.  We are passing inspections often, and should only have two left.  Drywall nailing inspection and the final inspection.  On Thursday, we passed the insulation inspections and the workers started dry walling the house Thursday and Friday.  Of course, due to the holiday they took Saturday to Monday off, so they should be back at if full speed this morning.

I took two videos on Thursday that I uploaded to give you an idea of the construction going on.

This project should be complete by the end of July or maybe at the latest the first week of the August.  We have done much of the heavy lifting, permits, electrical, plumbing, etc.

I hope everyone had a great 4th of July.

Upstairs #1

Upstairs #2

Here is a house we tried to buy pretty hard. It is in awful condition. It was built in the late 1950′s.  It is 800 sq ft and a 2 bedroom, 1 bathroom on a good sized lot.  The house needs about 25k in repairs to make it rent ready.

At the end of the day we missed out on this one, it was listed at 45k and sold for around ~70k.

We own House #28 about a block from this one and we paid about the same price, but our house is much better.  Built in 1980, 4 bedroom, 2 bathroom, 300 sq ft bigger, and only needed about 8k repairs.  A lot of the price difference probably has to do with the market going up, especially the low-end.

So if this type of property doesn’t get excited you might not like real estate investing!  At least buying the major fixers we do.

36th St – Outside

36th St – Inside

June was a great month, we put a ton of properties under contract.  Sold a house and bought a bunch of houses.

I am a bit uncertain about the market right now, it seems like the retail buyer action has cooled a bit.  Investors are even more aggressive, so the margins have completely disappeared.

1. We bought five houses.  A sixth one was supposed to close yesterday, but we had some issues with the City, so we are still trying to sort that out.

2. We sold one retail deal.  It worked out pretty good.  It was pre-90 day FHA transaction.

3. We rented 3 properties.

4. Cash flow has been pretty tight this month as we closed a ton of properties and I need to work on getting them set up with long-term financing.

Get to 20 rentals properties (not units)

We are at 21 rentals now, possibly 22 (depending if we find a wholesale buyer or not).  So far I really like being a property manager.  It’s a lot of work, but the truth is no one cares for your property as much as you do!

Make 36 Purchases (Rentals, Retail or Wholesale)

We are officially half done 2010.  I am three properties ahead of schedule at 21 purchases.  July should have at least 4 closings in it too, so that would put me a bit farther ahead too. We want to ramp up to 5-6 purchases a month for the rest of the year if we can, but we will be forced to wholesale at least two of those.

Make at least 10 Blog Posts per Month

I knew if I put it in writing it would happen!  Written goals are the key to success people.  The blog traffic has really picked up again now that I am being more active.

Everything else is pretty boring, all the rehabs are going pretty smooth.  The massive fire damaged House #39 is coming along great, we’re passing inspections left and right and actually will be dry-walling next week.