I am under a time crunch! I have to finish up ten homework problems for one of my MBA classes that are due Saturday night, I have requests at work piling up that MUST be satisfied tomorrow afternoon no later than 3-pm, I have to show Faust Ave. to a very interested and serious buyer, I need to arrange to have someone open Faust on Saturday to receive the dryer (that's another story!) and, oh, did I mention I'm leaving Sunday morning for a 10-day vacation to Los Angeles? I'm feeling the crunch now!
Things have been moving along nicely. Faust is now finished according to the original agreement. There are a couple of final items that I have requested as part of a change order that will be completed next week while I'm away on vacation. When I return, the lock-box and security codes will be changed and I will be officially complete with all rehab (almost). I'm still debating on what to do about the windows. With this current potential buyer who is courting me, I just may give a concession for the windows and sell as-is.
I'll post my progress (and pictures or video) after I return from vacation.
Have a great Labor Day weekend everyone!
Thursday, August 21, 2008
Friday, August 15, 2008
If You Could Only See Me Now!
Awesome! That's all I can say about this project. Other than a few minor details to be finished in the next couple of days, Faust Ave. is now ready to go! The finished product is beautiful. I need to take some pictures and do a walk-thru video soon and get them online.
The appliances will be delivered tomorrow and installed and then I can start proudly showing this property to prospective buyers and get this property "SOLD" before Fall settles in on us.
The appliances will be delivered tomorrow and installed and then I can start proudly showing this property to prospective buyers and get this property "SOLD" before Fall settles in on us.
Sunday, August 3, 2008
Where Does The Time Go?
It's been too long since my last blog update - what happens to the time? What have I been doing? Well, here's the short list:
- Almost finished with rehab at my investment property on Faust Ave in Detroit.
- Started using social networking tool, Twitter - Do you twit?
- I have secured a closing date for investment property in Mt. Clemens.
So what's happening on Faust? At my last post I had just discovered that I had purchased a property in a historic district and that I couldn't put in vinyl replacement windows. So I am investigating my options and, so far, I don't like any of them! I have a quote to refinish/repair the existing windows -- $25,000!! A quote to install Pella wood frame windows -- $20,000! Each option destroys any profit margin I would have expected to have in this property.
I'm meeting with someone on Monday to give me another bid on replacement of "like-kind" windows at a more reasonable price. I would expect to pay up to $10K, but any more than that will really start to hurt. We'll see how this works out.
As far as marketing the house on Faust, I have a sign out front. This sign has been generating at least one and as many as three calls per day. Unfortunately, every call so far has been from someone who needs to rent, not buy. Worse than having no credit, they all have had bad credit - foreclosure, bankruptcy, behind on bills, etc. This is a reflection of two problems in Michigan at this time: unemployment or under-employment. Many people have either lost their jobs due to downsizing by the automotive companies (OEMs and suppliers, both) or, they simply have not improved their income earning through job promotions. Many people get into an entry level job and never move up from there. That makes it very difficult for them to purchase a home.
I just recently started using a social networking tool called Twitter. This is a way of keeping in touch with your circle of friends and business contacts with short little updates about what you're doing, how you're feeling, etc. It's a great way to keep that network fresh and engaged. It's also a great way to meet new people who would be potential friends or business partners. If you are not twitting, you need to check it out!
I'm finally scheduled to close on my investment property in Mt. Clemens. This one should be a breeze and a simple flip or rental. I am so tempted to keep it as a rental, but I really need to just flip right now. I need to pay off my business lines of credit and start building some cash reserves. So, I need to stay focused. I know I should have more cash flow properties in my inventory, but it's too early for that. I need a handful of flips behind me to get that real momentum I have been desiring. Also, I'm not sure I want a bunch of separate single-family homes as rentals. There is more maintenance and more risk due to vacancy loss. When you have a single renter in a single-family home (say, a 3-bedroom, ranch with one family) then you only have one rent check coming in. If your tenant experiences a problem and stops paying rent, you still have to pay the mortgage. It's equivalent to a 100% vacancy situation. At least if you have a duplex fully rented, you have two rent checks coming in. Perhaps one tenant's rent covers the expenses and the second tenant is bringing in the positive cash flow. A four-unit building is even better. Did you know that you can have up to four families in four separate units of one building and it is still called a single-family residence? That's just the rules of the trade. It's the definition of a single-family house.
Where the real wealth resides is in commercial residential real estate. That would be five units or more under a single roof. I would like to get a 12-16 unit building for my first commercial property and I hope to do it in the year 2010. My first goal is to flip a few between now and then to have enough cash built up for the down payment. I could use my business lines of credit now, but then I'd have to make interest payments while also paying the mortgage. I'm sure I could cash flow enough to make all payments, but then I wouldn't have the business lines free to do other deals until I could refinance the apartment building to pull out enough to pay back the down payment.
So the plan is set. Let's move forward with a few more flips, build capital, and then look for the commercial building for positive monthly cash flow. Flip for capital, commercial real estate for residual, passive income. THAT, ladies and gentleman, is the formula for success in Michigan residential real estate.
Are you following me? This is an awesome adventure! If you'd like to learn more about what I'm doing and how I got to this point, please leave a comment and contact me. I'd love to talk with you about it.
You may be thinking, "Gee ... he's light-years ahead of me! I'll never get to where he is now." Don't think that way at all! I know people who are multiples of light years ahead of me -- I know them personally. I use their success as motivation to keep me going. I would like to be that person for you, too. Let's talk! Let's do business together!
- Almost finished with rehab at my investment property on Faust Ave in Detroit.
- Started using social networking tool, Twitter - Do you twit?
- I have secured a closing date for investment property in Mt. Clemens.
So what's happening on Faust? At my last post I had just discovered that I had purchased a property in a historic district and that I couldn't put in vinyl replacement windows. So I am investigating my options and, so far, I don't like any of them! I have a quote to refinish/repair the existing windows -- $25,000!! A quote to install Pella wood frame windows -- $20,000! Each option destroys any profit margin I would have expected to have in this property.
I'm meeting with someone on Monday to give me another bid on replacement of "like-kind" windows at a more reasonable price. I would expect to pay up to $10K, but any more than that will really start to hurt. We'll see how this works out.
As far as marketing the house on Faust, I have a sign out front. This sign has been generating at least one and as many as three calls per day. Unfortunately, every call so far has been from someone who needs to rent, not buy. Worse than having no credit, they all have had bad credit - foreclosure, bankruptcy, behind on bills, etc. This is a reflection of two problems in Michigan at this time: unemployment or under-employment. Many people have either lost their jobs due to downsizing by the automotive companies (OEMs and suppliers, both) or, they simply have not improved their income earning through job promotions. Many people get into an entry level job and never move up from there. That makes it very difficult for them to purchase a home.
I just recently started using a social networking tool called Twitter. This is a way of keeping in touch with your circle of friends and business contacts with short little updates about what you're doing, how you're feeling, etc. It's a great way to keep that network fresh and engaged. It's also a great way to meet new people who would be potential friends or business partners. If you are not twitting, you need to check it out!
I'm finally scheduled to close on my investment property in Mt. Clemens. This one should be a breeze and a simple flip or rental. I am so tempted to keep it as a rental, but I really need to just flip right now. I need to pay off my business lines of credit and start building some cash reserves. So, I need to stay focused. I know I should have more cash flow properties in my inventory, but it's too early for that. I need a handful of flips behind me to get that real momentum I have been desiring. Also, I'm not sure I want a bunch of separate single-family homes as rentals. There is more maintenance and more risk due to vacancy loss. When you have a single renter in a single-family home (say, a 3-bedroom, ranch with one family) then you only have one rent check coming in. If your tenant experiences a problem and stops paying rent, you still have to pay the mortgage. It's equivalent to a 100% vacancy situation. At least if you have a duplex fully rented, you have two rent checks coming in. Perhaps one tenant's rent covers the expenses and the second tenant is bringing in the positive cash flow. A four-unit building is even better. Did you know that you can have up to four families in four separate units of one building and it is still called a single-family residence? That's just the rules of the trade. It's the definition of a single-family house.
Where the real wealth resides is in commercial residential real estate. That would be five units or more under a single roof. I would like to get a 12-16 unit building for my first commercial property and I hope to do it in the year 2010. My first goal is to flip a few between now and then to have enough cash built up for the down payment. I could use my business lines of credit now, but then I'd have to make interest payments while also paying the mortgage. I'm sure I could cash flow enough to make all payments, but then I wouldn't have the business lines free to do other deals until I could refinance the apartment building to pull out enough to pay back the down payment.
So the plan is set. Let's move forward with a few more flips, build capital, and then look for the commercial building for positive monthly cash flow. Flip for capital, commercial real estate for residual, passive income. THAT, ladies and gentleman, is the formula for success in Michigan residential real estate.
Are you following me? This is an awesome adventure! If you'd like to learn more about what I'm doing and how I got to this point, please leave a comment and contact me. I'd love to talk with you about it.
You may be thinking, "Gee ... he's light-years ahead of me! I'll never get to where he is now." Don't think that way at all! I know people who are multiples of light years ahead of me -- I know them personally. I use their success as motivation to keep me going. I would like to be that person for you, too. Let's talk! Let's do business together!
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