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.
Friday, August 15, 2008
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!
Thursday, July 3, 2008
Interesting developments in the past two days.
Happy 4th Of July, by the way! This is the celebration of our independence -- for me, I might as well be celebrating independence from my money! Read on and discover why ...
Yes, it's official -- Faust Avenue is now part of a HISTORICAL DISTRICT and now I have to be careful with the exterior renovations. Specifically, I have to be careful with the kind of windows I put in -- I can't get away with an economical vinyl replacement. Will (my General) is going to investigate further for me and negotiate with the appropriate agency to minimize the expense needed to maintain the demands of the historical society. This could get very interesting. That's right, Rosedale Park has officially been designated a historical district just about the time I closed on the property.
OK - I like to make mistakes - no, really -- I do! I learn so much from them!! [sarcasm] Believe me, I'm not buying homes for the sole purpose of providing a humanitarian service to the local community, restoring and beautifying the neighborhood while profits are being made by everyone involved in the transaction -- except me! I do gain satisfaction knowing that I’m helping to revitalize a community; that’s a great result of my investing. But, as a firm believer in capitalism, I believe the sole purpose of owning a business is to MAXIMIZE PROFITS for the shareholders. All the other positive things that come as a result are just added bonuses. By the way, my wife and I are the only current shareholders of my business and I’m not the only shareholder unhappy about this latest development.
Sigh .....
OK, it's not over till it's over! The pity-party-express has left the station and I'm NOT on that train! So, on a positive note, since this is now officially an historic district, perhaps I can market this property as a beautifully restored historic home and perhaps it will hold more value than if it were not in an historic district. The property value certainly could not have declined further once the subdivision was designated an historic district. Also, I'm sure there are creative ways to meet the society's requirements in an economical manner. Time to put on the thinking cap and get creative. Alright class, Problem Solving 101 is now in session and I don't think I have enjoyed the first lecture! Oh well ...
The fun and adventure continues ......
Happy 4th Of July, by the way! This is the celebration of our independence -- for me, I might as well be celebrating independence from my money! Read on and discover why ...
Yes, it's official -- Faust Avenue is now part of a HISTORICAL DISTRICT and now I have to be careful with the exterior renovations. Specifically, I have to be careful with the kind of windows I put in -- I can't get away with an economical vinyl replacement. Will (my General) is going to investigate further for me and negotiate with the appropriate agency to minimize the expense needed to maintain the demands of the historical society. This could get very interesting. That's right, Rosedale Park has officially been designated a historical district just about the time I closed on the property.
OK - I like to make mistakes - no, really -- I do! I learn so much from them!! [sarcasm] Believe me, I'm not buying homes for the sole purpose of providing a humanitarian service to the local community, restoring and beautifying the neighborhood while profits are being made by everyone involved in the transaction -- except me! I do gain satisfaction knowing that I’m helping to revitalize a community; that’s a great result of my investing. But, as a firm believer in capitalism, I believe the sole purpose of owning a business is to MAXIMIZE PROFITS for the shareholders. All the other positive things that come as a result are just added bonuses. By the way, my wife and I are the only current shareholders of my business and I’m not the only shareholder unhappy about this latest development.
Sigh .....
OK, it's not over till it's over! The pity-party-express has left the station and I'm NOT on that train! So, on a positive note, since this is now officially an historic district, perhaps I can market this property as a beautifully restored historic home and perhaps it will hold more value than if it were not in an historic district. The property value certainly could not have declined further once the subdivision was designated an historic district. Also, I'm sure there are creative ways to meet the society's requirements in an economical manner. Time to put on the thinking cap and get creative. Alright class, Problem Solving 101 is now in session and I don't think I have enjoyed the first lecture! Oh well ...
The fun and adventure continues ......
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