House 3: Listed!

I got the house listed last night around 10 PM. My agent is leaving town for the weekend, so we scrambled a bit to get this in before she left. She said there were two other active listings in the area, one listed at $215,000 and one at $235,000. She thought that last one was wishful thinking. Anyway, mine is listed at $199,000, so it should attract some attention being the lowest priced house in the neighborhood.

If you remember, when I had the locksmith out there, he recognized me from my previous property and said he thought that one was up for sale again. My agent was curious and looked it up. Sure enough, it is. The listing included pictures and she could see they had some plants in the kitchen windows and some other decorative stuff. The listing said the furnishings would be included with a full price offer. Reminds me of the staging idea I heard about a while back. Anyway, the property is listed for $225,000. They bought it from me for $181,000 last October. The property is still on the market and has been for 35 days.

I stopped by my current property this morning to verify everything was locked and the carpet was completely installed. Everything looked good. I took some pictures and will post some before and after shots shortly.

The Lowes delivery department called me back, but I missed the call. They have a couple different size gas hoses and need to know what size to bring. I have no idea and I'm too busy to drive out there again to find out. Instead, I called my handyman and he agreed to go check it out and get one installed for me.

House 3: So Close, I Can Almost Taste It! (Updated)

The stove was supposed to be delivered this morning between 8 and 11. At 9:30, I got a call from Lowes saying one of their trucks broke down and the delivery will now occur between 10 AM and 3 PM. I'm not going to sit there all day, so they agreed to call me 20 minutes before they show up. That should give me enough time to get there from my office.
While I was leaving, the carpet installers showed up. I showed them the location of the lockbox, gave them the keys, asked if they had any questions, and took off.

During my two hours spent waiting for Lowes to show up, I got out my checklist of things I wanted the handyman to fix and made sure they were all taken care of. I was pleasantly surprised to find they were! The only problem I found was that once I turned on the hot water in the bathtub, it never fully turned off again. No matter how tight I turned the handle, a thin stream of water continued to run. So I called the guy up and told him the problem and he said he'd get it fixed right away.

I also turned off the pilot lights on the two gas wall heaters. It's warming up now and those things won't be used for a good 8 months or so. No need to run up the gas bill for no reason. They have electronic ignition, so anyone inspecting the house can easily turn them on again if they want. I verified they worked a couple weeks ago.
Assuming the stove gets delivered today, the place is all set for listing. My agent even already has the post for the For Sale sign up in the front yard. She's leaving town tomorrow, so I need to call her tonight to give her the go ahead to make sure it's listed for the weekend.

I must say, the house looks good. The outside was formerly white and green and it has been painted a light brown. The inside has been painted and cleaned up. The work appears to be of good quality. I took some pictures, but I'm going to wait for the new carpet and stove before taking some more and posting them. I'm glad the rehab did not take as long as my last one! What a relief! It still took longer than the 4 weeks I had hoped, but the delay was fairly short and acceptable.

And I had some more good news from my agent! When I bought the house, I figured the selling price could be $185,000. After the repairs and doing a bit more research, I figured it could be $190,000. She told me that seemed low and suggested I list it for $199,000. Sweet! She said I'll probably get an offer that includes a seller's contribution, so the actual amount I'll get will end up being less, but it's still a higher price than I thought.

Update: Lowes called at 1:30 and said they were on their way. When I got to the property, they were there, as was my handyman, who had just finished fixing the leaky bathtub faucet. I thanked him for coming so quickly. He said running water was wasting my money, so he got over quickly. I like this guy!

The Lowes guys put in the stove, but were unable to hook up the gas line because there was no gas hose. When I bought the stove, I asked the salesperson if I needed to buy a gas connector and she told me no, it was included in the stove. I should have known better. Lowes will be back with a hose and will install it. That'll probably have to wait until Monday, since I have some other appointments tomorrow and will be unable to meet them. I'm not letting this hold up putting the house on the market though.

The carpet was still being laid, but they told me they had about 2 hours left. That will definitely be done today. Time to call my agent!

House 3: Finished This Week?

Saturday morning, I received an email from my handyman saying the vinyl flooring was being installed Tuesday and that was the last thing on his list. Good news! I have the carpet installation scheduled for Thursday and the only thing left is a new stove. I tried picking that up Saturday, but the store I was at was too far away from the delivery address for their free delivery, so I have to go to a closer location tomorrow. They say they have next day delivery, so I should still be on track to have the place completed this week. I'm going to email my Realtor so she can get everything ready - we might be able to get the property listed in time for the weekend!

On another note, I started reading How To Buy And Sell Apartment Buildings By Eugene Vollucci. This book was recommended to me by a local apartment investor I met during the Rich Dad Weekend Get Together. I only made it a couple of pages before I had to stop, but it's sounding good so far.

Prosper Improves Tools For Lenders

Last week, I received a newsletter from Prosper that detailed some new features they have added to improve the site for lenders. These feature are:

  • Additional credit data, including "current delinquencies" and "adverse public records" to assist lenders in verifying a borrower's stated credit history. This info is only visible to lenders.
  • Special icons identify homeowners and borrowers with verified bank accounts. Personally, I find this last one somewhat pointless. Prosper verifies people's bank account anyway, which needs to be done because payments are made via automatic electronic withdrawals, so it seems to me like every borrower on Prosper will have a verified bank account.
  • The number of listings a borrower has made in the past 30 days has been added. There has been some problems with people posting listings that are basically advertising - they have no intention of borrowing money and cancel the listing as soon as it has enough bids to fund. Since bidding ties up a lender's funds for the duration of the listing, people abusing the system like this are costing lenders money. This will help lenders avoid such people.
  • Lender statements.
The last item is something that I like. I just received mine today and it presents a good view of your account. There are some things that might be confusing. For example, when you make a bid that doesn't win or where the listing is withdrawn, the amount still shows up in your Account Activity summary. For example, I deposited $500 and I had three $100 bids get cancelled. My account activity shows $800 total credits and $-800 total debits. Since I only put $500 into the system, this immediately jumped out at me. What is happening is the three $100 bids are shown as debits and when they were cancelled, the funds were added back as credits. It understandable, but could be confusing to new users. To their credit, they do provide a detail section that breaks out the bid cancellations.

The one thing that is nice in the statement is a chart showing the allocation of your loans across the various credit ratings. Here's mine:

Cashflow Day

It's been a while since I wrote about this, but I'm still receiving checks from four LLCs I've invested in that buy and sell foreclosures in the Bay Area in California. I got another check today from one of them for just over $750. This brings the total return on my investment to 62.5% over 3.5 years, which works out to about 17.9% annually. Not bad.

One of my original goals was to get into six of these LLCs. I'm in four now, but am currently rethinking getting into another two, at least for the time being. The problem is, although I am buying and selling properties and making money that way, I do not currently have any that I am holding on to and renting. I'm missing out on some good tax breaks because of that (as I painfully discovered a couple weeks ago). So while I really like the hands-off investing approach these LLCs allow, I think I need to concentrate on getting some rental properties to hold on to, be they SFHs or apartments.

Prosper.com Again

Just a quick update on my experience with this site. So far, all of my borrowers are current on their loans. Each has made at least one payment. Of the $500 I've lent out, I've received back $20.73 in principal and $4.81 in interest. Prosper has collected 15 cents in service charges from me, giving me a net interest total of $4.67. My ROI is holding steady at 17.79%.

The errors I was seeing on their loan detail screen were resolved a week or two ago. Hmm.. I thought I wrote about that, but in checking my previous Prosper posts, it looks like I didn't. The problem was that the Remaining Principal figure shown on one of my loans was wrong. I had lent $200 but the report showed there was over $300 outstanding principal remaining. This was the loan that the borrower had made early payments on, so I figured it was a simple calculation error. I emailed Prosper tech support, sent them a screen shot, and it was fixed very quickly.

It's still taking about a week for payments to get completely credited to my account, but again, that's a function of how the ACH system works and is nothing Prosper has control over. However, they are very good about noting which payments are still in process and which have been completed.

I'm pretty happy with Prosper so far. In another month or so, when I've collected enough to reach their $50 minimum, I'll probably lend again and keep my money in play. It's possible I may deposit some more of my own money to lend, but right now, I have too many possible other investments I'm looking at and I want to keep my options open for a while.

House 3: Closing In On Completion

I got an update from the handyman today. The interior painting has been completed and the exterior painting should be finished this week. The flooring contractor was scheduled for this week, but we don't have a date yet on when that will be started. The handyman hopes everything will be done this week, but that will depend on the flooring guy.

I sent an email to my insurance agent about the policy cancellation. I informed him of the rehab work and asked if there is anything we can do to get the coverage reinstated.

I'll sign and fax back the quote for the carpet and get that installation scheduled. I don't see why the carpet and flooring guys can't be working at the same time. I'll also need to stop by Lowes and buy a new stove today or tomorrow. I'll schedule delivery for a week out, which should give the flooring guy time to get the kitchen done.

House 3: Insurance Cancelled

I received a certified letter from my insurance company yesterday. It contained a refund check and a notice that they were canceling my insurance on this property. The reasons given were: poor roof condition, abandoned car on property, and rotten eaves. The cancellation is effective 5/16/06, so I still have coverage for a month. The car has been removed and the eaves are being repaired this week. The roof looks ok to me and we've had rain recently and there haven't been any leaks, so I'm not sure what to do about that. I'll have to give my insurance agent a call.

House 3: Another Update

I met with the carpet guy today. He's going to measure the house and fax me a quote. (I didn't want to wait around while he measured.)

The painter was there painting away. The handyman wasn't there though.

Things are shaping up. The window A/C unit in the converted carport has been replaced, which included building a new support for it. The front door has been replaced. The side gate has been replaced. The kitchen counter and sink have been replaced, although I wasn't able to get a look at them since they were covered with plastic by the painter. The kitchen cabinets have been painted and they look pretty good. The car in the backyard has been removed (!!) along with the old engine, weight lifting equipment, and other large items left there. All the appliances have been removed. The huge dumpster that was parked in the driveway is gone. The windows have all been papered over by the painter and my handyman and I decided to leave them that way until I put the house on the market. Hopefully, it will deter thieves. The bathroom window where they broke in has been boarded up, but not yet replaced.

Things left to do include some work on the outside of the house, painting the gate in the front yard, new vinyl flooring, and carpet. I'll have to check my list, but I think that's it. Oh, and it needs a new stove, but that's not a big deal and has to wait for the new flooring anyway.

House 3: Burgled!

I got a call from my handyman this morning with some bad news that could have been worse news. Apparently, the house was broken into last night. The thief or thieves broke in by prying open the bathroom window. All that was taken was the painter's paint sprayer and four 20 gallon buckets of paint. A police report has been filed and the handyman said, according to police, there has been a rash of burglaries in the area. They also indicated the house isn't in the best neighborhood (but I knew that).

The windows in the house are the old kind that have a little crank that opens them. The police say those are easy to pry open with a screwdriver. The handyman is going to replace the bathroom window with one that doesn't open, but of course, there are other windows in the house that are the crank type.

The really good news is there was no vandalism. The house is pretty much empty except for some appliances, and I am going to be throwing those out anyway. However, if the thieves had decided to destroy the place, that could have been very costly.

In other news, the car in back has finally been removed. Mark also says he should be done working on the place by the end of next week. I'd have to check, but I think that puts the project at 6 or 7 weeks to completion instead of the 4 I'd hoped for. I am meeting the carpet guy there tomorrow to get the place measured for a quote on carpet. I'm told there is only about a 2 day lead time needed to get the carpet installed, so as soon as I give them the go-ahead, it should be installed quickly.

Oops.. Almost Made A Mistake

Thanks to Monarchcrest and Steve for jumping all over my plan to roll my old 401(k) into my new 401(k). I originally planned on doing this so that I could draw a loan against it. However, further examination revealed problems with that. Additionally, I discovered I would only be able to borrow 50% of the value, which wouldn't work for me. Luckily, I have not yet submitted my forms for rolling the money into my new 401(k) and I have aborted that plan.

I had totally forgotten about self-directed IRAs. These guys allow you to invest in real estate or just about anything else. There are a bunch of restrictions on who you can invest with and such, so it will take a bit of study on my part before I am comfortable with them. Meanwhile, I have a maximum of 60 days to deposit the funds from my old 401(k) into some other retirement plan and I've used about 1 week of that so far. I am depositing the funds into a Rollover IRA at Schwab. This is just a temporary storage place to park the money to avoid penalties (in case I take longer than 60 days) while I investigate self-directed IRAs a bit more.

Google Gets Into Real Estate

Google appears to be beta testing a new feature for real estate listings. If you type in "real estate", "homes for sale", or "apartments for rent" in the search box, in addition to search results, you'll get a box that allows you to enter an address and search for homes for sale or rent nearby. The feature is combined with Google Maps. There is a nice blog entry about it here with some good screen shots. A Motley Fool article, which mainly talks about the stock market implications of this to other web-based real estate stocks, mentions that people can list their homes for free on the service.

All in all, I think this is a good move. As the article states, "when Google moves, things change." This move could help me as a real estate investor for renting houses and finding deals. It could also help me as a paper investor, since I own Google stock :-)

FYI, the first couple times I tried to find this Google feature by typing "homes for sale" in the search box, it didn't appear. Then I tried "real estate" and it showed up. Now it shows up consistently when I enter "homes for sale." Maybe as part of their beta test, they limit how often the option shows up.

Gearing Up For The Next Big Investment

After seeing Steve's presentation about multi-unit properties at the Rich Dad Forum Members Get Together (how's that for an awkward title?), my wife and I have become convinced that apartments are the way to go. The good news is that loans for these properties are commercial loans and so the bank doesn't really care about your financial statement - just the property's. The bad news is that they require a higher down payment. So to get ready for moving into this investment area, I've initiated some changes to my financial picture.

First, I am rolling the assets from my 401(k) with my former company to my new company's 401(k) plan. This is actually relatively painless, since both plans are with Fidelity. However, since I no longer work for my old company, I cannot take a loan against that plan. By moving the assets to my new 401(k), I am able to get a loan against these funds, should I need one.

Second, I am closing an old HELOC on my personal residence and opening a new one with a much greater credit limit. My original HELOC was for a maximum of $26,000 and I had opened this when I purchased the house over 2 years ago. Since that time, the value of my house has more than doubled, so I'm going to tap into that equity. The new HELOC will have a limit of $165,000. As an added bonus, the interest rate on the new line is 2 percentage points lower than my old one. Considering interest rates have risen since I opened the first line, this is a nice surprise. (It may be partially due to the fact that the new line is with a credit union, rather than a bank.)

Even with that much buying power, I'm still looking to partner with someone or someones for our first apartment purchase. Apartments have a whole different set of considerations than single family homes and I'd like to team with someone with experience in this area.