Mansion Impossible
This real estate-based game is a fun way to waste some time. Found it on Eric's blog.
Even Arizona Feels Effects Of Katrina And Wilma
Out here in the desert, we remain in the midst of a multi-year drought, yet we still are feeling the effects of the hurricanes hitting the eastern half of the U.S. Gas prices, of course, are the most visible repercussion, but the effects are also turning up in unexpected places. I received a letter yesterday from my carpet supplier informing me of shortages of the raw materials needed to manufacture carpet. Here are some statistics they cite for the chemicals needed to make carpet and pad:
The upshot of all this is that they are increasing their prices by $1 per yard, effective November 1. Take this into account when figuring your next rehab job.
- 34% of North American capacity of propylene is shut down
- 68% of North American capacity of butadiene is shut down
- 53% of North American capacity of paraxylene is shut down
- 40% of North American capacity of benzene is shut down
- 59% of North American capacity of cyclohexane is shut down
The upshot of all this is that they are increasing their prices by $1 per yard, effective November 1. Take this into account when figuring your next rehab job.
A Bit Of A Breather
I'm sort of in a take-a-break mode now. I've got to take care of filing all the paperwork from the property sale and send off the settlement statement to my CPA to have the data entered into Quickbooks. (That's beyond my accounting skills now, but once I see how she does it, I should be able to do it myself in the future.) I also just got a new computer (courtesy of the profits from this flip), so I've been spending time transferring data from my old system to the new one. My home office is a mess and I am shopping for new office furniture.
If a good deal comes my way, I won't turn it down, but I'm not going to be actively searching for properties until I clear up a couple of my backlogs. Which reminds me, one of the things I need to do is send some follow-up emails to the folks who responded to my entry about needing birddogs. I need to see if they are still birddogging and let them know I have funds available again.
If a good deal comes my way, I won't turn it down, but I'm not going to be actively searching for properties until I clear up a couple of my backlogs. Which reminds me, one of the things I need to do is send some follow-up emails to the folks who responded to my entry about needing birddogs. I need to see if they are still birddogging and let them know I have funds available again.
Final Results And Post Mortem For House 11
OK, I haven't been able to get the detail I want out of my analysis, mainly because I'm having trouble entering all the stuff into Quickbooks, so I'll need to get with my CPA on that. (I could do it by hand, but my time is pretty limited right now.)
Anyhow, here are the numbers on this property:
Fix Up Costs include the repairs I made plus utility payments during the time I held the property. Misc. LLC Expenses include the costs of running the business - a fax line, office supplies, etc. While not technically related to this property, this is the only property I've sold this year, so the profits of the entire LLC are really the same as the profits made by this one property.
All in all, that's not bad. If you look back to the rough estimates I made when I bought the place (check the Comments section), it seems I was wildly optimistic :-) I guessed $2,500 for fix up costs and I went way over that. Part of that was a $2,000 loss to the first cabinet guy. I also didn't originally intend on replacing the cabinets, which was about another $5,000. Additionally, I didn't know the house had aluminum wiring that would need to be fixed to the tune of about $1,000. But even excluding those unseen $8,000 costs, I still was over my fix up estimate by about $4,500.
Of course, I was also off on my estimate of the time it would take to get the property back on the market. I figured 2 months and it was closer to seven! But again, 2 months of that was my own fault for letting the ordeal with the first cabinet guy drag on and on. (FYI, if I had not used the first cabinet guy, I would have saved $2,000 and 2 months, which would have brought my profit to $31,017.04 and the holding time would have been reduced to 154 days, giving an ROI of 21.7% and an annualized ROI of 51.4%. And if I hadn't had to raise my buying price by $8,000, I could have had even better numbers... Woulda coulda shoulda....) It's almost embarrassing to look at entries titled "House 11 Should Be Listed By This Weekend!" that were posted 6 months ago. I was so naive :-)
The good news is I was also wrong on my estimate of the selling price. I estimated it would sell for $149,900 and we ended up selling for much more than that. Part of this error was due to me basing my estimate on past sales in the area rather than current listings, and part was due to the increased holding time - property values were rising dramatically as the cabinet ordeal dragged on and I profited from that.
So my investors are happy, I learned a lot, and we all made some money on this deal. Now it's on to the next one!
Anyhow, here are the numbers on this property:
Purchase Amount | - $128,00.00 |
Fix Up Costs | - $15,254.87 |
| Costs Subtotal | - $143,254.87 |
Selling Price | $181,000.00 |
| Late Close Of Escrow Fees Collected | $800.00 |
| Selling Costs | -$8,155.50 |
| Property Taxes | - $872.59 |
| Income Subtotal | $172,771.91 |
| Misc. LLC Expenses | - $500.00 |
| Profit | $29,017.04 |
| Time Property Held | 214 days |
Total Return (ROI) | 20.3% |
Annualized ROI | 34.6% |
Fix Up Costs include the repairs I made plus utility payments during the time I held the property. Misc. LLC Expenses include the costs of running the business - a fax line, office supplies, etc. While not technically related to this property, this is the only property I've sold this year, so the profits of the entire LLC are really the same as the profits made by this one property.
All in all, that's not bad. If you look back to the rough estimates I made when I bought the place (check the Comments section), it seems I was wildly optimistic :-) I guessed $2,500 for fix up costs and I went way over that. Part of that was a $2,000 loss to the first cabinet guy. I also didn't originally intend on replacing the cabinets, which was about another $5,000. Additionally, I didn't know the house had aluminum wiring that would need to be fixed to the tune of about $1,000. But even excluding those unseen $8,000 costs, I still was over my fix up estimate by about $4,500.
Of course, I was also off on my estimate of the time it would take to get the property back on the market. I figured 2 months and it was closer to seven! But again, 2 months of that was my own fault for letting the ordeal with the first cabinet guy drag on and on. (FYI, if I had not used the first cabinet guy, I would have saved $2,000 and 2 months, which would have brought my profit to $31,017.04 and the holding time would have been reduced to 154 days, giving an ROI of 21.7% and an annualized ROI of 51.4%. And if I hadn't had to raise my buying price by $8,000, I could have had even better numbers... Woulda coulda shoulda....) It's almost embarrassing to look at entries titled "House 11 Should Be Listed By This Weekend!" that were posted 6 months ago. I was so naive :-)
The good news is I was also wrong on my estimate of the selling price. I estimated it would sell for $149,900 and we ended up selling for much more than that. Part of this error was due to me basing my estimate on past sales in the area rather than current listings, and part was due to the increased holding time - property values were rising dramatically as the cabinet ordeal dragged on and I profited from that.
So my investors are happy, I learned a lot, and we all made some money on this deal. Now it's on to the next one!
Phoenix Area May Be Peaking
Just spoke with my real estate agent this morning (who is still having a hard time believing we finally closed!) about the general housing outlook in Phoenix. There are currently over 18,000 active listings in the MLS. A few weeks ago, there were 15,000. Time on market is also increasing. In other words, the seller's market is disappearing here, so be careful when buying properties in this area. Also, beware of comps - any high comps you find might be from the peak of the market.
I should also mention that her husband is a principle at www.buyazforeclosures.com, a company that buys and resells foreclosures. His business is picking up after being down for about 8 months, so more foreclosures are happening.
Opportunities are starting to present themselves to those who can see them. Remember: you make your money when you buy, not when you sell!
In other news, I called my bank to check on the status of the wire transfer and was told their computers were down. They will call me back when they are up.
I should also mention that her husband is a principle at www.buyazforeclosures.com, a company that buys and resells foreclosures. His business is picking up after being down for about 8 months, so more foreclosures are happening.
Opportunities are starting to present themselves to those who can see them. Remember: you make your money when you buy, not when you sell!
In other news, I called my bank to check on the status of the wire transfer and was told their computers were down. They will call me back when they are up.
