Second house almost done

The Cherry St house has been on the market for two weeks now.  The open house was well attended, but no offers yet. Doesn't help that the realtors are out of town on vacation for a week!  Keeping our fingers crossed.

The second house is on track to be finished this week.  The air conditioning finally was installed on Friday (much too late for the poor folks who've been working there since early July!).    Hope to have it listed before we leave for vacay.

Hubby is working with a friend of his to find the next project.  They put in a bid on a single family home on a nice piece of land.  It would definitely be the biggest project yet, but he had to bid way under the asking price in order to make any money at it.  He has a little room to increase the offer, but not too much.

Meanwhile Hubby has been measuring and documenting all of the improvements made an how long everything took and how much everything costs.  This is what he really brings to the game. He is really focused on developing consistent processes so he can more easily predict profits, etc.

Still haven't rented the one unit we still have open. Getting a few calls every couple of days, but the "right" tenant hasn't been found yet. After the previous disaster, he is obviously being a lot more cautious!

Some Financials - or "How Profitable Is This Anyway"

Hubby and I discussed the course of the business a bit tonight.  Some of his realtor friends want him to start negotiating with banks on their behalf, and he will get a portion of the profit from any sales that result. They also want him to do some property management (for rentals, and housing developments, etc.).  He also wanted to discuss maybe bringing in a partner to help fund the next renovation (we have enough to fund about 2.5 projects, but not three full ones).

After much debate we figured out some of the financials.   He will make about $15,000 from the first flipper, and he could make as much as $30,000 from the second. If we estimate conservatively, at $15,000 per property, and consider that we can comfortably do 2 properties per quarter.  That is a profit of $120,000 per year (before income taxes, of course).  This does not even count the income from the rentals.  Very lucrative.  Of course, we are dependent on the realtor getting the houses sold, but it is really in his best interest to move the properties (because we won't buy a third until one in sold).  During the down times (which we might have in August) Hubby can work on the rentals, and also develop the estimating process, and start generating a list of interesting properties for the next round.  Even if we miss our estimates in a particular quarter, we should still be just fine financially.

Decision:  for right now, Hubby is going to stay focused on the flipping and rentals.  It has only been two months.  We can always re-evaluate after the first year.

In other news, we finally got the water turned on in flipper number two!  Nothing much to discuss on the rentals right now.

Finally listed!

Flipper is finally listed.  Looks fantastic!  Here is the listing with some great pictures of the property:
http://www.remax.com/property/108472628-60440123/1322-CHERRY-ST-Pottstown-PA-19464/

Bought all of the materials for the 2nd place yesterday morning.  Work has already started and because it's a townhouse there is not much to do on the exterior (we needed to fix a drain pipe - already done - and the patio might need to be relaid because it slopes too much toward the house.  Doing a minor kitchen remodel (new counter top,  new floor, maybe new appliances, but keeping the cabinets).  Need a few interior doors, but the exterior ones are already fixed and/or replace.  New furnace and AC, of course (that seems to be one of our trademarks - and helps the resell value tremendously!).

Not much news on the rentals this month - definitely a good thing! - have received rents for 5.5 out of the 6 units that are occupied.  Expecting the 2nd half of that last one on Friday this week (keep fingers crossed!).  Need to get new tenants into the place that ended up being evicted, but really happy to be rid of the old ones.  Almost giving up hope of ever seeing any of the money we are owed on that one.  The place is clean already and we may move the stove from the new flipper to this apartment, but otherwise it is good to go.  Hubby is confident it will be occupied by August 1st.  It does feel good to have the rental situation a litter calmer, at least for now.

First Flipper Goes On Sale on Monday

I've been neglecting the blog lately - too much going on! - I will try to do better.

The first property hubby has renovated goes on the market on Monday. Quite a transformation (will try to upload pics tomorrow after it is fully cleaned).  A lot more work that he originally anticipated, but we should still get a nice profit and certainly have the satisfaction of seeing the transformation before our very eyes!

Hubby has started work (well not personally, but the general contractor has started) on the new townhouse. Finally closed on that property a week ago.  Working with the HUD was a major pain in the neck. We ended up closely a full two months after the original date, and the REALLY stupid part was that the listing indicated that they wanted to close in like 10 days!  This property seems like it will require less.  Contractor has already replaced the front door, fixed the  sliding glass doors, removed a section of drywall that had mold behind it, and fixed the plumbing (the copper was stripped).  We are deciding how much of a kitchen reno to do, and have to do the paint and carpet (as always!).  Also need to replace the furnace and AC.  Looking for a nice profit out of this one.

On the rental front, hubby reported that rent for 4.5 out of 7 properties is received for July!  Planning to pick up one more payment tomorrow, and the second half from someone next Friday.  FINALLY evicted the tenants who were months and months behind on the rent.  That is now empty and clean.  Hubby is confident he can have it rented by August 1st.

Tenants moving out

It seems like we will be losing tenants from at least 3 of our 7 apartments, and maybe as many as 5!  We are happy about 2 of the tenants who are definitely leaving.  One has struggled to pay the rent on and off from the beginning. The second is the unit we are trying to evict.  Unfortunately the other three are all fabulous tenants.  One family has lived in their unit for over 4 years.  We will certainly miss them, and Hubby will be very busy trying to fill vacancies as they come up.  Luckily things seem like they will be spread out a bit, so we won't have 5 empty units at one time.

One of the problems with move-outs and showing is that you have almost the same problems as showing a house, but none of the control.  Hubby showed one of the apartments tonight, but the woman who was interested was really turned off by the mess, from both the interior of that unit, and by another tenant who has junk all over the place.  We may need to wait until the tenant is completely out, and force the other tenants to clean up their act before even trying to show the place.  This definitely means lost rent as the place sits vacant.

The renovations are continuing on the flipper and we are still waiting to close on the 2nd flipper (although the realtor says he has a buyer for the 2nd one.  All we have to do is get thru the buy and renovation!).  Hubby is continuing to work with folks on craigslist about the wheel chair ramp and I finally finished up with all the eBay stuff.  Hubby is enjoying working on the property half days.  He may put  in some "overtime" this weekend to paint the basement!

Wallpaper and wheel chair ramp

Hubby has been learning this week how hard a renovation can be. He has been removing wall paper all week and is finding it both frustrating and satisfying.  They work 4 days per week.  Hubby works 5 hours and the  contractor/handyman is supposed to work 10 hours.  Next week, because of the holiday, they will work Tues-Fri instead of Mon-Thurs.  I am really excited to see the place.  He managed to get the kitchen cost down to about $1300 (cabinets and countertops).  Still need floor and appliances (and paint, of course, but that is relatively cheap).  Closing on 2nd house is now scheduled for next Friday and can't come a moment too soon.  Now that the weather is changing, you are overcome by the mold smell when you walk in there.  Son still helping out whenever he can.

Tenant issues are not going so well.   These guys are real con-men!  Hubby wants to cut a deal with the guy we are trying to evict to just him out of there without the whole court thing.  He is giving them a break on the court finding and keeping the deposit and then the guy asks to stay until June 15th!  Apparently 5 months of free rent is not enough!  Meanwhile the unit on the payment plan sent him a real nasty text message because they were offended about something he said while collecting the rent last week.  With anyone else, they would have been out on the street.  Some people just feel entitled to everything. Drives me crazy!

Reno continues/court case update

Hubby is trying to get the tenants out of the house as fast as he can.  Even offered to forgive a month of rent just to get rid of them.  No idea what they are going to do. Strongly suspect they are going to drag it out as long as possible.  At least the judge agreed to revise the judgement to include May's rent, and Hubby is going to file for possession as soon as possible.

Reno work is continuing.  I saw the new kitchen design today and it looks really really nice. The whole project will take only about $2000 in materials (not counting paint and flooring).  That's not really too back for cabinet/countertops/backsplash.  Still debating the design a little.  I like shelves instead of upper cabinets.  I think it will look better and be more modern and versatile.  Hubby is having to referee the debate between me and the handyman. Usually we agree, but hubby still insists on asking both of us!  Son says the attic looks fantastic now that an old "Beaver board" ceiling has been removed and the place is cleaned up!  One room down, 8 to go - lol!

Starting renovation and court decision

Well, it took all week, but Hubby (with help from Son) finally started the renovation for the flipping property.  It literally took almost two weeks (and lots and lots of trips to Good Will) to get all of the previous owners belongings out of the house. Some tips:  Good Will will take as much as you can give them, but not furniture; many people will recycle scrap metal, and will come pick up unwield objects like stoves and refridgerators; even with all of the above, a lot will need to be thrown out.  We ended up completely filling two big dumpsters and we didn't really have a lot of furniture.  Hoping to sell a washer/dryer and still have a lot of stuff on Ebay tonight!   Also, put a "free stuff" posting on Craigs list about the wheel chair ramp. Many inquiries. We won't make any money directly, but won't have to pay the labor or disposal costs for taking it out (plus I feel better by not throwing it out).

Hubby and son basically did some demolition today. The kitchen cabinets were removed and some weird ceiling tiles were also removed (luckily the ceiling above these tiles is in pretty good shape).  Still lots of dust and I'm worried about son's allergies and asthma. He said the biggest problem was the overhead stuff.   Hopefully we won't need another dumpster, because there actually was not that much demo on this place.  It will be exciting to see it take shape.  It already looks bigger because the contents are gone.

Unfortunately the day ended on a sour note when Hubby got the results of his eviction proceedings in the mail. Very frustrating, but the judge did not grant the full amount. It appears as if May's rent was not included.  The tenant now has until a certain to pay or we can file for "possession".  The possession thing means that they will be given 10 days to move out or we can lock them out.  I'm not really crazy about this prospect, and we still aren't sure about the process for collecting on the judgement.

Estimating for Renovations

Just went over some software we are considering buying to help estimate for renovations.  It is basically a giant spreadsheet, but has prices for literally every task (as small as replacing a smoke detector).  Estimated based on the last small job our contractor did for us and found we were a bit overcharged.  That's ok, just did it for practice and as we get better hopefully he will be happy to use our estimates rather than coming up with his own.  The contractor seems to estimate by picking random numbers, no formal system.

The spreadsheet is pretty cumbersome, but if it helps keep things organized, it is well worth it for only $65.

Still owed rent on two units and last day of the month is tomorrow.  Will continue eviction proceedings for one apartment on Thurs most likely. They've had notice given, next step is court!