Well Rounded Investor

My journey of becoming financial independence by 35 years old

Another Rental in the Work?

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***this is the picture of the actual park, not the house that I’m buying**

Good ‘Ol Friday, everyone!

I must apologize for not making any more update on my blog for awhile. Behind the scene there as been a lot of stuff going on.

Plumbing issue emergency:

My main water drain has decided to clog on me. After two bottles of vinegar and Drano later, it still didn’t work. I had to call my handyman, and went to Home Depot to rent a Cobra Plumbing Snake to open up the line.

It didn’t stop there when I found out my dishwasher that I haven’t used since I moved in to wash anything started to give up. Since the whole thing was so stinky, I went ahead an upgrade it to a new dishwasher.

Cost of Rental: $65

Cost of Labor: $160

Cost of Dishwasher: $265

Total: $490

Volunteer to Coach U12 Soccer: (One of my goal this year was to volunteer 200 hours)

Well the spring season has come once again, that means, it’s soccer time! To prep for soccer, I’ve been jogging, walking 2-3 miles, 2-3 times a week. The season hasn’t really started, but I asked the parents to bring the kids out early so they get used to the low dose of pollen before the full blooming season. It would make my whole team sick.

Rental Property Opportunity:

I don’t trust auction.com due to all the negative reviews. However, my brother has been having so many success purchases with them. So, I’m taking a big step bidding and winning a rosey discriptions: park front, water front, and facing South property for $55,001 (closing cost estimate $60,000). The house is a couple blocks from the River, where there is another park is connect to it. It’s a couple miles from all of my family members.

Now the real truth:

  • It’s a fixer upper.
  • It’s vacant. (Fenghui wise, we don’t want a vacant or foreclosure house, because something must be bad with it for the ex-owner to leave the house.
  • Foreclosure property from auction.com with negative reviews
  • It’s out of state, it’s back in the Midwest where my family is
  • It’s 1595 sq ft with 1000 sq ft of basement. That means, I have to put more money to fix the place up.
  • I haven’t even look inside (just like the location)

Now the hard truth:

I don’t have $60K in cash, so I’ll have to liquidate my portfolio to make this investment. Auction.com requires Cash. I’ll have to see if this deal is going to go through.

Come Monday, I’ll have to make the hard decision of selling some of my positions to raise the cash.

I am excited about this opportunity. But at the same time it’s scary. Have you bought a property from auction.com before? Have you bought an out-of-State property before? What are the closing steps? Please let me know if you have any comments or suggestions.

Update: Auction.com has just called me. The following are the step to close the property:

  1. I need to send the earnest money by Monday along with 40 pages of paperwork to the closing company and send the receipt to auction.com.
  2. The process will take 40 days.
  3. title cost is about $1520

 

 

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11 comments on “Another Rental in the Work?

  1. ambertreeleaves
    March 26, 2016

    Hello,

    This sounds like a challenging opportunity. Will you rely on the family to supervise the works and rent?

    The only rental I ever had was in the same city.

    Like

    • Vivianne
      March 26, 2016

      Hi,
      Thanks for the input, my 4-pled, and triplex are also in the same city. My other sister might need the extra income. She’s also having 3 properties for rent. I’ll see what’s going on. I have my other brothers and sisters also interested in managing. My Dad is also super sharp. šŸ™‚

      The main thing is I don’t mind moving back home after Mister’s Mom pass and live there for 6-9 months of warm weather and travel to Asia or Puerto Rico in the winter. šŸ™‚

      Liked by 1 person

  2. B
    March 26, 2016

    Hi Vivianne

    Wow, didn’t know houses there are very reasonably priced there. At 60k, that’s a far contrast to what in getting at my place. Is it a customary practice there to buy even without looking at the actual site?

    Like

    • Vivianne
      March 26, 2016

      Many houses on foreclosure that are listed on auction.com or live auction in front of the court house are sold unsight. Sometimes there are still occupants inside the house, the website is telling you not to disrupt the occupants. Many of these owners don’t want you in their house.

      After you bought it, you’d have to kick them out. This might take 1-2 months depending on whether they are willing to move out or you have to get a court order to move them out.

      In my case, it’s vacant, after I take control, if they don’t have the keys, I’d have to break into my own property. šŸ™‚ I bought the house because it’s vacant, that way I don’t have to file for court from long distance.

      It can be very risky. My brother bought a house for $25k, and it was “immaculous”, he only had to thought paint here and there. And another house he bought for $35k, he had to make 4-5 truckload of trash inside the house and the basement in order to begin the rehab work.

      Of course the days of $20-40k/rehab is almost over, hence I’m spending $60k on this property. I wouldn’t buy anything that I personally don’t like to be living in it. The location is great, it’s a couple blocks from the river. In front of it is 150 years old park that is well kept with tennis court and pool with water fountain. It’s super nice.

      Since I now have a property home, any trip that we take to see our family will possibly tax deductible as it might be a work related trip.

      I prefer to buy a couple more houses so I can keep the cash flow going. Stock investing is great, it’s totally 100% passive, with rental, there is always involve human resource, human interaction is what turn people off for some reasons. šŸ™‚ but the reward is great.

      Like

  3. Dividendsdownunder
    March 27, 2016

    Wow, that’s..a huge decision. Good luck it Vivianne, I hope it all works out. I could never buy a property, even just for $60k, without having seen it first.

    Ps, sucks about the dishwasher!

    Tristan

    Like

    • Vivianne
      March 27, 2016

      I understand where you’re coming from. But sometimes when things feel right, I’d just have to go for it.

      It’s such a great area to be in. The location is perfect. Some of the question I ask myself when buying a piece of real estate:

      1. would the land of the house worth 60k? Not quite – the park front and water front is valuable to me, but the assessor don’t value the land that much.
      2. Even if the inside is all beaten up and require tons of fixing, is the shell and the land worth 60k? Yes, definitely. Breaking even is easily accomplished.
      3. What are the neighboring houses are going for (the comps)? From $50k-$500k. Yes, the original mansion sitting on the park is worth $500k with pool and such. The surrounding houses that are park front are well kept.
      4. Would I live in it? Yes.
      5. Is it rentable after some fixing? Yes, the location is park front, a couple block from bike trail along the river, near hospital, near shopping.

      A lot of my decisions looks like “compulsive”. Hehe, I did give a tons of thought, and a lot of research before going in.

      Liked by 1 person

  4. Jeff
    March 28, 2016

    wow sounds like an excellent opportunity Vivianne! Unfortunately we cant find properties at that value in Canada. Something like that would go for like 300k too 400k. Maybe its time I start investing in the US. šŸ™‚

    Like

    • Vivianne
      March 28, 2016

      One of my co-worker moved here from Canada. She still owns an apartment building of 6 units in Toronto. Opportunities are everywhere, keep looking and I’m sure you find something you like.

      Otherwise, move to the US, we welcome Canadian investors. šŸ™‚

      In the Midwest, says Flint, Michigan (the town with lead in the water crisis), houses is going for $12k and those are lovely, well kept houses.

      Kansas City, where google fiber is in town with lightening speed, you could find $40k houses.

      Even here in the northeast, the houses in the up and coming neighborhood (used to be druggies heaven), some beat up houses can go for $25k. šŸ™‚

      I just found out my brother has 3 other houses that’s he’s fixing up for rent?! Man, he’s on the roll. He keeps using the rent money from other properties, and from his business to buy houses in cash for these beat up house.

      Mr. Is concern that if Trump or Cruz get elected, they might deport the illegal immigrants out, that would create an influx of houses. But if we can buy in cash, and with a little patience, I think we can still ride the next housing crisis.

      Best of luck to you in finding rental property and managing risks. šŸ™‚

      Like

  5. Dividend Hustler
    March 28, 2016

    Keep it up Vivianne. Making moves and taking care of opportunities. I think it’s a good investment for 60k for a fixer upper. That’s super cheap. I don’t think you could buy a home or a newbuild for anywhere near that.
    You know what’s best and do it!
    Cheers.

    Like

    • Vivianne
      March 28, 2016

      You are right about new build being super expensive. They are going at the basic price of $100/sq ft, and that don’t count if you want premium carpet or hardwood floor, or granite countertop, etc.

      Old houses generally already come with hardwood floor. Refinish $500-3000
      Kitchen upgrade 3-10K or $50 of paint if we’re lucky šŸ™‚

      Bathroom upgrade 1-$3k.

      New car port (this will not be on our budget until we move in at least 7 years $25k

      Still cheaper, and the location is unbeatable. All and all it’s less square footage than what I have right now, but downsizing is necessary in retirement, as we want to maximize our time outdoor, and minimize cleaning up the house. šŸ™‚

      It goes against my belief that my next house would be a brand new build to my specification. That was before I hit the road to financial freedom. šŸ™‚

      Like

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