Well I feel justified in our duplex purchase.
BB went to the bank yesterday and I THINK our mortgage is nearly completed. I had all the docs I thought they would need in order (learned from last year)- and the woman was equally organized. She ran the numbers to do a FHA loan or a conventional loan and the FHA loan is cheaper for us. We don't have 20% to put down on this one so we will have to pay PMI regardless, and the FHA loan has lower interest rates. We locked in at 4.8%. Our closing costs are $5500 +/- $200. I am not completely sure how much we want to put down- we COULD put down 10% but that would wipe out our expendable cash reserves completely. I plan to run the numbers tonight but I think we might put down 5%.
The woman told me the bank manager already approved our loan and she was not counting our rental income because that would mean we made too much money to qualify for the loan!
When BB heard that he says to me: "Gamecock, I TOLD you we could afford it! Why do you always act like we are broke? Will you relax now and let me have more spending money?"
I actually had a good reply:
"BB, I save all our money so we can do impulsive things like buy houses when we recognize a good deal. Everyone we know thinks that buy was a steal but we were the only ones who had the cash to make it happen."
Talking to the bank lender who told me we have plenty of money and that this loan would be no problem was re-assuring. But I hope BB's head doesn't swell and get him dreaming...
So today is inspection- I think. Our realtor has had a heard time getting ahold of the other realtor to get keys to the place. Plus it is raining so I would prefer to put off to tomorrow. I dont think the inspector will spend as much time on the important things like termites, roof and foundation in the rain.
Oh yeah- everyone remember the BIG yellow Colonial type house from 2 posts ago that spurred this whole house buying process? It is holding an open house today and the auction is next weekend. I'm going to check it out- just to see what the inside looks like. I am leaving my checkbook behind!
Archive for January, 2010
Well I feel justified in our duplex purchase.
We got the place. I cant believe it. We found out late last night.
We submitted our offer (7% off list price)first thing in the morning- and I guess they countered in the afternoon sometime- but our realtor never checked his email until 7pm when the other realtor called him and asked when he was going to respond! They countered back at 5% off list price which we accepted. They must have been nervous when they heard nothing from us all day- but we were nervous because we thought we heard nothing from them all day! Before our realtor told us about the counter offer I checked realtor.com and all the listings for all the units had been pulled from the site. I was sure we had lost the place.
The property is one of 3 attached Federal rowhouses all for sale. All started out listed over a year ago for $150k over the final sale price. This past weekend the reduced price was reduced further causing a flurry of activity. BB and I didnt know all this of course. We knew that when we were house hunting last year this property was way out of our budget- but we didnt know about all the recent price reductions. We just looked online and noticed that it was now listed reasonably- so reasonably it was the cheapest place in the city!
So we requested to see the place and learned there were 3 offers that all came in the day before or that day. Our realtor explained to the selling realtor that he was showing it to an interested couple (us) and our offer was likely to come in. We wrote an offer that night.
The next morning we learned that 2 full priced offers were in on 2 of the properties. Another offer was on the table not full priced and we didnt know what unit it was for. We had already submitted our 7% off list- price offer but our realtor told us to go in full price. We didnt- because we thought we were competitive enough to at least be given a "final and best" chance. I still and likely never will know what the other offer was for but the seller chose to counter with us which we accepted. We saved ourselves enough money to buy all new kitchen and laundry appliances when the time comes-so we were happy with that. The other 2 units were sold for full price to a single buyer who I believe wants to convert 1 unit to a SFH like us- and rent out the other unit.
After over 350 days on the market all 3 units sold the same day! That seller must be doing a happy -happy dance.
So I am in shock. BB is stepping up to the plate- he scheduled a meeting with a bank for a mortgage for this afternoon. He is handling it all himself. Thankfully- because I have still not recovered from the mortgage hell I went through last year.
I am excited because it is 1 block from a favorite bar I like to go to. $1 drink night on Thursdays!
Anyways- it's bittersweet because I am in LOVE with my current home. Far more in love than this new place. But the new place has renters in place so it will be another 6 months or so till we figure out if we want to move into it or not. The only reason we would want to is because of the KILLER location. And it's resale value will hold up whether it is converted into a SFH or not. My current property is worth more as a duplex right now because we are in a low income/high renters neighborhood.
Without further ado:
Floor to ceiling windows!
So BB and I have found a property we are going to make an offer on. It's a 1900's Federal style duplex located 1 block from the main central park of the city.
Right now there are 3 offers on this foreclosure. We would be the 4th. So I dont have much faith in getting it. But we'll put in an offer and see what happens.
The plan right now is to leave it as a duplex with the 2 active leases. This is how haphazard we are doing this: We have not even seen the leases yet.
We know they are leases because people are living there. The real estate listing states that it collects $1600 month in rent. This would cover the mortgage, taxes, insurance and give us a $2-300 extra a month (depending on the interest rate we get).
When BB returns from baseball season in September- we will re-asses the situation and see if we have the cash saved up to convert it into a SFH. Hopefully we will- and we will renovate it in a month and move in. We will rent out the unit we are currently living in and that will almost pay the mortgage on the SFH.
I am giving BB lots of rein on this one. I remember how AWFUL it was getting a mortgage last year and BB has promised to do everything.
Truthfully- I dont think we have a chance to get it. Even if we go in full price- the comps in the city show it is listed for about $70k below what anything else is listed for. I am familiar with the property- it was listed for sale $150k over the current foreclosure price when we were looking for houses last fall.
So BB and I looked at a house yesterday. We didnt have any kind of formal thought process going on. It's just that in our walks around town we see "For Sale" and "Foreclosure" signs and out of curiosity we get online to see what the price is.
Well yesterday during our walk we found this house:
And on it is a big fat "Auction 2/6 -starting at $99,000" sign.
This house is 4100 sq ft.
So BB and I go home. BB's best friend who is a realtor stops by and we ask about the big yellow house.
Realtor says "Listen- forget that house- you need to see the Victorian I will be putting on the market in a few days. All original everything. Gamecock you would love it." Asking price is $200k.
Now I know everyone knows I LOVE our house we just bought a year ago. The issue is that our house is a duplex and we are guessing it would be over $50k to turn it into a SFH by adding an internal staircase, move the water heater, enlarge the kitchen downstaires and add a master bath upstaires as well as repair the upstaires plaster walls.
So we were thinking maybe it's smarter to use the $50k as a downpayment for a SFH that already has all that and rent both units of our current duplex. This would collect over $2k a month in rent (paying both mortgages) rather than lose the 1 rent and also start paying the mortgage ourself.
So we decided to see this "steal of a deal":
The house turned out to not be for us. It looks like it could be magnificent- but BB was quickly turned off by the fact that the siding is asbestos. In addition the roof is over 100 years old and NEEDS TO BE REPLACED. The current owner has done patch jobs so no leakage. In addition the owner has not kept up the place. The hardwood staircase and floors were painted (commonly done during some era not too long ago), the plaster is peeling everywhere, and the 2 balconies were enclosed into rooms...and done poorly. The upstaires flow was really bad with odd sized rooms and a horribly narrow and weird hallway.The realtor comes from a construction background and kept saying it was all no big deal but BB and I were sharing ESP thoughts that it was all a very big deal.
Last night we really talked and figured out what we wanted to do. After looking in the MLS we could not find a house that offered more than our current house. Every SFH house listed either had less to offer or was very expensive. We kind of came out of our thought process realizing that if we bought a SFH it would have to be bigger, more updated, on a larger plot of land, in a better part of town to make us move. That might be hard to find in a price for less than the cost of us converting our duplex into a SF.
We decided that I would look around this baseball season while BB is away but more than likely we will stick with our plan to convert our house into a SFH.
Update: So I thought that was our plan. BB just called to tell me we are going to see this house tonight:
I just had a yearly "State of Gamecock finances" talk with my financial planner.
I inherited the services of this planning company when my mom passed 3 years ago. She and my dad used the head boss for years. I never liked the boss- going by my mom's irrational spending habits I didnt think the guy did a very good job. Maybe logically I know that no one could keep my mom in check and it would have been my responsibility to do so over the financial planners...but I still dont like him. Even today 3 years later I get angry and annoyed at the thought of him.
So I was reluctant to keep my business with the company when I had the inheritance. I guess the boss knew that because after my first meeting with him I was then partnered with a young guy who was my own age. I initially thought it was because my business was less important than the other clients. My mom had spent down a lot of my fathers accounts but the boss continued to work with my mom out of loyalty to my dad. Now I was working with smaller numbers and was only worth the time of the young guy fresh out of school. My dislike of the company grew. I decided to keep them until my situation had settled then take my business elsewhere.
But then I got to like the new guy. He was "on my level" with communication styles and I was not intimidated to ask questions...He was never too busy to talk to me. Now it's been 3 years and I still continue to use the new guy. I still dont 100% trust him- I dont know if I will ever really trust anyone to handle my finances. But I am satisfied with him.
So todays meeting went well. I am 60% stocks and 40% safe. Thats where I feel comfortable being. Through 2009 my account went up 26.3% - which I can hardly believe with the stock craziness we have been having. But stats are tricky- though it's math and math doesnt lie- I know it is easy to twist numbers to tell whatever story you want to tell. And I dont know how to read the charts that were provided to me enough to read any bad stories that might not be told to me (my distrust peeking through).
But I use my own math formula. I know I inherited $xxx in late 2005. I know how much I have spent out of the account since it was put into my name. And today it is only about 10% less than what it was when I inherited it. I have spent much more than 10%. So according to Gamecock math- the account is doing alright. So I am satisfied.
So there was a situation last night regarding the tenents who live upstaires. (Background: We have 3 college kids who are 4 months away from finishing up the 2nd year of a 2 year lease.)Last night around 3:45am a fight broke out. I was woken up by the banging and stopming. I woke up BB and we immediately assumed 1 kid was locked out and was banging on the door to wake his roomates to let him in. BB went outside with the keys to let the kid into his unit and on the 2nd floor balcony was a 2 kids just going at it. BB yelled at them to stop which they immediately did- but one kid immediately asked if he could spend the night downstaires in our unit, to which we responded "Of Course."
So the kid sleeps in our guest bedroom and when he gets up in the morning he and BB talk about last night. Seems 1 roomate is graduating in 4 months and all he does every night is get belligerently drunk. The other roomate wanted to call 911 last night on the drunk roomate but they didnt. And the fight broke out.
The kid who slept in our unit wants to move out. He finished up his associates degree in December, has not been able to find a job, and wants to return to New England where his parents are- but he has been staying because he is tied to the lease. To make it worse- the kid who wants to leave was in AA recently and now no longer wants to be around drinking or drunk people.
I was already at work when this conversation took place. BB sent the kid back upstaires to work it out with the option that if he can get the other 2 kids to take over his 3rd of the rent- he can go. I am inclined to let the kid go anyways and absorb the $350 month loss because the long term consequenses of an AA recovering person living with a drunk is worse than the $1400 we would be losing. BB is not on board with that- telling me I am not their mother.
So I think regardless- the lease ending in 4 months is not going to be re-newed. We will have to find new tenents. BB and I are going to go over our options tonight about this situation- and what to do about getting new tenents.
Offhand I think our best bet will be asking a realtor to find us a tenent. The realtor can let the applicants in and out of the unit (because I work so much)- and screen their background checks. (I dont know how to do that.) I think we pay a small fee- like 10% of the first few months rent?
I am still around. Working is getting busier as I have learned to do more and gained my boss's trust.
Not so much posting time.
I also had some setbacks with my new dog and the stress over what to do was hindering me from focusing on anything else. (aggression with strange dogs.)
But BB and I just went away for the weekend and he took it like a champ (people coming into the house to take care of him and other dogs). I was really worried about that. Now I can focus on other things... like finding him doggie training classes!
BB and I are going to test him this weekend with some excersizes and then reevaluate what his needs are.
But because he was so good for our neighbors this weekend I have had a large burden off my back and will hopefully get back to regular postings.