"Prepare to enter the poorhouse- you little b*!^h." -That line from the TV show "Entourage" has been playing through my mind all day long.
I know it's because I closed on the "Impulsive Purchase" today. It was very anti-climatic and I really feel somewhat- I don't know- disappointed maybe.
BB wasn't here to go through it with me so the responsibility was on me. I was so afraid something would go wrong I refused to let myself get excited about it. I really wished BB was with me- maybe it would have been more exciting. And since it is currently rented I didnt get the satisfaction of walking into the building after the closing.
I just cleared out my bank account, signed all the documents and handed over almost $12,000.00 for what feels like nothing in return. The realtor didn't even bother to bring the keys to closing, telling me he will drop them off "later" (he lives next door to me so it's not shady- he can just be lazy sometimes). After I handed over the big giant check I was given some papers and told I was done.
On the way home I drove by the property. "Yup- that's the house- it's still standing" I thought as I drove by it.
What worried me was that the seller (also the selling realtor) did not bring me the $1000.00 in rent deposits the current tenants paid. I was expecting the money at closing- as some sort of perk me up. But nope. The woman waited for me to bring it up and just nonchalantly goes- "oh yeah. Ok. I'll get that to you."
I was kind of thinking- "When!? When will you get it to me? And How?!" But it seemed like everyone had their own agenda at the closing. My realtor was busy checking to be sure all his docs were in order to present to his real estate company- the lawyer was monotonously handing me papers to sign- and the seller/realtor was bantering with my realtor.
So I let it go and tried to trust her.
I have to chase her down anyways because 1 of the renters is Section 8 housing and the housing authority said it is too late in the month to re-route the rent check to me. The rent for March is going to the old seller who will need to give me the money.
Nobody brought up the 2 days of prorated rent that she owes me either. I was going to let it go I guess. It's $85.00 which hurts me to lose but I feel like I am already going to be chasing her for the $1000.00 deposit and the March rent- so might be better to let the prorated rent thing slide in my pursuit of the bigger money.
It makes me nervous. But BB called my realtor and asked about it and was reassured that if I don't get the rent money and the deposits by the end of next week- we can go and try to revoke her real estate license.
I don't want to revoke anyone's real estate license. I just want to build my bank account back up.
So I thought today would be fun and exciting like it was when we bought our first place- but it wasn't.
I am also annoyed because although I put down $5600.00 on the loan- the loan only reflects $2898.00 was paid towards the principal because an FHA charge was wrapped into the mortgage. And no one told me about it. Sneaky sneaky these mortgages are. So I handed over almost $12000.00 to see $2898.00 come off the principal.
But we own it. It's not completely cash flow positive but close. If the 2 units collect the rent the owner says they do- I will have to cover a gap each month of $83.00. Neither unit has an existing lease- 1 family has lived there for 14 years and the other tenant has been there since 2002. The seller was sneaky and listed in her advertisement that the place was collecting $1700 a month- a good $500 a month more than what she disclosed after our offer was accepted. But looking at the property appraisal- it says that the building collects $1350 a month- which would pot me in the profit margin of $55 a month (which I would take!) So now I just have to wait and see what the rent money is when it's handed to me I guess. Because the seller has been so conflicting with the information-I don't really trust her at all.
Archive for February, 2010
"Prepare to enter the poorhouse- you little b*!^h." -That line from the TV show "Entourage" has been playing through my mind all day long.
I have taken to calling the new duplex/townhouse our "Impulsive Buy". It was impulsive- having looked at only 1 other property and putting in an offer on this place 3 days after we decided to start looking. And the place is currently a duplex but we live in a duplex so it gets confusing calling it a duplex. So it has come to be known as the impulsive purchase house.
We close on it tomorrow. Almost 13 months after we closed on our current home (It's still my dream home). I want to record my experience with the closing cuz I found it so helpful to go back and read my entries from our last home purchase.
Our closing costs are $5770.00 ($2130.00 less expensive than last year)
Interest rate is 4.875% (less than 5.5% interest rate of last year)
We were accepted for the loan on the first try! (different lender than last year too)
But this time they needed different documents than last time. This time the bank asked for proof that there is no mortgage on the CA property. Well how do you prove that? They did a title search on the property and found no liens on it-they ran my credit report and saw I was not responsible for paying a mortgage on it. They saw my bank statements for the past 2 months and saw I never made a payment for a mortgage on it. ...not good enough. They wanted more proof. They also asked for this info on Tuesday. Closing is on Friday. That left me scrambling. But we got through it.
This time BB is in FL for baseball during the closing. The lender was supposed to FedEx him the papers to sign and have him send them back. The plan was to send the documents by 11am Wedensday morning to ensure a timely trip for the documents. No they did not get sent out at 11am. Or 1pm. Or 2pm. About 3pm I get an email saying the documents will be emailed to BB when they are ready and he will need to sign/notorize and send them back.
BB does not have a computer in FL. (We thought he would get a free one through the team but it never panned out...he doesnt need/want one anyways.) So I called/emailed the lender that this was a new plan and BB has no computer. If the lender wanted this new plan to work she would need to call BB when the docs were emailed so he could drive to a printing place like Kinkos and print them out. The lender emails back that she thinks she can send the docs through FedEx in time to get them to BB. So she FedEx's them at 6pm (7 hrs later than planned!). But then she emails me that she forgot the Truth in Lending disclosure and will email that to BB in the morning (today)(Totally defeats the purpose of mailing them- dont cha think?).
BB got the package about 2pm today, drove to Kinkos and printed out the last document. He was annoyed because the lender never marked where he was to sign anything. So he told me he is hoping he signed everything but will not be surprised if he missed somewhere.
BB went to FedEx the paperwork back but the shipping label the lender included for BB to use is not an overnight label. So BB had to purchase an overnight delivery label (for $50.00!)and I am really ticked off because I know they built the label into a price somewhere. So we paid for a label we couldnt use- and had to purchase a new one.
So hopefully the documents make it back before the closing. I am a little ticked off that everything waited till the last possible second- it would have been nice if BB had more than a 3 hr timeframe to review everything before he had to ship it back.
But what can you do- at least we are closing.
Had a fabulous weekend. BB left last week for Spring Training and this was my first weekend alone. It was glorious! My time was truly all mine- I ate what I wanted, I slept and woke up when I felt like it, and I did whatever I wanted, when I wanted.
I bought a Camellia tree to plant in the front yard. For those that dont know- it blooms in the winter and has large beautiful flowers that almost look like Roses. They are in bloom all around Savannah and I wanted one of my own. Now I have it!
I went for a leisure walk with the dog Saturday in the georgous mid 60's weather. The walk was so enjoyable we went for another Sunday morning and another Sunday evening! I love walking downtown on Sundays hearing all the church bells ringing.
I went out with friends Friday night and we stayed out till 3:30 in the morning! It's been a long time since I have been out that late. It was nice not worrying about BB at home and knowing he was going to stay up to wait for me, or get me up early in the morning.
It was a beautiful weekend. I hope everyone else enjoyed theirs as well.
Doing well here in GA. The weather is warming up a few degrees. Makes me want to be outside.
BB left yesterday to start the baseball season in FL. Saying goodbye was not too bad. Brinks dying over the weekend used up all the tears I had and put BB leaving in perspective. BB will only be 6 hrs away and we already have plans to see each other once a month. Thats much better than once a season as it was last year.
BB settled into the house in FL. He went by the baseball school where he used to give lessons and re-negotiated his pay rate to do lessons. He is now going to be making $50 a half hour to teach baseball lessons. He has 3 lessons lined up for tomorrow!
Teaching the lessons is very hard on his back- I am pretty sure he is not going to be doing them very often once the routine of coaching for the professional team and then working a second shift at the baseball school starts up. But for now- while he is enthusiastic- go BB.
I'm doing well. Trying to keep the numbers working with this new house purchase. Still not positive how it's all going to work out but we will get there.
He went pretty peacefully
Brinks is sick. I am sitting on the couch right now keeping an eye on him- figured I will blog about it as I have too much nervous energy in me about him and no where to direct it. I don't want to clean because I want to keep the place as peaceful as possible for him- no walking around and making noises.
When we adopted him from animal control in December we knew he had heartworm. But he was also underweight, had kennel cough and was unentered. So we fixed him, got rid of the kennel cough and worked to put some weight on him. We couldnt put on more than a few lbs on him- so 10 days ago he got the 1st round of heartworm injections.
I guess its a toxic poison they inject in him and it kills the heartworms, but also damages a lot of other areas, and the dead heartworms in the body are dangerous themselves because they can get lodged in the lungs and cause damage. So it's important to keep the dog quiet for up to 2 weeks while the toxin and heartworms dissolve and get out of the system.
We have kept Brinks quiet and he has reacted so well to the injection. He has gotten healthier and his appetite really increased a lot.
Last night he was totally healthy. He ate a big dinner and jumped on our bed to go to sleep.
This morning he was not on the bed when we woke up. That was odd...and he was slow to respond when we called him back into the bedroom. I had to lift him back onto the bed. So we knew he was sick- just thought he was a little mopey.
He ate no breakfast but he was very finiky eater as early as a week ago.
Then about an hour of waking up, BB left to go grocery shopping and I noticed Brinks kept getting up, moving a few feet and plopping back down. Like he was uncomfortable.
After about 10 min Brinks tried to get up again and had no use of his hind legs. He collapsed on the ground so quick I thought it was my imagination. I called Brinks to come to me- he got up and dragged his hind end as he tried to walk.
I called BB to get back home and made an appointment at the vets. They said they were slammed and couldnt see him for an hour. BB came home and we waited around. After 20 min we just carried him out to the car and decided to wait at the vets.
When they saw BB walk in carrying a 70lb rottie, they saw him right away. The vet said his heartbeat was very low, his lungs are filled with fluid and she thinks he might have had a stroke as a result of the heartworms in his system. The vet wanted to immediately get some x rays, EKGs and start medication. She said she was "cautiously optimistic" about his condition. So we left him at the vets.
BB and I came home and went for a walk. After an hour we got a call that he was stable and resting. They would call later with more news.
Then the vet tech called us 20 min later to say Brinks went downhill and we needed to come see him.
When we got there- they had him on the floor hooked up to an IV. Apparently he had vomited a huge amount of blood in his cage. His body had gone into shock and his organs were shutting down. His temperature had been low to begin with- but now its about 10 degrees below normal.
They were working to get him back and the vet said they had just given him everything they could give him- the next few hours would determine which way he went. So BB, me and the vet tech sat with him on the floor for an hour. We put heating pads on him to warm him up and just kept checking to be sure his eyes didn't turn yellow (another sign of organ shutdown). He had massively bloody diarrhea but the vet said that was a bad sign- but better than vomiting the blood.
The vet closed at 1pm- but our only option at that point was to move him to the emergency clinic or leave him at the vets in a cage with only techs coming in to check on him every 2-3 hrs. I didn't leave him alone in that critical state- but the emergency clinic is very expensive. So the vet tech offered to stay after hours with us for awhile until he either stabilized or had to be put down. So we stayed at the vets with him and he did better. He slowly became more alert and stopped the diarrhea.
After almost 2 hrs the vet came back to check on us and make a decision. She said he is not out of the woods but he's stable. If he's going to make it he just needs a regular IV and sleep. So we decided to take him home where we could keep an eye on him. The vet called the emergency clinic to let them know he might be coming in tonight, and loaded us up with IVs and medication.
We carried Brinks to our car in a stretcher and loaded him in. The drive was stressful with a lot of turns and bumps. Getting him out of the car into the house was hard. The whole thing took every ounce of energy he had earned.
We have him in the kitchen now. He is sleeping on 2 comforters with 2 heating pads and sheets. He is sleeping. He has no alertness at all. Basically we were told that if he throws up blood again- we would likely be facing putting him down.
I just heard him moving and checked on him. He had been sleeping on his side but just shifted so he is now sleeping on his other side.
That's a good sign. Not only because it takes a lot of strength to move under all those heavy blankets- but also because the fluid in his lungs pool up when he is on one side too long. I was going to shift him onto his other side soon- but he did it for me. And he didn't puke or have diarrhea.
So now I wait I guess.
Things between me and BB are back to normal. Things were normal again 2 days later. The fight helped to clear the air and we are back on board with each other again.
Regarding the new townhouse we are purchasing: The selling realtor (who is also the owner) wont list the house as "under contract." She still has it up for sale. She is afraid our financing will fall through- or she wants higher offers. My realtor is fuming mad over this. He is first a friend of ours- but since he is a realtor we used him to buy the place. He got tipped off that something was off when the owner/selling realtor called him ansd asked for the keys to the place because she was showing it. Then over the weekend our realtor got several cash offers for the place and he is sure the owner/seller has received about the same volume. But together we double checked our contract and as the seller- she signed and dated everywhere- so it's binding. We got the place. The mortgage appraisal is today.
In other news- someone somewhere got hold of my credit info and started buying things in France. My CC company was great in alerting me and shutting it down.
Thats about it. Off to read all of your blogs now.
So BB and I had a good looonnng fight last night. Tears/threats/yelling...it was awful.
It started when BB called me at work to say he talked to a bank about getting a HEL to renovate the townhouse and learned they are nearly impossible to get nowadays. He said we would need to get a consdtruction loan.
I lost it. I know construction loans are very complicated/very expensive, require 20% down, and must be paid back in 1 year.
I took his call and said: "This project is already getting more expensive than we planned. You were in charge of organizing and making a plan. I knew it was going to get messed up because we were so impulsive and there was no research first...and now you want to use my inheritance for the 20% down to fund your construction loan. No. No Way. NO WAY!"
So we argued on the phone and hung up. I simmered at work and when I got home I really went after him. I told him I was tired of him coming to me for money, I was already tired of this project and that the down payment money I was fronting under the promise he will pay me back half was the last dollar he was getting for this project. ...those were the nicest things I said.
Then he keeps argueing with me and makes some good points and I start to weaken.
Then he goes in for the kill. Oh this hurt.
He said "Gamecock- you keep controlling the money with your plans and your ideas. But you had the biggest chance in the world to make money and you blew it. You made the worst business decision ever 4 years ago and I have never opened my mouth. I have never mentioned it. You just go on with your plans and have never even seen how stupid you are with your biggest asset."
He's talking about a condo I inherited 4 yrs ago in San Fransico. At the time of the inheritance it was appraised at $600k. The unit had been purchased by my parents in the 70's for $43k. When it was passed to me it had no mortgage, the taxes were locked in at less than $2k a year, and it had been rented by the same family for 6 years (the same family still occupies the unit.) The rent it was collecting was a little low for appraised value/cash flow standpoint. Basically my family had not been to CA in over 15 years and we really dont know what the rental market is like. But the place has not been updated so my mom had the rent at a price she thought was fair- and I kept the rent at that price, raising it just 3% a year for 2 yrs till the real estate market tanked at which point I have not raised it all all for 2 yrs.
My financial advisor/BB/ and BB's dad ALL tried to convince me to sell it.
I was leary of the financial advisor because I figured he just wants a bigger stock portfolio to manage so he can get a larger commission.
And I thought BB wanted liquidity so he could live like a king.
BB's dad was the most rational- showing me that $600k sitting in a bond fund was earning about 2x the interest as the rent was collecting without all the liability...but I looked at his charts and passed on the idea of selling.
The place is sentamental to me because it was my parents. And I personally dont trust myself to have access to that much money. Plus the rent it collects is plenty for a normal person to have as extra income- why get myself accustomed to a lifestyle that I dont need? I wanted something solid to pass down to my kids. And most of all- this might be awful- but I think once I sell the place while I am married to BB it becomes OUR money because it was accrued while we were married. Then if we ever get a divorce half of it goes to him. But if I keep the inheritance intact, in the event of divorce- it stays with me- because it was given to me only before we got married. True? I dont know. (Do I think we will get a divorce? I dont know. Does anyone ever think they will get a divorce when they get married?- yet 50% do.)
So for years I have not really given the property much thought.
Well the property value has of course tanked. Foreclosure listings in the building are selling for $450-$470.
So last night BB explained to me that I have mismanaged away $150,000. That people are predicting California will never boom again the way it was- that every year I own it the property is that much older and has more disrepair than the last year. BB told me that every week during the real estate crisis he would think about the CA property but never said a word. And I continued to live my life never even aware of the money that was being lost.
So ouch. That more than stings. It stings bad and you know why? - I think he is right.
Holding onto the property will just be trying to recoup losses. The property is getting no regular maintance and every year that passes a problem could be getting worse- leading to more inspection issues when it does sell. And having the property so far away with no ability to regularly look after it does increase liability issues.
I think I actually should sell it.
So BB and I had a heart to heart last night. About the new Townhouse purchase.
Over the last few days it has quietly dawned on me that I am really really in love with our current house and the idea of moving out of it causes me to cry.
I have been fighting this feeling because logically- moving to the townhouse is a big step up. Plus I was initially excited about the whole thing and never told BB in the beginning that I dont want to leave. So I have kept quiet.
But last night I just kept bursting into tears every time I thought about something in the house that I would miss.
Last night it was the thought of leaving all the huge oak trees that line our street and the crepe myrtle tree directly in front of the house. It is so fun to watch squirrels running up and down those large oak branches in the summer.
The new street has 1 large oak tree and the rest is all skinny sapling trees.
So I confessed to BB that I dont want to move. I dont love the new townhouse- at best I Kind-of-Like-It. I explained that I put everything into this house- every decision with this house was heavily pondered and I always wanted to use only the best materials because I love the house and considered every expense a long term investment. My heart sings when I pull up to this house after work and this house makes going to work everyday worth it.
The new townhouse is good. I dont love the house- but I do love the location. But I cannot say that I wont have fits of regret leaving our current house.
BB surprised me. He loves our house too! He completely understands and he said he feels very similar. He is excited for a big kitchen. He is excited for more room and to live in a reletively safe neighborhood. But he much prefers our house to the townhouse.
But he feels very strongly that moving into this townhouse is a step towards increasing our net worth. I actually agree. The townhouse purchase price is insanely low. It's in the worst condition of a completely renovated middle class location. If we renovate and upgrade it- we should have no problem selling it for a profit.
We dont want to try to "flip" it because that seems risky given the market and numerous flip failures everywhere.
Plus- this might be a one time opportunity to really make some money and we dont want to be impatient and lose a very marketable property by selling in a down market.
Plus- if we do "flip it"-we are still living in a house in a bad neighborhood. Though I personally love the neighborhood and the city is making strides to crack down on crime in the area- it's still one of the best houses on the block. BB wanted to wait a few years for the market to rebound and our neighborhood to improve before putting more money into it.
So thats the decision we came to. We will go forward with our plan to renovate/ upgrade and move into the townhouse. We will live in it a few years and wait for the market to improve. When renovations on the townhouse are done, BB and I will talk about the potential future value of the house. When the townhouse hits that pre-determined value- we sell. Meanwhile- the craftsman home duplex will be earning rent and still be ours. We then take the money and re-asses the craftsman home neighborhood. If we want- we return back so I can enjoy the oak trees and coffered ceiling.
I just had to make BB promise me I would not get "trapped" in the townhouse. He has been so excited about the place I could not determine if it was the thrill of the deal-the idea of demo and renovation, or if we were going to be constructing his dream home. I was worried that BB would enjoy the townhouse so much that he never wanted to leave.
Luckily- BB is on board with me- and see's this as a temporary adventure to get us to a more secure future.
So I am not too huge a fan of this rental property deal. I am still coming to terms with all the events and regularly go from excited anticipation to anxiety/worry. I still love this 1st home and consider it the ultimate betrayal to move out- even if we are not selling it, and plan to return to it one day.
BB is SOOOOOO excited it is as if he has hit the lottery. I am not so sure why he is so excited. I know he is tired of no dishwasher, and a tiny bathroom...but really? He is that sick of our small unit that he is nearly dancing at this project?
I think it's the chance to be Mr. Handyman. It's all about the demo and reconstruction.
And I think he is excited to go back into the shopping spree mode we were in when we first bought this place.
When I think of the long term consequenses of buying the property I am happy. In a year from now construction will be done and we will be enjoying it. Our networth will be up and we will be able to plan better for the future.
But short term- my financial Mojo is all messed up.
THIS WASNT IN MY BUDGET! This was not a part of my 2010 plans or goals. I had everything nailed down to the dollar and cent for this upcoming year. Now everything is screwy.
Now I have to spend $1k in ernest money this month, $12k for closing costs and down payment next month, and $400 for a home warranty.
BB keeps adding on expenses after expenses and he is in full blown planning mode. I am tired of babysitting him. I feel like he logically cons me. He lays out a logical plan about how "the roof needs to be replaced within a year but the home warranty will pay for it."
I say: "Huh? Home warranty? I forgot we need one of those. How much is it?"
Me: "ok. Well if it will replace a roof I guess we should get it."
Him: "If there is a big storm that comes in the first year then the warranty will replace the roof. Theres only a $500 deductible."
Then I get off the phone feeling like..."Wait. what just happened? I thought the roof was fine?"
So you see folks? He just managed to get me to commit to a new roof, a home warranty, and to a $500 deductible all in the span of a few minutes.
He never once talked about how HE would pay for any of this. Grrr...
I think I need to have another talk with him.
Inspection went well- I guess. Since we are planning to almost gut the place and start over I guess there was no need to really go over everything with a fine tooth comb. Our contractor acted as the inspector, and basically talked numbers with us.
Learned a few things:
The upstaires renters have been living there for 14 years. So there is no lease- and I do not feel the need to create one. They pay $600 a month.
The building is coded for section 8 housing. The upstaires renters are section 8 and the downstairs renter is section 8.
The downstairs woman has lived in the unit several years as well but is ill and has gone to live with her daughter. She is planning to move her stuff out and vacate the apartment- but the government assistance checks will continue to pay her $500 a month rent until that day comes (and based on the stuff in there I dont think it's coming too soon).
The air conditioning unit is about 3 years old, the water heater is about 1 1/2 years old.
No sign of termites.
The building is in better condition than the contractor expected, it is only tilting about 1/2 an inch instead of 3 or 4. (I guess this is good news?!)
Because it is section 8 housing the place has lost a lot of it's historical character. The molding is 80's, most of the wood floors have been covered in tile or carpeting and we are not sure of the condition. The ceilings were dropped down to make room for ductwork, and almost everything is a handyman special repair.
Now for the down and dirty numbers:
The contractor gave us a worst case scenario price for everything we might possibly want to do and it is up to us to whittle down our wants into our price range:
Lift the house $2500
New electric $2500
1 Window repair $500
Stairs (build Trim & handrail): $3,000
Kitchen: Heart Pine & Raised Floor: $4,000
New ½ Bath under the stairs: $4,000
New Kitchen (Including appliances & labor): $14,000
Raise the ceiling $2,000
Plaster, paint, trim $2,000
Guest rooms (Carpet & raise floor): $2000
Plaster,paint & trim $2,000
Bath upgrade $1200
Masterbath/Master bedroom $7,000
So those numbers dont scare me. When we did a walk through to look at the place he told us he could do a complete upgrade for about $40k- so thats what we had prepared for.
The plan going forward is to continue renting the units through August while BB is away. The combined rents will pay for the mortgage and expenses -$120 / month. If the downstaires renter chooses to vacate by April- we already have a plan to rent to some baseball players in town for the summer and can charge them $800 a month. Therefore the mortgage/taxes/insurance will be completely covered.
In September when BB returns- he and the contractor will work everyday together to get the project completed. The project is estimated to be a month long.
BB and I will take out a $40k HELOC to complete the project. BB has promised me to stick with the budget- he promised he will not come to me requesting more money. He knows that after $40k the well is dry. If we stick to the $40k HELOC our finished investment will still be about $80k below what the current upgraded comps are for on the street, and I want to be sure we are definately in a position of immediate equity when the reno has finished.
Monthly mortgage/expenses plus HELOC will leave us paying about $800 a month out of pocket once we have rented the unit of the house we currently live in.
So thats where we are with the project. I know things will go wrong but the whole project is too far away to even worry about right now.
I am just glad we have a gameplan.