Gamecock's Mind over Money

So much has happened in the last few weeks! I'm behind in everything.

To start, the CA condo went up for sale 2 weekends ago. I posted before pics in a previous post. BB and his friend went to CA for 10 days and added new floors throughout, repainted every surface except the cabinets, had the heating replaced, changed all fixtures and had the place professionally cleaned.We had a stager come in and finish off the place to get it ready to put on the market.
Here are the after pictures:








We recieved an offer $20k below asking within 3 days and countered at $3k below asking. They did not counter back. Then 3 days ago we recieved an offer $3k OVER our asking price!

There are some issues for concern. The buyers want to use an FHA loan, and this HOA FHA eligibility expired a few months ago. The realtor is concerned about getting an appraisal to support the purchase price. Before this offer, she really pushed me to be happy with a purchase price $10k below asking. I thought our asking price would be a no brainer easy to get, but she had a lot of hesitancy. And now she is worried about the appraisal. Also the buyers are purchasing AS IS, but you never know how the inspection will turn out. But those are out of my control, so I am letting the realtor handle it.

In other news, on my side of the country, BB has been working hard on his new rental property. The downstairs unit has been complewtely repainted, recaulked, new bath vanity, smoke detectors and some window fixings. The roof has been repaired. The place was listed on Craigslist for rent since Sunday and we have 2 showings set up before the weekend.

Here are pictures of the downstairs unit:









So this weekend, BB and I will get the upstairs ready to rent. The upstairs does not need nearly the work the downstairs needed.

And then my work has been exhausting me. My boss is out this week b/c he had twins over the weekend. I unofficially took over his job as best as I could. I simply dont have enough hrs in the day to get everything done. I knew this would be a tough week, but I have put in 40 hrs in 3 days! Thursday and Friday will be pure overtime for me. I was so stressed today, I almost cried. But I didnt. I now have so many people to report too...I leave the office every night in good shape. I have a to do list set up for the next day and it seems managable. Then throughout the day there are so many unexpected phone calls, so many unexpected interruptions, and so many more people emailing me for updates! Asking when X report will be done, when I last did Y, am I going to do W, why hasnt Q been done. OMG I cxould get everything done in the day if I didnt have 5 people breathing down my neck constantly requesting updates. And I dont think the 5 people are very aware of each other...they think they are the only person I am reporting to.

But it is a great opportunity for me. I am being given responsibility to handle things way beyond my authority level, and aside from not getting things done fast enough to please my temporary bosses...there have been no catastrophes. Well, there were an unusual amount of catastrophes last week that I'm still cleaning up this week...Aand that is slowing me down too. But thankfully those issues cant be attributed to me taking over and making mistakes. They were problems that had been building and we couldnt contain them any longer.

Ugh. I wish I had more time to focus on the Real Estate. But right now I really trusting people around me so I can focus on work.

It feels good to vent.

A lot going on right now, I'm writing to just organize my life.

On the property side of life...

BB has returned from California. The job remodeling ended up being way bigger than we anticipated. New paint, flooring went down in every room, the heating was replaced, new faucets, light fixtures and then cleaning every surface.

I have not yet organized the receipts to get an idea of the cost of this trip. Including airfare, car rental, food, I am guessing in the $7-9k range.

BB and our friend spent about 8 days working on the condo getting it ready to list. They had 2 full days to play. They enjoyed the Haight Ashbury area of San Francisco but really loved the Redwood forest.

So the property went on the market a few days ago. Yesterday there was an open house and I am told 9 couples came out to view it.

I've got a few more papers to sign, send back and then that place will be off my priority list and fully in the Realtors hands.

Rentals...

We close on the Chocolate house Monday. The lawyer found a problem with the title and the bank needed a few days to get that cleared up.

BB has lined up a few contractors to make repairs, updates next week and we are hoping it will be ready to rent by the end of the week.

Renters move into the upstairs unit of my other rental in February. January was a tough month to go without renters, but I have learned to show the units after they are vacant. Showing while the old renters are still occupying the unit hoping for a seamless transition does not work for me. The unit is generally filled with dirt, chaos and does not show very well. So I wait till the old renters move out, clean it up and show it. This means a few weeks of vacancy, but saves me the hassle of giving 24 hr notice to the renter, and then showing it 10+ times. When it's vacant, it rents easily. This time I only had to show it 3x.

Personally...

When BB returned from CA his back was really in pain. We went to FL to see his back Dr to get injections to reduce swelling. BB is feeling better now. But he still cant do much around the house.

We are waiting on Cobra paperwork to fill out for his health insurance. I think the old insurance ran out in early Jan, and we need Cobra to cover these injections. On Monday, BB will call to see where the paperwork is.

I ran the numbers last night to get a sense of our 2012 income verses 2011 income (when BB was employed). We are short about $2400.00/month even if we count the full $3k of new rental income.

There are a lot of variables that changed besides losing BB salary. He recieved bonuses a lot which averaged to about $1k a month. Our health care was free. His employer matched 10% retirement contributions.

We were collecting rent from the CA property as well. The property that is now up for sale.

But on the flip side...selling the CA property...I plan to pay off my primary house mortgage, HELOC and CC bills, reducing my expenses about $2k a month.

And once those are paid off, I want to refinance our mortgage on our first house from a 5.5% rate to maybe a 4% or whatever I can get. That will reduce the mortgage by maybe $100.

So although we are losing a significant income with BB job loss, we can still pay our fixed monthly expenses. I am anxious to get everything settled so we can get a feel for our new financial normal.

So..the big news is that it appears we are buying the Chocolate House. We are taking the plunge and BB is going into a real estate career pretty heavily.

The last post stated that we had countered the banks counter offer by increasing our 1st counter offer by $1k.

The bank accepted!

I think we had a good negotiating hand because we made the first offer a few days before Christmas, and we negotiated through until we had an accepted offer about 2 days after christmas.

We didnt plan it that way, but we knew we had a strong hand because people are not looking at properties during the holidays, so it was unlikely there were any other showings around the time we submitted our offer.

On top of that, it rained for 2 days over christmas and we were able to make sure our realtor indicated to the banks realtor that there are water marks on the ceiling from the roof. We already knew the roof needed attention and built that into our offer, but since it was raining during negotiations, we reminded the bank that there are more water marks growing by the day! (There are not really, but the bank doesnt know that.)

So it was lucky timing for us.

We close in a few weeks, whenever the bank is ready, we'll be ready. We offered a 10 day closing, but have heard the bank wont be ready in time. Works for us.

So far we have had the pest guy out there, no termite damage.

A roofer is coming out in the next 2 days to give us an estimate.

The Air/HVAC is being inspected tomorrow.

The home inspection is scheduled for Wednesday.

The electricity and water was just turned on. BB and I did a walk through to see what is needed to get it renter ready.

The place is missing a lot of ligh bulbs, faceplates and some broken windows. One floor washer/dryer needs to be replaced, and a faucet downstairs. And several rooms need to be repainted.

When everything is done, I'll post pictures!

There is a local private college in town that fills most of the city rentals. We are hoping to rent each unit to the students. I doubt many students are looking to rent in February, but I think we'll get it rented to someone pretty quickly.

In other news, the tenants moved out of the upstairs unit of our original duplex (my Heart House). I'm not sure when they moved because when I went by this morning it was vacant. They never called to say they were going.

So BB and I worked for 3 hrs today cleaning the unit. It took longer than expected, and we did an inventory of some biig expenses coming in the next few yrs. But for now, we just needed to get a new stove and kitchen light. We ordered a stove for $360 and it will be in on Saturday. I picked out a pretty brushed nickle light for $130 to replace the pretty gross flourecent light.

I listed the place on craigslist today.

I saw the downstairs tenant (2 single guys) and they have requested pretty girls for the upstairs. I told them they have a 50/50 shot!

I hope the calls come soon!

Well 2012 seems to be here and my life did not get sorted out before it arrived. So I'm going to set some goals, though I feel like my life is still unpredictable and might head in wild directions.

Goal 0: Implement CA plan. This is to sell CA, pay off our primary mortgage, CCs, HELOC, lawyer, and find a safe place for the remaining money to rest.

Goal 0A: Get a lawyer to draw up paperwork sorting my inheritance from BB's financial contributions. My inheritance is my money unless I mingle it, which I have by putting so much into real estate, and BB has agreed that we should seperate it on paper to put my mind at ease.

Goal 1: build up a $5k emergency fund for each property we own.

Goal 2: by May 2012, go back to saving $200 month for a replacement BB car.

Goal 3: Start horse riding again.

Goal 4: Start a ROTH IRA for BB so he can save for retirement.

I guess those are my goals. My head is mostly filled with plans and it's hard for me to separate the two, though I do think it is important to create both plans and goals.

I try to look down the road and envision what I want next Christmas to look like, but it's so fuzzy. I'm still wrapping my head around the changes going on. BB retiring from baseball and going head on into a real estate investment career.

But that means good things are on the horizon. BB has found another career hes really passionate about. We just need to do it right.

Happy Holidays everyone! I enjoyed reading everyones Christmas blog and hearing about their family celebrations.

BB's father came down here to GA for a week and we spent the day watching movies. Relaxing day for sure.

On the real estate front, I last stated that we were going to look at a property for a rental income.

We went and saw the place that day, it is very impressive. I call it "The Chocolate House". It is painted a chocolate brown with white trim. It is a duplex and with 4300 sq ft it is huge! One of the biggest duplexes I have seen in the city. The upstairs is 5 bd 2 bath, and the downstairs is 4 bd 2 bath. It needs to be cleaned up, fresh paint and it'll be ready to rent.

It's a foreclosure listed at $189,900. We put in an offer for $165,000 with 10 day closing. The bank countered at $185,000 and asked for 10% earnest money.
We have countered at $170,000 with 10% earnest money. We are waiting to hear what the response is.

We went out and looked at it again 2 days ago to double check everything before we countered. We went over it as thoroughly as we could. It has been winterized, so the water and electricity is off. But assuming those areas are good, for work we found:

Thorough cleaning/touch up paint needed
Washer/Dryer upstairs needs to be replaced
Stove downstairs needs to be replaced
Upstairs toilet missing
Upstairs kitchen sink faucet needs to be replaced
Some porch boards needs to be replaced

The biggies is the roof and siding.
The roof might be leaking in spots. Because there are water stains along the outer edges of the ceiling. It is either the roof or the gutters are not working. We'll get a roofer up there if we go under contract. If it can be patched for a year, we'll be ok. If not, then we wont buy the house.

The siding. The paint is peeling pretty bad. It could use a paint job today. But can wait a year or two. The siding has not yet been impacted by peeling paint so no rot.

The numbers:
We think we can rent the upstairs for $1600 a month, and the downstairs for $1400 a month. With a $3,000 income, we will put $1k a month away for future repairs, $400 for taxes and insurance, and that will leave $16oo cash flow for the investor.

If we save $1k a month for 9 months, we can put on a new roof. After that, if we save $1k a month for another 7 months, we can repaint the whole house. So the big items will be taken care of in the next 1.5 yrs.

The next big question is the electric/plumbing/HVAC.

We feel that paying $170k plus $5-10k in repairs/closing costs is the very top of what we can afford. So if any of the systems are out, we are not going to go forward.

The reason we feel good about this house is because a very high end investor owned the property and restored it before he went into foreclosure. He had a reputation to use high end rehab materials and saw his projects as a restoration of the community. His vision was in line with mine, to have a quality product that will last a long time and add to the value of the area.

So we feel optimistic about the systems.

In the meantime, to keep BB from having his heart set on this property, we have tried to find back up properties.

We found one yesterday that we thought had already sold. We saw the "For Sale" sign out front and checked online. It had sold in Nov, but the deal fell through so it's back on the market.

The duplex had belonged to a contractor friend of ours in 2009. So now we refer to it as "Jason's House" We had dinner there once. He lived in the top floor with his wife and son. A few months after we met him, his wife got a job in another state and they moved.

The house did not sell and went into foreclosure.

The current owner bought it for $130k and now has it listed for $200k.

We walked around it yesterday and looked at the pics online, it does not need anything to make it renter ready. Actually, the bottomn floor is already rented for $1400/month. It's 3300 sq ft.

BB called our realtor today and learned that the new owner put alot of updates into the house, and thats why they are asking $60k more than they paid for it.

So thats a bit of bad news. We were hoping there was a lot of negotiating room. Noneless, we are going to look at it today.

If the numbers figure that the Chocolate House and Jason's House are the same all in, then we'll be on an even playing field and I'm not sure what we'll decide.

But having Jason's House enter our conversations has really calmed BB. He is much less into the Chocolate House now and he's being more conservative with what he is willing to pay for it.

Thats exactly what we needed, so even if Jason's house is a no go, it accomplished my goal of showing BB that there are new opportunities everyday and we dont have to be fixated on one place.

I am posting as a way to organize my thoughts. Actually this is a vent. I need it. I wish I had great news to post, but my luck has not been going in a positive direction lately. Everything is still ok, just not making the progress we were making in the past.

A lot of changes are going on right now. So I’m trying to mentally stay ahead of each step.
The CA condo will be going up for sale in Feb. BB is going out there for 10 days in Jan to get it ready to go on the market.

BB will apply for disability in January. We are meeting a disability lawyer in late Jan to get information and involve him (lawyer) in the process. We were told to apply ourselves on the 1st even though BB will likely get rejected, so no time is wasted.

BB is going to have another back surgery. He went to the Dr a week ago to fill out disability paperwork and the Dr wants to remove the screws that are in the back to try and relieve some pain. This will be a week long recovery and then some rehab, so not a huge surgery, but also not a simple procedure. Especially since the Dr is in FL, so we’ll be 6 hrs from home for the surgery and recovery.

BB’s parents have been getting a divorce since August. BB’s dad has decided to move to GA and restart his life.

BB and his dad have decided to start a real estate business together. This will allow BB to have an income without working if he gets the disability. BB will be an investor and his dad will be the other investor. Together, they are not too handy so they plan to sub out any work that needs to be done. I want to get behind this plan, but I’m just not really on board. They talk about this plan several times a day, but I don’t know. Honestly, BB won’t be contributing very much to the company b/c he doesn’t have any money to invest. I think his dad feels bad that BB is injured and is facing 30 yrs of not working and is trying to help BB by starting this company.

I think they will be ok- I am hoping they don’t go overboard with the leveraging. Right now they want a few rental properties and once they have a steady income, they talk about flipping one house a year. But I just sigh when I think about it.

In the beginning of all this talk, BB was talking about buying properties for ridiculously low prices. $50k for a building and putting in $10k of remodeling to get it renter ready. The only buildings in that price range are falling down. I pointed that out but BB was confident he could find deals. He said he has been on the MLS and there are lots of good properties in that price range. So I let it go.

In the beginning, they were not going to start until the divorce is final so the business does not get dragged into splitting assets.

Guess what? BB has started looking at properties. Guess what? All of them are over $150k. Suddenly these are the good deals and less than $150k costs too much to fix up.

I guess I think this business could go somewhere (there certainly are great deals out there) if BB had some patience and if he was using his own money (which he does not have). He has good intentions. He thinks he can play this game and come out ahead. But every time he finds a property he likes it is “the deal of the year” and he is fixated on it and making an offer and not letting it get away. He has no formula to see what price he needs to get it for, guesses at a rental potential, no checklist to see about fix ups. He uses his gut and won’t listen to anything negative about the place.

I hate to be a Debbie Downer, but I find myself going extremely negative on the property trying to get him to come to the centerline and be neutral and objective. His energy and mind gets so pumped up and it causes me to stress and want to cry because he is being so (happy) emotional. I have to step back and retreat because his energy is too overwhelming for me. So I throw up my hands and say that I don’t want my name on this plan. But then later I insist on researching and seeing the place because I don’t want my husband getting involved in a bad deal and dragging down our future.

He allows himself to get fixated on properties without even going in them. Then when he goes in them and sees the reason why no one else has bought the place, he is so disappointed. I keep telling him “there must be something wrong with it, why else has it not been purchased?” But he thinks it’s because he found it first, not because more experienced people than him have rejected it and it’s waiting for a sucker buyer.

And if the property does not work out, (thankfully none of them have), he is crushed. He starts searching the internet again and talks about how disappointed he was about the previous property.
And then he finds a new property to be excited about in a day!

We are going to look at another property today. It’s huge and the outside is beautiful. But it’s in a non desirable neighborhood. It’s actually one street away from my 1st house that we bought (that I still love). Now that we currently live in a better neighborhood than that area, I have perspective and can see how that neighborhood is such a big obstacle to overcome when deciding where to live. And I can see how long it takes for neighborhoods to improve. When we bought our first house, I was sure the neighborhood was on its way up and would be a highly desirable area in a few years. Well, it’s been about 4 yrs and the neighborhood has gotten worse.

I think it is renter ready (based on the outside and MLS pics). But for the neighborhood, I think it is listed slightly high. It’s a foreclosure, and the previous owner kept selling it back n forth between himself and his company at hugely inflated prices and taking out higher and higher mortgages on it. I think the bank was left with around a $300k debt on it. It’s listed for $190k now.

Even if BB gets it for $30k less than its listed for, which is what he is thinking to offer, I think that will be a solid price for the property. Not a deal and certainly not a steal!

But BB has a lot of emotions running through him. I know that’s what’s spurring all of this. And I don’t know how to calm him down.

He wants to be contributing. He is being helpful in his housework but he wants to be making a financial contribution towards the family. I’m doing everything I can to not have him feel this way, but it’s not working. He wants an income. Now. Today.

He wants to have a title. A career. He wants to be able to tell people he has properties and have a whole smoke n mirrors thing going that even though it’s his Dad’s money, he can call it his company. He doesn’t want to tell people he is unemployed or on disability.

He wants to be using his time effectively. I am at work all day every day, and he wants to be doing something. Real Estate is something we are both interested in, and he wants to have something to show for his days. He wants a project.

I understand all these things, even though he has not come out and said them. I just don’t know how to slow him down. He has a project; it’s called our 1st rental property. And he ignores it. Right now it’s pretty self sufficient, but it could always use some attention. But attention costs money and he doesn’t have any, so he wants to use house money to put his attention elsewhere.

So all I do is keep hoping something is wrong with the properties he is finding. I keep hoping he’ll burn out a bit and see this as a job, not something to be sacrificing for and chomping at the bit to do. Then he can get some objectivity.

But he’s not going to burn out. Because his dad is all excited too. It’s a new chapter, a new start and his dad is as anxious to get started as BB. So they are on the phone all day keeping each other pumped up.

And the crazy way he and his dad have plans to move the money to avoid violating disability and keep it separate from the divorce….that’s another story that makes me sigh.

Well, like it or not it looks like we are going to be a losing a full time income. Permanently. BB has never really recovered from his back injury and is making plans to go on disability. The surgery worked as well as it can work, but the Dr failed to tell us that all the “things that could happen as a result of the surgery” are likely to happen. When a Dr. tells you about paralysis and death, you know they are telling you things to cover themselves, and that makes all the other things seem like stretches as well.

But BB only does have a limited amount of mobilization, and he is in different stages of pain constantly. He can work for a few hours at a time. But not be doing the same thing for those few hrs. If he is on his feet for too long, his back hurts. If he sits for too long, his back hurts. If he jolts his back- he is out for the rest of the day.

And now his body is having a negative reaction to the pain pills. Something about eating through his stomach lining. He can’t take more than half his dosage without having severe stomach pains. Last season he was using pain pills regularly and his bile ducts leaked and had to be removed. After the surgery the Dr said he thinks it was caused from the pain pills. Another fact that they warned as a possibility that we didn’t think it was a probability. I was kind of disappointed that he was being prescribed the medicine knowing it will lead to a breakdown of his organs.

So BB is going in for another surgery next month. To try and ease the pain for him. But the Dr has already said he’ll sign off on disability paperwork to help BB’s case.

So from the little data we have gathered so far:

BB must not work for 6 months before he can file.

Because he is young, he will probably get rejected a few times before it is approved. We can expect it to take up to a year and a half before the benefits start.

This is a decision that means BB cannot work at all while on disability. There are some instances where he might be able to do side jobs if he earns less than X per year...but it’s up to the judge to set the parameters.

Because BB is young, has not paid much into the system and hasn’t earned huge salaries in the past, I think we can expect it to be less than $1000 a month.

BB will get Medicare after he starts getting disability.

If BB ever feels better enough to get a job, he can go off disability, but he will probably never be able to go back on.

And I think I heard that he will get no Social Security benefits when he is retirement age. Something about him getting his SS money now instead of later.

So that’s the newest. We have been dealing with this for a few weeks now, but I am finally starting to get a little familiar with the terms and get my head wrapped around all this.

Wow- I really cried when BB laid it all out for me. I was so selfish for one night and BB was great about letting me have my moment to grieve all the future plans that we would be giving up.

And the details are still really blurry, but I think this is our new reality. I’m slowing allowing it to sink in.

Well, a friend of mine put an offer on a foreclosed duplex across the street from me.



The property was rented up until September and then it was vacant. A foreclosure notice went up about 2 weeks ago and I was curious about the asking price.

When a "For Sale" sign went up last week, I called to get the asking price.

$99,000!! I was totally floored. I paid $160k for my place and that was the cheapest purchase on the block in ten years.

I called my husband who was hanging out with our realtor friend. My husband relayed the asking price and the realtor immediately called the agent for the details. There were already 3 offers on the place.

The realtor put in an offer of $135k for a mutual friend of ours who has been looking to get into real estate by getting a duplex.

Over the last few days I had become a little bitter. This place was bigger than mine, a free standing property (mine is a rowhouse), and it has a double balcony! An upstairs and downstairs balcony. It had features I would love to get at a cheaper price!

Today we learned that her offer was accepted. So we all went to see the property. Why they didnt see it before, no idea. But since it is across the street from me- I got to go too.

I walked in, and instantly I had waves of stress and dismay radiate over me from the poor condition of the inside. It reminded me of my huge renovation that was completed in April and I realized...I am in no way ready to go through another renovation! The memories this place brought back were not good.

So I learned that I am not leaving my property for a long time...I cannot put myself through another renovation.

Back to my friend, she was overwhelmed. The place was in need of the same thing mine needed...tear down and start over. Actually it was in worse condition because I was able to continue renting my property out after purchase and had to ask the tenants to leave when I was ready to start construction.

This place...is not able to be immediatly rented. The kitchen was missing several parts of it, the 2 additions built onto the back were falling (I thought my floors were uneven), the porches do not feel secure under your feet. And the roof is leaking.

So the bad news is that my friend is going to pass on the property. It would need too much money to get it rentable, and be a long term constant repair property unless the structure was fixed and everything was replaced.

She is not looking to buy a major multi month long renovation.

The good news is that this is the worst looking property on the block and it is not immediately rentable without a good amount of improvements. So whomever does buy it will have to do some considerable improvements to it, ultimately raising the value of the neighborhood and my property!

I am quietly hoping it gets converted to a SFH like mine was. It would be such a great SFH with so many porches and being such a huge building!

So, changes on the block are coming!

I have decided to sell the CA property. BB and I went out to visit it last week and decided selling was the best option.

We went out to CA for 5 days. We spent 3 days in the city, staying on Haight street. It was great, but expensive! But great.

Then we headed a little south and spent 2 days in San Mateo to see some old friends of mine.

I met with the long term tenant in the condo, and she has not found a job yet, no promising prospects.

I met with a realtor and we discussed next steps.

The condo is in surprisingly good shape, and surprisingly huge!

The realtor said we need to paint it nuetral, fix the heater, paint the cabinets, clean the carpets and stage it before putting it on the market. Maybe get some new light fixtures too.

The realtor is really fixated on staging, saying its really important.

I dont know, if you walk into an empty condo- does staging really compel you to put in an offer? Wouldnt taking the $2k to stage it maybe be better spent on a granite countertop? Or would nice furnishings be a better bang for your buck?

The realtor also said if it does not sell within a month, to increase the realtor commission by 1% to get realtors to work hard on bringing buyers in.

Regardless, the tenant is moving out in January, and BB and a contractor friend of his is going to fly in to complete the fix ups. He'll stay at the empty condo for 2 weeks and do all the necessary remodeling with the realtors input. She said she will go to Home Depot with BB and pick out the fixtures and stuff for him.

So we are hoping the remodeling is $5k, flights for the men $1k, food for the men $500, rental car $300 ...and then staging $2k.

So thats the plan...right now. pics of the place are below. Input appreciated!

Hey guys,
I have a financial question. I have heard that the current regulations regarding taxes and house selling is: no capital gains taxes are paid from the first $250k earned from the sale of a house.

I have heard this before, but it just sunk in for me last week.

My question is: does this apply to me too? (In essence it boils down to that.)

Regarding my Impulsive Purchase that BB and I bought last year:

We bought it for $160k and put $120k into it. So one way or another we have paid $280k for the house. If we sell it for $400k…we are almost at the $250k appreciation level from the sales price even though half of the appreciation is from money we put in?

I guess my question is- is the $250k appreciation a “free and clear” appreciation (accrued from property value up to $530k), or will I just get the benefit of not paying capital gains on money I put in and invested in the property?

I am guessing the $120k I put in counts towards the first $250k appreciation break.

Was there a loophole that I could have utilized to ensure that my $120k counted towards the cost of the house and not towards an upward appreciation?

We are not planning to sell! I just want to know how it all works, now that I have a grasp on the concept.

I had a really big revelation this weekend regarding the rental property in CA. I wanted to share it, I doubt it’s a new perspective but it was a new to me perspective.

I have been debating about whether to keep or sell a property I inherited in California. There are pros and cons to both decisions, but a decision needs to be made soon because my renter is leaving in January.
I was trying to determine long term gain of the property if I decide to keep it. To look at the future, I looked at the past.

There are some assumptions at play here, but even being very cautious, the numbers kind of blew me away.

My mom bought the place in 1976 and lived there for 2 years before moving in with my dad in another town. She bought the place for $45,000. This property has been in the family for 35 years.

I assume there was a mortgage, so here are the assumptions:

Assuming she put 20% down, she had a mortgage of $36,000.

Assuming she had a 10% mortgage interest rate (I heard that rates were in the double digits in the 80’s. I’m not sure about late 70’s.

Assuming it was a 15 yr mortgage (I have heard the 30 yr mortgage is new?) She paid $78,080 total for her condo. Taxes are fixed at $1200 per year so in 35 yrs she has paid $42000 in taxes. In total, the place has cost her $120,080 plus HOA fees.

She has rented the property for 33 years. Rent goes up so I have no way of knowing what she has charged through the years. Right now the property nets (after HOA fees) $1250 a month. I’ll assume her rental income has averaged a net of $800 a month.

$800/month x 12 months =$9600 year. $9600 x 33 yrs = $316,800.

The property has brought in $316,800 and cost $120,080. Over the years, my family has had a $196,720 income boost from the property. And then on top of that- it has appreciated to a value of about $440,000! So with realtor fees and closing fees and fix up fees, we’ll say the property will net $400,000 after the sale.

So with the property equity and rental income, this little condo has given my family $596,720!!

Is my math right on this? Is my line of reasoning correct?

And I do understand there were vacant months where no money came in, things broke, needed repair. But even rounding down to $500,000. Whoa! That is serious money!

Now I can better understand why long term real estate can be so lucrative for long term investments!

Seeing the long term return on investment numbers are a bit more crazy than just considering how the monthly amount might impact/help your budget.

In this case, it pays to be patient with the real estate market.

I need some help with a tax rule. I talked with a realtor in California today and set up a date to meet with her when I travel to CA this month to make a decision about the CA property (rent or sell).

I like her so far. She is very friendly, knowledgable. She told me about 2 tax items I need to keep in mind:

10/31 Tax Deferred Exchange
I can use the proceeds of selling the property to buy a property in my state and there is a tax break if I choose to do that. She told me to talk to a tax lawyer about it. Is anyone familiar with this? Can someone explain this to me better?

FITB (Foriegn Investment Tax Back)
Any out of state owner selling a CA property has to pay 3.33% tax on proceeds to the state of CA. It's a tax that is unique to the state of CA. Is there any way to get out of that one?

I was able to follow the rest of her conversation well. We talked about the property and renting vs selling. She said she has property managers on her team if I decide to go that route. She is gointg to email me a few listings soon so I can starrt becoming familiar with the market.

ok, I started renovations in September 2010 and moved in April 2011. I owe everyone some pictures! So here they are; my big renovation:

Before:



NOW
The kitchen



Length of the house


The Dining Room




Entryway



Living room



(I have a thing for light fixtures.)
Thats all the pics I have right now. I just wanted to share because I love looking at pictures too!

Greetings, this blog posting is going to be a vent just to get all my jumbled thoughts into an organized process.

First I feel like I have had a wave of financial problems hit me all in the same month. Stupid October. And I feel like the problems stem from a bad decision I made by buying the Impulsive Purchase. I wish I could say it was a Stupid decision but it was actually a good decision. Short term pain (right now) for long term gain.

To start with the decision that caused the problems: Husband (BB) and I were living in ½ of a duplex that we owned, and rented the other half out. Our financials were pretty secure but then BB got a big time job and our finances really improved. We decided (in 2010) that the real estate market was at a great time to buy and we really needed more space, and would like to live in a better part of town. We found a rundown duplex on a great street in an ideal part of town for way below market value. And within a few days we bought it without really, really considering the possible consequences.

At first things were good. We left it rented out for 6 months while we replenished the savings from the 3% down payment and closing costs. During this time we took out a HELOC on the first home to use for renovations of the 2nd home.

Once we began renovations, our budget was completely unprepared for this building. Our contractor found unanticipated structural problems, and we learned along the way that his “vision” of what we wanted and our “vision” was vastly different. So all the things we thought we would be getting suddenly turned into an extra cost. It’s not that we got taken advantage of; the contractor is BB’s best friend. And every time I went to the job site (2-3 times a day) the men were working. No sitting around or wasting materials. But it was a “oh you want crown molding in this room?” and “wait, you want subway tile in the shower not 12 x 12 tiles? The subway costs a lot more to put in because of the labor and additional time it takes to install. And subways are like .50 a piece versus a 12x 12 for $1 a piece.” (To tile 2 showers was $1338.00 in just tile). So it was little things like upgrades that I thought was standard and my contractor didn’t anticipate when we were discussing budgets. And it was things that were needed that the contractor didn’t think of like blinds for the master bedroom. $350.00 for 3 wood blinds! And $160.00 for light dimmers! Then there were big expenses like the original Air Conditioning unit breaking 2 weeks into moving in. That was a $3200 unanticipated expense. And $1729.00 in dumpster charges! I look at the detailed budget I kept and nothing sticks out as “the biggie” charge, just a lot of unanticipated and more expensive than thought charges.

So the budget went from $40k to an end product of $120k. And I know that is mind blowing. I thought it was mind blowing for a long, long time. Luckily the we gained about $50k in equity over the renovations we put in; the building 2 doors down equally renovated just sold for $90k over what we are into for our place. I congratulate myself that we walked away with debt of the $45k HELOC and $15k in credit card bills. The rest we covered out of savings and paychecks. And we did get the card down to $7k but then October came along and things are complicated and overwhelming.

BB lost his job. That’s the real issue at play here. If it was not for this, we could weather any of the rest of the things that came along. BB was on a year to year contract and his job called in Oct to say they are not renewing when the contract runs out in December. That was a totally unanticipated blow that hit us financially and hit BB hard mentally. He loved the job and was crushed. Aside from the depression and despair and disconnect he is now in, I don’t see another job of that caliber coming his way. He is a baseball coach and those jobs are hard to come by. We have sent out his resume to all teams 3 times since he got the news and we have gotten back 90% negative responses. There is one glimmer of hope with a team but they won’t know until mid December. I’m not counting on it.

We also contacted the local universities but there are no openings right now.

If the coaching does not pan out, BB has no other skills to fall back on. He has no degree, no office skills, no experience. He is exploring getting a phlebotomy? License but that will be 6 months of courses and just knowing BB I know he won’t follow through with it. Though right now he thinks he will. So he is counting on a Phlebotomy salary of $12-14 an hour, maybe with benefits, even though he is not signed up for courses, has no idea how to get into the field and has no contacts in the industry. He is kind of useless to long term plan with. I’m on my own in the realistic planning department.

So without his salary, we can get by on my salary and our rental income. We will be able to pay about $500 a month toward the CC and still live somewhat comfortably.

But then my long term renter in CA is moving out in January due to long term unemployment. For 13 yrs she paid $1750 a month and last year it was reduced to $1200 to accommodate her job loss. I recently blogged about whether to continue to rent, renovate or sell the property. I’m still undecided and constantly thinking about it. I’m kind of leaning towards selling to ease the current financial strain of BB’s job loss, the CC bills and the HELOC. Though I worry about missing out on long term benefits of having the property to ease short term problems. (Although BB is not very employable, I do think a baseball job will come along in the next 2-3 years.)

And now one of my renters here in GA announced they are not renewing their lease which runs out in January. I think we can get that rented out within a month, so it is a loss of one month’s income but it’s just an added stress that weighs on my mind. With the loss of that rental income just for the month January combined with the other lost revenue streams, we are going to scrape by that month.

How could this have been avoided?

I used our emergency fund to pay down the CC bills that were charged for the renovation. I had never touched the fund before and figured getting rid of the interest on the CC was a justified reason to deplete the fund.

I used the $18k I had saved for the CA rental property on the renovation. I had saved that money to put towards the time when the renter moved out and I would need to renovate the property and/or cover several months of it not being rented. But during the renovation I justified that “this renter had been there for 13 years, what were the chances she would move out before we could replenish the account?” (BB blames himself for that because he talked me into doing it. I blame him too.)

If either of those funds were still intact I would feel a lot better about the unemployment situation.
So I’m not sure why I am writing. I just don’t have anyone to talk about this with. I don’t have anyone in my life that is better or more experienced with finances than me. That sounds so egotistical, but my dad is the person who managed the family finances and he did very well. And he died before he taught me anything about money. My mother squandered a good portion of the money when it was left to her. And she died too, not that I would ever ask her for financial advice. My friends are young and struggling, or just getting comfortable, but don’t have a track record that makes me want their opinions. Some friends would look at my situation and tell me that I don’t have a problem at all. Other friends would rant on and on about how BB doesn’t carry his weight and he is the source of my problems. But all friends would probably look at me differently if they heard me use actual numbers in reference to my life. And BB’s family has made poor financial decisions as well. I wouldn’t want their advice. So that leaves people like my financial advisor who I feel has a stake in what I decide (He would advise me to sell and give the money to him to manage). Sounds odd, but I go to this forum because you guys are checked into your finances, aware of financial basics and can offer me perspectives that I had not considered.

So I don’t have any questions right now. Just a lot of factors on my mind that I wanted to organize and vent about. Thanks for listening.

I am back from another long hiatus and I'd like some perspective from the seasoned savers.

A fun fact to keep in mind: I live in Georgia.

In 2007 I inherited a $1300 sq ft condo in Foster City, California. It was my parents place when they first got married and the mortgage was paid off long ago. (I found paperwork showing they bought it for $40k!)

Since the early 1980's, the place has been rented out. I inherited the place and left it alone because the tenant had occupied it for almost 10 yrs and had no plans to leave.

She was paying $1750 a month, and I pay almost $500 month in HOA fees. The taxes are $1000 per year.

Last year the tenant was laid off and the rent was reduced to $1250 month for 6 months while a job was found.

The 6 months turned into 8 months, and now it will be 12 months and we have agreed that the tenant needs to find somewhere else to live in January because they are still unemployed and cannot afford the actual rental charge of $1750.

So in January I have a big decision. Sell or Rent?

During the day I am inclined to rent out the property and tell myself that "real estate is at the bottom and this is the time to stay in the game if I want to get the full value of the property someday."

To rent it out, I figure I'll need some renovations, a trustworthy property manager, and some luck.

My currently unemployed husband (another blog for that story) and his contractor friend are planning to fly out to CA in January, and complete the renovations. They would put in builder grade materials and update the kitchen cabinets, countertops, bathroom tiles, vanity, maybe shower, and carpeting. And paint. We are hoping this can be done for $10,000. in 2 weeks. (Sounds like an HGTV show...)

Then we would use a property manager to rent it out for...$1900 a month? maybe $2000? But I'm sure 10% would go to the property manager, and then $500 in HOA fees, so I would clear about $1300 a month.

My fear with this scenario is that the property manager would be useless or unreliable and essentially steal our money. (I have heard scary stories!)I dont have any contacts out there so I would be hiring based on websites, phone conversations and gut.

And I fear that the place would be a merry go round of tenants who only stay a year and move, stay a year and move. So the $1300 a month would be spotty.

The pro of the idea is that I get to keep a completely paid for asset in one of the highest real estate areas in the country. (Though I'm also afraid an earthquake will take it down. It's insured...but you know how insurance companies are.)

Or I can sell it. This is the plan I formulate late at night (like tonight) when I am unable to sleep because of pending bills.

I am guessing I could net $420,000 for it as it is now. I could pay off some debts I have accrued and still have $366,000 to bank.

But where to bank it? In a bank for 1% interest? I have less faith in the stock market than the real estate market so it's not going there.

If I bank it for 1% interest I am getting about $3,600 a year vs the $15,600 a year that the rent would potentialy bring in.

I could pay off my primary house mortgage with $150,000 of the $366,00 and that would eliminate $1380 a month bill from my life.

Then I would have $216,000 to bank at 1% interest but the only debt I would have is a rental property that pays double its mortgage every month.

So it seems like $150,000 of the $420,000 would eliminate a $1380 bill that I was planned to have for 28 years. So that will actually put $463,680 in my pocket. Plus I would have $216,000 left over from the sale of the property.
...right? Am I thinking this out correctly?

So does it seem like the right choice is to sell it while it is at the bottom of the market and use the money to pay off (affordable) debts? Or to rent it for a nice monthly cash profit and wait for the real estate market to come back?

(I said "affordable debts" because we can make our monthly payments on our current debts.)

I want to do the right thing for long term sucess. Not short term gains. It's just hard for me to see the forest from the trees right now. I need perspective.

I have to confess that the construction on the house also left me with a lien on my house. Thinking about the whole thing gets me angry and stressed. So I have been in denial. But yesterday I received another letter from the company and know it is time to deal with it.

Essentially, when we bought the house, the back wall was sinking and had dragged the floors down with it so the back of the house was slanted. The load bearing walls in the interior had been moved to non-load bearing areas and had warped the floors from the weight of the house sitting on them. This was all covered up with plywood floating on top of the floors so it appeared that everything was level. I am still really mad at whomever decided to fix the problem by floating plywood and then carpeting and not revealing the problem when they sold the place. But it is what it is.

Anyways, my general contractor hired a construction company to straighten out the floors. We went with the mid priced company who is a big name in town. The construction company sent some guys out and after a week we saw less and less of the guys. The job was dragging out. And the job site was vacant most of the time.

After a few weeks the guys said they were done. This was already longer than expected to take to complete the job. My general contractor (GC) went out to the site and pointed out areas that still needed work.
A few weeks later they said they were done again. My GC pointed out more areas that needed work.

Then they said they were done again and my GC went through and took pictures of everything that needed work and sent them to the owner of the company with a furious email blasting the company and threatening to tell everyone in town about the quality of work from this company. My GC got a VM apologizing and the owner went through the next day with the GC and they identified what needed to be fixed.

The workers came out the next day, did some work and said they were done.

My GC came out and they had done nothing to fix the problems under the house.

At that point he told me to forget this company, don’t pay them the remaining $3k and we’ll get someone else to fix it. He called the owner and said that we were not going to pay because the work was not complete and now we don’t even want them to complete it. The owner told the GC to pay what was fair for the work done. The GC said he would think about it. Then the GC had a day laborer who was on the job already fix under the house, and our carpenter kind of jigged the flooring so it was even-er. The plan was to send the difference in money to the construction company, but my GC got so angry every time he thought about it that he said to not pay anything. So we didn’t. But the dining room is still tilted, you can tell because my china cabinet leans. And my back guest bedroom is still slanted; you get a miniature case of vertigo when you walk across the floor. Both problems are so minute that people question me when they see it; “is it me, or is that cabinet case tilted towards the fireplace?”, “Gamecock, is something wrong with this floor, I kind of feel like I’m walking downward.”
I just nod my head and say “I know, it’s tilted.” And laugh it off because we are in a hundred year old house.

Anyways, I stopped communicating with the construction company. My better judgment was to call and explain why I was not paying the last draw, but my husband and GC both told me the owner of the company would construction talk me in circles and end up making me feel like I should pay or end up saying something he’ll use against me in court. So I never called.

I received a letter saying they were going to put a lien on my house. Oddly enough, it was for $4k, not the $3k I owed.
My GC explained I had two options:

I could go to the court and put down the $4k as proof that I have the money and have the money held in escrow type account while this is settled in court.

I could ignore the lien because it does not effect me until I sell my house which we have no intention to do. The lien needs to be renewed every 4 yrs by the construction company just to stay valid and chances are after 4-8 yrs they’ll stop renewing the lien.

We ignored it until construction was over. We were still ignoring it up til yesterday when I got another bill from the company asking me to pay $2200 of the $3k that I owed.

I am tempted to just pay it. But my GC says not to- we can go to court and win this because our floors are not level within ¾ of an inch which the contract states they would be. And our carpenter who jigged the floors and then worked on the rest of the house said he’ll go to court for me and we would win hands down.

But I don’t want to go to court. I don’t want to hire a lawyer. I don’t want to risk losing. I wish BB would handle it for me but he is more inclined to believe the GC and wait it out and not do anything.
I think I am going to call the owner and offer $1500. And ask them to send me a notice that the contract has been paid in full. But I am afraid the owner will argue me in circles or offer to come fix it now or corner me into something I am not prepared to do.

Ugh. I think I will think on it longer and deal with it next week.

I am back checking in after a long hiatus. BB and I were just reviewing our finances for the first time since we moved into the new house in April. I wanted to wait until the bills stabilized and the new house bills died down.

It's looking good. Really good. I'm surprised. The $15000 cc bill we racked up through the construction is down to 8800. I am projecting we can get rid of it by January. I'm really thrilled about that.

In other news on my mind...

The house we moved from that we are now renting out was broken into about 2 weeks ago. Someone busted in the back door while no one was home but luckily the house alarm scared the burglar away and they didn't take anything. The alarm company called me, I went over to the house and called the police and the tenant. The tenant was shaken up and asked to get a dog. I agreed. He got a Pitt bull from the humane society. He has his hands full, she is very high energy but is sweet so far. I am hoping he stays out the year with no more problems.

The tenant in my inherited rental in CA lost her job about 8 months ago. I gave her a significant break in rent for 6 months to keep her from moving out. She just asked for a 2 month extension. I am hoping that rent is restored to normal in October.

I got a 3 percent raise at work! I am happy about the raise but way prouder that I had a sit down and said I need a significant pay raise/ promotion because I have been doing the same thing for 2 years and feel that I am ready to take on more. He agreed and said he'll think about it and to give him a few months. I am going to hang tight and hope for the best. I believe my boss and think that this time next year I will be in a better earning bracket. We'll see how it goes down. I've never negotiated before and feel really proud that I stood up for myself and said what's on my mind.

Well that's a brief recap of what's going on. Hopefully I will be blogging more.

Hi everyone,
I hope someone is getting some rain somewhere because Savannah is dry dry dry!

Anyways, I am starting to get my interest in savings and blogging again. For a while there I just shut out any thought of money because I was spending so much of it on the new house.

Now I am still spending huge quantities but its no longer at a fast and furious pace.

Our 19 yr old air conditioning went out 2 weeks ago. (The only original features of the house we kept was the roof, the A/C, the floors and the porch. Because they were still in varying degrees of functional)I wanted to squeeze 1 year out of everything so I could save up some money to start replacing those aging items when they started to go. But of course 1 month after I move in we lost the A/C.

I have been sleeping on the couch downstairs to stay cool and got 3 quotes to replace it. The first quote came in at $4200 which blew my mind. The 2nd quote came in at $3200. The 3rd quote came in at $5100. Although the $5100 guy was so high I was considering him because his presentation was so good. He really educated me on what they were going to be doing, the quality of the brands, and the warrenties/guarantees. He was a rep that seemed to come from a very comprehensive, well managed company that focused on customer service and customer comfort. Whereas the other 2 worked for themselves and had a more unreliable, non customer service based approach.

But in the end I couldnt wrap my brain around a price that started with a "5" or even a high "4". I went back to the $3200 guy and asked the brand A/C he was planning to install. He's using a Carrier unit which I understand is a lower end brand but I think it will last over 5 years and thats good enough for me. He'll warranty it for 1 year.

Otherwise the house is turning out nice. BB comes home from FL for 2 days next week. He has never seen the finished house because he had to leave in February before it was completed. He and I are both so excited.

I have not used any of the appliances except the washer/dryer. I kept the protective wrapping on them so he can be the first to use them. I want him to enjoy some of the excitement of a brand new home. And let me say- going to the grocery store and only buying food that can be made in a toaster or microwave is very limiting! But it add to the excitement. It's been months since I have had a plate of noodles. They'll taste great!

And financially we are stopping the cash flood. Our purchases still wipe out our bank account, but I am able to make the purchase when the money is in the account. Before I was writing checks on a several times a week basis that would equal a couple of months worth of paychecks.

Things are getting back in order. I am starting to find a new normal.

BTW: my computer isnt working so I cannot upload pictures yet. I am hoping BB gets it fixed when he comes home next week!

Well it’s been a long time since I posted on here. I checked in once and that was it. I’m not sure if I’ll return to my regular blogging or not. But this is the first week where I have earned more money than I have to pay out.

My husband and I impulsively bought a run down section 8 historic duplex in the center of town about a year and a half ago. The location is so good that I still can’t believe we get to live there. The plan was to put $40k into it and convert it from a duplex to a SFH and move in.

I’m not sure where it all went so wrong (financially).

I guess the trouble started once we owned the house and we were able to start ripping into things. We discovered that the load bearing walls were not on load bearing piers under the house, so the weight was causing the floors to sink in spots and cause a lot of unevenness. And we found out that some very important supporting beams had been cut and shortened to make way for interior walls, but nothing was done to support the beam, or support what was on top of the beam. So the things on top of the beams (like the 2nd story) were kind of staying afloat by their attachments at the exterior walls. The exterior walls couldn’t handle so much weight and our rear exterior wall was sinking from all the weight on it.

So structurally we had problems. Then our carpenters took forever to get nothing done- so we fired them and got new carpenters. Now I’m in a law suit. I actually haven’t even worried about that yet. It’s more of a lien on my house than a law suit.

The plumbers failed their inspection 4 times. FOUR TIMES! That really ate away at our timeline. The plumbers also lost our original negotiated contract and then tried to charge us the original price after the job was done. We also lost our negotiated contract (it was a 7 month long process) and so it was “he said/she said” for a while. We ended up meeting in the middle.

The framers didn’t frame so well and it was not noticed until sheetrock was up. Then the sheetrock had to be torn down and things reframed straighter. I asked the workers to leave it as is until one explained that it would appear to a home inspector that our walls are tilting when we go to sell the house. We just paid a lot of money to fix tilting walls- so down the sheetrock went. That ate up almost 2 weeks and a lot of money in labor.

I paid $400.00 for 2 beautiful stained glass windows and then paid another $500 for them to be framed in and secured to the side of the house. The inspector came in- saw the windows and asked for our paperwork from the historic society that they were approved. Paperwork which everyone told me I didn’t need to get and after I was not allowed to keep the windows without that paperwork, my contractor told me that informing the historic society about the windows would open a can of worms for the rest of the work being done. So out of the wall the windows came. They are now in the attic. We had to piece together boards to use as siding to cover the holes in the exterior wall.

And then everything costs more than anticipated.
Some good things though…

I love my kitchen. Though it was about $5k more than budgeted. Originally we were going to go IKEA for $5k (including appliances) but BB (husband) had an attitude with the sales guy and decided we were not going to spend our money at IKEA. We went to Home Depot and got beautiful Thomasville cabinets for $5700.00 plus $5000 more for appliances. That really ate into the budget.

I love my Heart Pine floors. Our house had a good amount of original Heart Pine flooring in it but I wanted the whole place in the wood floors. We had to throw away a good chunk of the existing floors due to damage- so we purchased a lot of the flooring that we had already thought we had. So purchasing materials that we were already counting on having in the house ate into the budget.

I love my vaulted bedroom ceiling. We were having issues with the electric company. They wouldn’t give us a separate source of power without a firewall between our unit and the next door neighbors. So we had to tear into the 2nd story ceiling (not part of the plan or budget) and once I realized how high the ceilings could go- I wanted them. So my vaulted ceilings were not part of the budget or timeline but they are impressive.

I like my moldings. The molding was a big drain on the money. I asked for dentil molding in one room and my contractor told me it was an expensive upgrade. Then he “surprised me” and ordered it for me. I love it. Glad he did it. He also told me to get rid of the original molding (not 1900s original, 1980’s original) and let him redo it historical looking. It looks good…but I think the 1980’s molding would have looked fine too. The molding ate up about 2 months of labor and a big budget buster- not sure I would have made the same decisions.

So that’s a tiny recap. I’ll have more to come as I get back into blogging.

All in All…$118,000 spent on my $40k project.
I did keep a very detailed account of where every dollar went. Still not sure what caused it to go over so much though. I think it was the timeline. Paying hourly labor of 4-5 men for 7 months instead of 4 months really costs a lot. So glad I dont have to pay them anymore.

hey everyone,
It's been over half a year since I last posted. Wanted everyone to know I'm alive and doing well.

I've been doing extensive renovations on the 2nd property that my husband and I bought last year. the reno has gone way over budget and way over deadline but is nearing a close.

I lost interest in saving money for a long time because we were spending more money per week then we were earning in a month. I didnt feel like posting numbers and getting scolded, I didnt feel like posting numbers and depressing other people who didnt have a hundred dollars to spend, let alone what I was spending.

But its a few weeks from move in. I dont know if I'll return to my love of money blogging or not.

But all of my dogs are alive! And I'm still happily married. BB is in FL for another season of coaching and he loves it. I'm still in Savannah and I still love it. This is my dream city, and now I own a dream home (my original house) and a dream location (renovated house).

I still have my job and aside from extreme stress causing me to be always sick, I'm healthy.

Sorry for the concern and the months of no responces.

Well it's time for a check in and check up. I feel like it is the calm before the storm time.

In The Impulsive Purchase the tenants upstairs moved out a few days ago. They paid me for 1/2 of the month and now its empty. They left it completely bare. I love them. After living there for 14 years I thought they would leave a ton of junk. But they didn't even leave 1/2 used cleaning products.

The tenants downstairs told me they will be out by the 1st. They have not done anything that I can tell. They lived there for 16 yrs so I am hoping they leave it as bare as the upstairs. That would be sweet.

Demo is set to begin on the 1st. I am trying to schedule a walk through with an architect type so we can submit floor plans for permit approval. My contractor has been wishy about if the floor plans are really necessary- he has an excellent eye for layout himself- but he wants me to spend the money for easy permit approval and an easier process of outlining things to plumbers/elecricians and holding them to estimated budgets. So I guess the floor plans will be the first of many big expenses.

For my current home- the tenants upstairs just caught up yesterday. The one guy who never paid me his 1/2 of August had thought the "overage" they had given me the month prior would be used as 1/2 a months rent- and I used the overage as half their deposit (which they had not given me yet). So I applied the overage to August rent and we worked out a payment plan for their deposit. A DUI and Parking Boot prevented them from being able to pay it all at once. So they will pay me in installments over the next 6 months. A bit of a headache to keep track of but its all ok.

In other news I had my 1 yr review at work and got a 3% raise. I was hoping for a title promotion and a big jump in pay but that didn't happen. But the position I was hoping for is still wide open- as of yet I still have no supervisor!

I used the raise and increased my retirement contribution by 2%...the extra 1% will be "fun money"(partying money lol).

And...WE GOT ANOTHER DOG! We rescued another Rottweiler. Her name is Tai. Shes 4 yrs old and very sweet. We were not looking for another dog but my SIL heard of a family divorcing and the wife surrendered their rottweiler to the animal shelter. The shelter is a kill shelter so the dog was given a limited time to be adopted. After 2 days in the shelter the families cousin got the dog out of the shelter but then needed a family to take her. Since we have lost 2 rotties and love them- SIL called us. Lucky for us Tai is working out very well. She gets along with our other 2 dogs well. She's just huge. Our dog food consumption is going up.



Thats about it. Wow- thats a lot.

Things are progressing. Giving the renters 3 month notice to vacate was the right thing to do and has so far worked out well. One renter plans to be out a month and a half earlier than the move out date, and the other renter called to tell me she is waiting to find out if she is chosen for a rental house and will be moving out immediately if they get it.

So the renters are all set. Now I am scrambling to speed up the HELOC process. I dont want the duplex sitting empty for even 2 days, and dont feel comfortable starting construction until the HELOC money is in the bank.

On the day to day financial front- things are going well right now. Everything is staying steady. Once the renters are out and I'm carrying the mortgage and undergoing construction I am not sure how everything will fit together. It'll be some re-allocating and tight but ok after 5-6 months when expenses calm down. It's the frenzy of purchasing that I am worried about. But I take a deep breath and tell myself there is nothing to do about it now.

BB has scheduled his back surgery. He'll come home for 2 weeks and then return to FL for the surgery. I am very excited for the surgery, as is BB. He is in so much pain it effects his life so severely. I cant wait until he is pain free and can return to a normal life. He's had this bad back for so many years, I may not even know him afterward!

The renters upstairs are going...ok. The 6 month guy has paid his half of the rent but the other guy that I thought was more responsible of the two has not paid for August. And in July he asked for his deposit back because he wanted to take me up on my offer to just pay an extra $175 month for the 6 month lease duration and pay it that way, rather than all upfront. I didn't give it back to him. But clearly he's run out of money. I'm not sure how- he's only been in the apartment 1.5 months. I wonder if they didn't get their deposit back from their previous place. But the more responsible guy is also pretty spacey and it's very possible he hasn't realized its August yet. He's not dodging me. Every time I see him I want to ask for the money but keep hoping he'll bring it up. Next time I'm going to just ask for it.

It has crossed my mind that I have two shaky tenants living in the upstairs apartment. Their rent covers my entire mortgage on the house, and I have 2 very stable tenants who pay the mortgage on the 2nd duplex moving out by September 1st. I need to be prepared to carry 2 mortgages at once. I'm not looking forward to that possibility but I am somewhat prepared for it.

Thats about it. I'm headed to FL next week for a long weekend with BB. Just trying to hang low before the construction starts and turns my life into chaos.

Well it’s been a few weeks since I posted but I have been lurking. I am glad Frugal’s puppy is bringing her joy and minimal headaches- and the rest of you are making progress on van loans, mortgage payoffs and other savings goals.

I’m doing fine. I just went to the tropics with BB for a destination wedding. We spent too much money but it couldn’t be helped. The price for food is stunning! $14 for a burrito. $24 for a dinner entrée. OUCH!

But in other news I went ahead and gave my tenants of The Impulsive Purchase 3 months notice to vacate. We will be closing on our HELOC at the end of the month and we are anxious to start renovations. I contacted the section 8 social worker for one of the tenants to notify her of my intent to ask the tenant to leave and the social worker wrote back that the tenants daughter contacted her that very morning saying they want to vacate in 1.2 months because the mother is very ill and the accommodations no longer work for the family. So it works out for both parties- they are welcome to vacate when they want and we can start renovations as soon as they leave.

The upstairs tenants…we’ll see. I chickened out of face to face communication and handed a sealed envelope to the sister who brought it inside for the tenant. I was expecting a pretty immediate phone call but I have heard nothing so far. The family has lived there for 15 years so I am expecting a lot of anger and bitterness. (…maybe my letter was so well written that they are accepting the news willingly? Lol, probably not.)

That’s about it. The savings are on auto-pilot and the accounts are growing. Yippee!

BB and I got into a mini fight again a few nights ago. We handled it pretty well but it was still stressful. It started when our contractor friend who will be working on The Impulsive Purchase called me over to a project he’s been working on for the last few months. The couple bought a historic duplex and are converting it into a SFH. Exactly as we plan to do. I have been keeping tabs on the progress because we will be following in their footsteps. Their costs have spiraled up but that was due to unforeseen defects and then a lot of additional high end upgrades.

I went over there and it is pimped out. The place looks phenomenal. They are still working on the first floor but they are doing a lot of nice details. Tray ceilings, built in bookshelves, glass doors and wooden design in their concrete floors. Not only am I impressed with the contractor’s skill, but also just how much it is starting to look like it should be on HGTV!

Anyways, then the contractor starts telling me about how BB and I are going to need more money to get anything like what he did here. I kept telling him “but I don’t want an outdoor shower” and he kept giving me this look like “you say that now…” (but I really don’t). He had told us when we bought the place that we could convert it to a SFH for $40k. Now he’s saying that will cover the first floor. He’s telling me that if I put $80-100k into the house it will hold it’s value in that neighborhood (he’s also a realtor).

I totally got annoyed and called BB. I was venting to BB and BB started taking the contractors side! Saying things like, “well, lets say we just put $65k into it and maybe don’t do the upstairs for a year.”…what!? NO! We were told we could do it all for $40k, that was a condition put in place before we bought it. The argument grew. A lot. My CA property got dragged into it with using it for a HELOC (I was telling BB we don’t have equity to get that kind of money out of our properties anyways. I was really thinking I just don’t want to borrow that much but used our equity as an obstacle.) Then the CA HELOC argument turned back into “we should sell it” and then it turned into “Gamecock your going to do whatever you want to do so just tell me what we’re going to do. Since I have no say in the matter.”

It went on like that for a while. We eventually came to a resolution but we don’t really see eye to eye on the two main argument points. I am angry because BB PROMISED me that we could do it all for $40k. Does he know ANYTHING about construction? No. But I told him that I didn’t think it could be done and didn’t want to buy the property. BB talked to his contractor friend and then repeatedly matter of factly told me it could be done. I told him that I don’t want to hear later that they need more money. Now we are hearing that we need more money and BB is just going along with it! He didn’t question it then, he’s not questioning it now. He’s doing zero research –just agreeing to whatever he is told. It makes me SO MAD. I feel really deceived. I trusted him against my better judgment.

And he is angry because I have been using the income produced from the CA property to put into savings in case we need to do a big renovation job out there some day. In case of an emergency or in case we want to remodel it before selling it or whatever. The money in the account is enough to cover the additional costs of The Impulsive Purchase. BB of course wants to raid it and does not think we should have the account in the first place. Because we need to sell the property. Today. As is.

We did find one lightbulb moment. BB kept asking me if we could afford to take out a $65-80k HELOC. I kept interpreting it as "Why CANT we take out a $65-80k HELOC if we can get it?" And would hysterically yell "we cant afford it!" Until BB made me sit down at a computer and plug in the numbers in an online calculator. The payment was going to be about the size of our mortgage payment. BB asked... "can we afford to pay that every month?" to which I said "No we dont have the income. Maybe next year when we both have raises but not today." And that worked. BB said "Fine. We might have the equity to borrow but we dont have the income to pay it back. We're not flipping this house so we need to make sure we can make the monthly payments. And we cant. So we stick with our original numbers."

So we eventually agreed to divide up The Impulsive Purchase into 3 stages. The first stage outlining what we can do now with the money we have. And then see if we can live with that until we have the money for the 2nd (finishes) and 3rd (outdoor) stage. We’ll work with the contractor to create the plan and budget in the next few weeks.

So there is peace in the household today. I say cautiously.

Today both tenants showed up. They still cant get on the same page. "J" is still completely excited about the place. "6 month guy" has serious concerns about the neighborhood and now refuses to sign a lease so he can move out if something happens. "J" thinks the concerns are unwarrented and is willing to let 6 month guy be noncommittal. So only J signed the 6 month lease and 6 month guy agreed to pay J every month.

The third roomie "T" is willing to move in in September but the 3rd bedroom wont fit his queen size bed (3rd bedroom is about half the size of the other 2 rooms). So T is dragging his feet... (and why don't T and 6 month guy switch rooms since 6 month guy doesnt think he'll stay anyways?) So I suggested they use the living room as a bedroom, and the 3rd bedroom or finished attic as a living room. J was kind of blown away by that idea and is going to figure out how that could work.

I think J just needs 1 roommate. If its T its cool, if its 6 month guy its cool. So 6 month guy will try it out- and if he doesn't like it by the time T can move in- then 1 will move out while the other moves in.

So J is on his own here. Poor guy. Sweet personality- I hope he can work it out.

I negotiated $100 off the prorated rent for June. J wasnt expecting to have to pay anything for June because his lease at his other place is not up till July. So he thought he could just move his stuff in upstairs and leave it here while he was living at the primary place. Then move in in July and start paying rent.

That's not really gonna happen, but I also want to collect something rather than nothing- so I knocked $100 off the prorated rate. J paid me in cash. He has the keys- tomorrow I am canceling my name on the utilities...hopefully this is an open and shut case.

please please let us have a quiet couple of nights in the neighborhood while 6 month guy is moving in!! J and I both think that once 6 month guy gets used to everything he will calm down and appreciate how close it is to the downtown bar scene (not walking distance, but $5 cab ride distance). But maybe not. Some guys are nervous, they act nervous and they become a target. We'll see.

Well the new tenants were supposed to come by today during my lunch hour to get the lease signed for the upstairs apartment. Only 1 boy showed up. We couldn’t track down the other boy. But the guy who did show up walked around and made a comment about being happy with the apartment and wishing he could get the lease signed so they could move in.

Then as he was walking out the door he turns around (I am behind him) and says “I’m graduating from school in December and don’t know what I’m going to be doing so I want to sign a 6 month lease.”

…WHAT!? This was never brought up before!

I was stunned and then he quickly filled in the awkward silence “I mean “J” can sign a lease for a year. But I want to sign a lease for just 6 months.” (Does that even make sense?)

I was not able to recover from that very well. I told him that he needs to formulate a plan with J and let me know what they want to do. They can sign a 6 month lease together, or a 1 yr lease together- but not 2 different leases. (Reflecting on the conversation afterward I HATED agreeing to the 6 month term- December/January is the worst time to find renters.)

Anyways, J called me an hour later apologizing for missing the appointment. He “woke up around 9am…but then fell back asleep around 11am.” (As if it was a praiseworthy accomplishment to wake up in the first place at 9am.)

I told J to talk with his friend about their lease plans because now the other roommate needs to be out in December.

J called back a few hrs later and we rescheduled the lease signing for tomorrow evening. I asked what they had decided and they are going with a 6 month lease (cringe) though J said he will probably sign on for an additional 6 months after the lease expires but that he wants the option to leave when "6 month guy" goes because he will need to find a roommate.

But they have a 3rd roommate coming in August. I think. “T” walked around a few weeks ago and seemed to like the place. But maybe privately he said no. I don’t know. T is not signing anything, J and 6 month guy are signing the lease.

If T moves in in August I think J and T will stick it out through the year. Both boys are in college and I doubt they want to be moving their furniture if they don’t have too. Especially if T is moving everything in August- he’ll have 5 months before possibly moving out again. So hopefully T is on board to move in. I’ll ask tomorrow.

If it’s just J and 6 month guy there is still a good chance that 6 month guy will stay on for the 2nd 6 months. 6 month guy needs to find a job. If he finds one in the area –he stays. If no job comes up- he probably stays too. If he finds a girlfriend he likes- he’ll probably stay.

I try to look at the bright side- 6 month guy is paying a non-refundable pet deposit for the dog being there just 6 months. In 6 months the dog might be out but I will still have the big deposit.

I just want them to move in. Theyre not a very organized group…I feel like they are little wanderers who will wander to the shiniest object. A shiny new place for $40 more a month just came up on the rental market. I don’t want the boys to get distracted and wander over to that place. Heres hoping I lock them in tomorrow night.

YES!!! Doing the very happy dance.

This is a weird thing to read I am sure because I have not let on that I was UNcomfortable, but I was and I didn’t know it. I felt a little stress whenever I thought of our finances, I would go through phases of obsessively running numbers to gauge future savings goals, but I felt like that was a part of being a grown up- always a certain amount of burden that you live with.

I have been slightly uncomfortable…well since the Impulsive Purchase. I don’t know how to explain it really but when BB was a baseball player and earning less than $10k a year our day to day expenses were stretched. Then when he got a job as a coach 7 months ago our yearly income more than doubled.

So what did we do? We bought a fixer upper property (The Impulsive Purchase). We used up all liquid savings we had outside of our emergency fund, retirement or property equity on the closing and 3.5% downpayment. We raided savings accounts that were meant for other goals such as future cars, primary home renovations ect. And after the closing a few minor expenses came up that kept us a little more behind than we had planned. AND THEN! Everyone I know decided to get married this year. In an exotic location. 5 trips in one year.

Looking back now we had taken on more commitments than we could handle if everything came tumbling down. We had been looking at the monthly numbers of what we could afford with BB's new paycheck- not if we could afford it right that day. I subconsciously knew it and didn’t really know how to recognize it. So I just felt uncomfortable. Low level stress all the time.

But today we have made it through to the other side. One trip completed, two trips canceled, one trip already paid for, and one trip not yet on the books. So those obstacles no longer weigh on me.

And today, BB got his paycheck for the month. It has put us ahead of where I thought we would be in mid June. Today we broke the $4k mark on the emergency fund (we almost didn’t- but I added an extra $85 in today just to see the account reach that number ). BB has $700 saved for his future car (we expect him to need a new car sometime late next year). All our other mini savings funds are at a point where they will be enough if we need to access them today. And my bill paying account is now in the black where I can handle several of next months bills if my paycheck this month never comes in (for some freaky reason). The account is no longer paycheck to paycheck.

I feel good. It's only 10am and I feel like I have accomplished a lot. Bring on that air conditioning repairman. Today I am ready for him!

It’s been some time since I have posted a money related blog. I have been caught up in life (work) and less caught up in money. I think it is because our budget and expectations have finally settled down since The Impulsive Purchase. We have the same amount of money back in the bank that we used as a down payment on the property, it’s been a few months and the place (and tenants) are showing no signs of problems. And I have tenants lined up to move into the upstairs unit. They’ll be signing the lease on Wednesday. The only cause for concern I have is that the air conditioner is leaking when I run it. BB says he thinks the pipes are clogged. I'll be calling a maintenance man tomorrow. Luckily I have been saving up for an air conditioning tune up and have $300 saved. I hope that will cover whatever is wrong.

So this weekend I called around about securing a HELOC or HEL on our property so that we can start the process of converting The Impulsive Property into a SFH. I think we are going to go for a HELOC…it’s cheaper-ish than a HEL. It’s a variable rate interest that concerns me- but we can leave it dormant for several months (construction is not scheduled to start until October) without having to pay anything, and we can pay it off and leave it open as we need.
BB initially wanted to get $50k but based on the equity I think we will qualify for $25-30k. This makes me happy. It will keep us more efficient and less extravagant. I thought of taking the amount out of my inherited IRA but decided against it for a few reasons:

I don’t want to mix my inheritance into my and BB’s stuff. In the event of a divorce the property would be split despite the fact that my inheritance paid for almost the whole thing.

I don’t want to get into the habit of using the IRA as an ATM. I decided long ago it would be for retirement and that’s what it will be for. People don’t raid their retirement accounts for house renovations (or they shouldn’t) and I am not an exception.

The stock market is crazy these days. Maybe some people say I am taking money from investment stocks into another investment vehicle but I want to try and be diversified. So the money stays in stocks.

I am of course not happy about taking on additional debt but think that the long term rewards will be worth this risk.

I have been painting the upstairs rental unit and as promised- pictures!

Some learning tips:
I bought more than enough paint for the entire place to be painted and I completely burned out halfway through. The 3 bedrooms and living room were painted. The hallway and kitchen were left white. I have 3 gallons of unopened paint left over.

I really like certain colors. I chose the colors in my unit that I live in downstairs- and when picking upstairs colors I wanted to try out other colors. I picked out a few colors and decided to give them a try. One bedroom is THE EXACT SAME color scheme as my dining room. I thought the colors were totally different until I stepped back and realized "OMG! These are the same colors as downstairs!" Oh well. I like them.

I picked out a historic yellow for a bedroom and a more neutral creme for the living room. They are the same color. On the walls- they look the exact same. Oh well.

I found THE PERFECT COLOR Blue. In my downstairs unit- 4 of the 7 rooms are a shade of blue...but it was not until I stumbled on this blue when painting upstairs that I realized I found my color soul mate. Walking into that room instantly relaxes you and just looks so beautiful. I tried to capture it in the picture but the photography does not do this blue justice.

Here is the kicker: The blue is a "custom color match". I ordered 6 sample cans based on paint chips and took the sample paint home. One of the sample jars was this blue. But I do not have a paint chip to match it to and the color sticker on the jar says "custom color". It's a mysterious jar that I somehow got and it held my magic color. Oh I love this blue!

And 2 of the unopened gallons will go to future use. I want to use the Living Room yellow in the kitchen of the new property, and I will use my Soul Mate color in the next property as well. Either the living room or master bedroom.

The yellow living room that was supposed to be neutral:


The bedroom that is the exact same color scheme as my dining room:





My SOUL MATE Color:





Historic Yellow that ended up being the exact same color as the yellow living room:

A librarian position is opening up at my employer in Austin TX. The job starts in January but they will be hiring soon. I don't know how far you are from Austin but I know your in Texas. I am pretty sure you are going to school to be a librarian...right? If you want more info let me know. I don't know how to do private messages.