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.