Here it is ladies and gentleman. Iʼm currently waiting to hear back from my realtor as to whether or not I am the new owner of this property. If youʼve been following the blog for awhile, you know that: I already own two properties (my primary home and a rental property). You probably also know that Iʼve been looking to pickup another rental property to add to my portfolio for a few years now. If fact, there are a couple of blog posts to document my failed attempts in the past. You can read about those here here and here.



Iʼm looking to spend no more than $30,000 for this property since I will be paying cash. Fortunately for me, due to the “housing crisis”, there are thousands of properties in the Atlanta area (and in alot of areas around the country) that can be picked up for peanuts compared to what theyʼve sold for in the past. Each day, I comb the real estate listing in my area looking for the perfect investment property to come on the market.

A couple of weeks ago, that perfect property appeared on my computer screen. The property above was listed for $12,900. No, I didnʼt leave off a digit or put the comma in the wrong place. The property was listed for $12,900 and is bank-owned. There were about 12 photos available and they all showed that the house was in pretty good condition. Prior experience has told me that properties at this price and needing little work will be snatched up pretty quickly. I found the property at about 10am and by 12:00pm, I was on my way to look at the property in person. The listing broker could not meet me at the house but he was nice enough to give me the lockbox code so I could go ahead and look at it. After checking it out, I called the realtor and put in an offer.

The House. This little beauty is a 3 bedroom, 1 bath ranch on a crawlspace. It was built in 1950 but has been renovated within the last few years. The sales history for the house from the county public records are:

• $105,000 in December 2006
• $63,900 in July 2006
• $115,900 in February 2006
• $108,000 in April 2003
• $82,500 in October 2000

Repairs. The home definitely has good bones. The windows are fairly new. The AC unit appears to be in good condition. The carpet is in good condition but needs to be cleaned. The kitchen and bathroom has nice ceramic tile and the hallway has laminate flooring. There is a nice sturdy deck on the back of the house but it needs to be pressure washed and stained. The roof needs to be replaced but it can actually hold on for maybe a year or so. The interior needs minor repairs to the ceiling and walls and a new coat of paint. I plan to have an inspection completed prior to the final purchase to make sure there are no major issues.

Financials. I said earlier that the house was listed for $12,900. I knew that if I put in an offer of $12,900, I would be quickly outbid. My initial offer was for $15,000 cash with no contentions. A few days after my initial offer, I heard back from the realtor. The home had over 10 bids already and my offer was not among the top. I initially decided to give up on the house and move on to the next one. After doing a little research on the comps and having my uncle (the contractor) check it out, I bumped my offer up to $25,000. I really think the home is worth approximately $60,000 in the current condition. I should hear something on 4/12/2010. You guys wish me luck and Iʼll let you know what happens.

Woo Hoo! I just got the signed lease back from my tenant indicating she will be with me another year. I'm happy and a little worried all at the same time.

I'm happy that I get to keep her because she has been an excellent tenant. If she stays through the end of the new lease, she will have been with me for four years! As a first time landlord, I've been extremely lucky to get such a good tenant on my first shot. I've never had any problems collecting the rent and she only calls me for repairs when something major goes wrong.

I'm a little worried though because while we were discussing whether or not she would renew the lease, she asked if I could possibly lower the rent. She said she had been looking around for something a little cheaper but she was not able to find anywhere she would be comfortable living. She currently has an adult child living with her and he helps out with the bills. He will be moving out soon so she is worried that she won't be able to keep up with the bills after he moves out.

As much as I wanted to help her, I told her that I couldn't afford to lower the rent but in order to keep her, I would be willing to leave the rent the same instead of increasing it. She was okay with this and agreed to the new lease.

I'm crossing my fingers that we will have another year of on-time rent payments.

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Just when I thought Murphy was gone on an extended vacation, he comes back to visit me. I received a call from my tenant stating the sink is leaking underneath. I was hoping it was only a minor repair and that maybe a washer had gone bad in the faucet. If I only needed to replace a faucet, I would be out of pocket for less than $100.

I had my handyman take a look at it and it was a little worse than I thought. Looks like not only will the faucet need to be replaced, the sink basin will also need to be replaced. The old sink can't be used since the holes that were bored for that sink have rotted and there is no material for the fasteners underneath to hold on to.

I received a quote to repair the sink for around $800 which includes the labor and materials needed to complete the repair. This quote was from the handyman I've used for a couple of years and I'm pretty sure I can trust him. He does all the work on my rental property and he's also done some work for me at my primary home (tiling my kitchen and crown molding). I usually glance at the estimate he gives me and either say ok or if I feel the labor costs are out of line, we discuss it a little further. I don't know what he was thinking on this one because he went with the highest quality sink and faucet. Of the total $800 estimate, materials consisted of $600. I knew the materials costs were out of line for a sink and faucet so I headed down to the home repair store. After I finished shopping for the materials, I was able to trim the total cost of the repair down to less than $500 while still using quality materials.

It's funny about the timing. I just finished fully funding my rental property savings account thanks to an additional paycheck this month. It's like Murphy was peeking into my bank account. Just like the last repair I had to do for the rental property, it was a minor inconvenience and not the end of the world. Thanks to me saving money in a separate account for times like this, I didn't have to sweat the repair and wonder where I would find the money.

If you don't have an Emergency Fund, START TODAY! (Hint: ING Direct is a great place to start a savings account). Murphy is always lurking around the corner just waiting to cause you a little financial stress. Be prepared and you can tell Murphy to go pound salt.

Last month, I posted about "Trying to Keep My Good Tenant" and I was waiting for a response from my tenant on her lease renewal choice. As posted in the previous post, I gave her two options for renewing the lease. I received a call from my tenant today and we discussed which lease option she chose.

My tenant will be renewing her lease; but not for the terms I presented to her. My tenant advised me that she is looking to purchase a house in the next year or so and did not want to be locked into a 24 month lease. She wanted to know if I would be willing to do a 15 month lease instead of a 12 month or 24 month lease.

Since she renewed for more than 12 months but less than 24 months, we agreed to a 10% increase. I think this trade off is more than fair as she could have haggled for the 5% increase. Things aren't final yet and won't be until I print up a modified lease agreement and meet with her later today to have it signed.

Need a tenant? List your home, condo, apartment or vacation rental with Apartments.com.

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I’ve had my current tenant since I first decided to become a landlord and rent out my house two years ago. I did not take the proper steps of protecting myself by running a credit report on my tenant or verifying prior rental history. I had a couple of people interested, mostly college students from the local college, but decided to go with my current tenant. I had multiple conversations with her and I just had a gut feeling about her. So far, that gut feeling worked out to be correct and she has been a great tenant.

My tenant pays her rent on time. I’ve never had a bounced check from her and she doesn’t call me for minor repairs. I’ve never even had to respond to a “lockout” at 3am. Sometimes, I get so busy and I don’t realize that it is time to pick up the rent check and she will call me to remind me. Of course, part of it is probably because she doesn’t want to pay the $50 late fee but that’s ok with me.

I’m working on the new lease and I want to make an attempt to keep my current tenant for at least another two years. In today’s market, I could probably rent my home for about $1200. My current tenant is only paying $1000 which doesn’t quite cover the mortgage. I chose not to raise the rent last year in an effort to keep my tenant. This year, I’m going to give my tenant two options to stay. I’ve heard how hard it is being a landlord and some of the nightmare tenants. I’ve been able to avoid that and I want to continue not having to deal with crap like that.

Option 1:
If my tenant chooses to sign a one year lease, the rent will increase to $1100. I think this 10% increase is fair considering I did not increase the rent last year.

Option 2:

This is the least expensive option for the tenant and the best option for me. I’m offering to only increase the rent to $1050 if she chooses to sign a two year lease. This will pretty much guarantee I have a good paying tenant for the next two years and also give me time to get right-side-up on the home. By this time, I will have some equity in the home and the housing market will be in a lot better position.

My tenant has to let me which option she will choose by April 1st. Once I know her decision and have the signed lease in hand, I’ll let you guys know which option she chose.

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Here we go again. A couple of weeks ago, I had to replace the front door to my rental property. Yesterday, I got a call from my tenant for another issue. It appears there was a wet area on the wall and she could not determine where the water was coming from. This same problem happened about 2 months ago and went away.

I called American Home Shield to check out the problem and see if they could repair it. American Home Shield offers a home warranty to cover failure to major components in your home. For my house, it costs about $350 a year and each service call is $55. The component has to have been in proper working order prior to the failure in order for the repair to be covered.

Turns out, when I had hardwood flooring installed about 2 years ago, they removed the toilet to put flooring in the bathroom and did not reinstall something in the base of the toilet causing there to be a small leak each time the toilet was flushed. Whatever they did wrong finally failed and caused all the water to run out of the bottom of the toilet. Since the toilet was not properly installed, American Home Shield denied the repair. The technician chose to replace the wax seal as a courtesy.

Now, I have to replace the carpet in the living room next to the bathroom that flooded and the hardwood floors (laminate) that have warped in the bathroom.

I'm considering filing a claim under my landlord’s policy to see if it will be a covered loss. Most insurance companies only cover losses that are sudden and accidental. Since I don’t know how long this has been happening, I’m not sure it will be covered. If it is a covered loss, I will only be out of my $500 deductible. If it’s not a covered loss, I have to pay for the cost of the repair and have a claim show up on my CLUE report.

What would you do???

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The Disappearing Account


Image Credit: mio please

With the help of an extra paycheck in January, I managed to reach my goal of saving $1500 in my Rental Property savings account. Since I'd fully funded that account, I had planned to use the money I had been contributing to this account to help reach my goal of $5000 in my Freedom Savings account.
Apparently fate had other plans.....

When I picked up my rent check from my tenant yesterday, she told me it had been raining inside the front door and that the door frame appeared to be rotten. I took a look at it and sure enough, a lot of it was rotted and there were water spots from where water had leaked inside.

I called the contractor I'd used in the past for home improvements and had him come out and look at the damage. The door frame, the outer molding and the door would all need to be replaced. Apparently, the builder did not put a flashing above the door to stop water from coming inside the door frame. The grand total to repair the damages.....$1900.00 for materials and labor.
Just to be sure I wasn't getting ripped off, I had two more estimates done and they all were within $100 of each other. I decided to go with the contractor I'd used in the past since I already knew the quality of his work.

By the end of the week, the Rental Property savings account will be empty and I will need to pull $400 from my Freedom Account. I hate that I will be emptying out the Rental Property account but the most important thing is I can pay for the repairs in cash and not add on any additional debt.

It sucks to be a landlord when things like this happen.

My realtor called me last night to let me know my offer has been accepted! Now, I need to setup a property inspection and termite inspection. I am out of town on business until Monday and we are scheduled to close on next Friday so things will be moving pretty quickly.

I'm off to my meeting, I'll post more details as they happen.

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In the words of Tom Petty, "The Waiting is the Hardest Part". I put in an offer on an investment property on Monday. My realtor called me and advised that the offer has been forwarded to the bank's asset manager for final approval. There are no other offers on the table and I made a full price offer so it looks like I should get the property. I am excited and nervous all at the same time. One of my dreams is to be able to build a portfolio of real estate and this purchase will help me get closer to fulfilling that dream.

One of my character flaws is that I am very impatient. This is also one of the reasons I got in debt. I did not have the patience to wait and save up for a purchase.

Hopefully, I will hear something tomorrow so I will know if I am adding another property to my portfolio of if I need to continue shopping.

As I've posted before, I have been searching for a cheap investment property. There are numerous properties available due to the large number of foreclosures in the Atlanta area. I put in an offer last week on a nice bank owned single family home but was I was outbid by another buyer.

I had a few backup properties and saw those yesterday with my agent. After looking at 3 properties, I decided to put in an offer on this one.

This property is a 3 bedroom, 2.5 bath fee-simple townhouse built in 1990. The property was originally listed for $61,600 but was reduced to $31,600 on 8/4/07. The last sale price was $80,000 on March 3, 2005. The county tax assessor has the value of the property at $76,600. The value range on Eppraisal is $78,563 - $106,413. The value range on Housefront is $87,000 - $97,000. There are about 5 properties for sale in the community with asking prices from $48,000 - $89,000. Rental rates in the area range from $650 for a 2bedroom and $850 for a 4 bedroom.

The property appears to be structurally sound and only needs cosmetic repairs. A condition of my offer is that the property inspection is satisfactory. The previous owners were apparently upset that they were losing their home and caused a little damage to the property. They smeared the walls with a unknown substance, broke all the light fixtures and caused minor damage to a few of the walls. The front and rear doors and the carpet will need to be replaced. There are also a couple of broken windows. I estimate I will need to put about $10,000 in the property to make it livable.

The offer was faxed over yesterday afternoon so I should hopefully hear something on Monday.

I'm back from looking at investment properties and I decided to put in an offer on one of them.

Here are the possibilities:

This one was listed for $26,600 and has a new roof. The inside was terrible and needed alot of work. This one was removed from the list of possibilities.

This one is listed for $20,897. After calling the listing agent, we found out that the property went under contract last night. I decided not to look at this one.

This one looked pretty good and only needed cosmetic repairs. The electrical and plumbing has all been redone. It is listed for $29,900. Sadly, it was also put under contract prior to our viewing. I am keeping my eye on this one just in case the other deal falls through.

This one looked deceiving in the pictures. It is listed for $24,900. It is the only 3 bedroom, 2 bath property that I looked at. This one also needed alot of work and had a weird layout. This one is also off the list.

And the winner is:

It is listed at $33,900. I am planning to offer $25k. My agent will be faxing the offer over tomorrow. I plan to have a thorough inspection to make sure there are no major problems.

I'm headed out with my realtor to go look at a few investment properties today. I now have about 5 that I am considering ranging in price from $20,897 to $33,900. I created a spreadsheet to evaluate the deals and 4 out of the 5 seem to be really good deals. Once I walk through them and determine how much work the properties will need, I can make the final decision. The maximum amount I am willing to spend including repairs is about $40,000.

Once I get back, I'll post pictures, prices and which properties I am seriously considering.

It has been a very busy week for me. Work has been crazy and I have been very active in my homeowners association working on some problems in the community. As far as the condo I wanted to purchase, I remembered that my neighbor a couple of houses down is a real estate agent. I went over and gave him the MLS number for the property. He did a little research and spoke with the listing agent. It turns out, there is a big investor that put in an offer for the entire complex. The property is no longer available but he is checking to see what other listings he can find in the same price range. Today, I found another home that may be a good deal. Check out the picture and the details below:

This house is a 2 bedroom, 1 bath bungalow. The house is fully renovated and is listed for $33,900. It has been on the market for 93 days. The originally went on the market for $54,900 and was reduced to $44,900 on 8/30/2007. It was reduced again to $33,900 on 9/26/2007.

Eppraisal lists the value range of $111,238-$150,498 with a middle value of $130,868. Zillow lists a tax assessors value of $69,700 (40% of market value).
Housefront lists a value range of $119,000-$131,000 with a middle value of $125,000

I am emailing this listing to my realtor now and will let you guys know what happens.

I always like to keep an eye out for cheap real estate to see what deals are on the market. While browsing Ziprealty yesterday, I found this property. It is listed for.....you ready....hold on.....$10,900. Nope, that is not a typo and I didn't leave off a zero. It is a bank owned foreclosure. I ran an e-appraisal on it and the values ranged from $108,212-$146,404. I ran it in Zillow and the tax assesors value is $120,100. I am not sure what the deal is with the property history but it seems like a great deal. I would definitely have the property inspected and appraised before closing.

Here's why I want this property:

• I can pay cash for the property.
• 2 bedroom, 1 bath condo
• 2 miles from downtown Atlanta
• Big development plans in the area
• Location, Location, Location

I could choose to rent the property out to bring in some additional income or just sit on it and watch the property values rise. The area around the property is not the safest but the neighborhood is changing fast for the better. I say within 3-5 years, the area will have totally been revitalized.

A reader recently commented that I mentioned my Rental property but never gave alot of detail about it. I wanted to post a little more information about how I became a landlord.

Did I plan on being a landlord?
Yes. However, my plan was to purchase a few duplexes and have the rent pay the mortgage. The property I am currently renting was not intended to be an investment property. I bought this home when I was 26 and it was my first home. I did not think I could afford a home with the amount of debt I had. I used to go out on the weekends and look at homes all the time and happened to meet a realtor one weekend. He told me to call him the next day and he would discuss the process and see what I could get approved for. I called him up and was surprised to learn that I could afford a home up to $130k. (My credit scores were in the high 600s and I was making about $40k/yr). I was so excited and we planned to look at homes in my price range and preferred area the following weekend. The next weekend, we looked at about 3 homes in a townhome neighborhood about 20 miles NW of downtown Atlanta and about 12 miles from my job. The sellers needed to sell because they were building a new home and did not want to carry 2 mortgages. The home was about 5 yrs old and the asking price was $127k. The home was a 3 bedroom, 2.5 bath with a full, partially finished, basement. The townhouse was on a corner lot with a large yard (especially for a townhome). My agent put in an offer of $122 with the seller paying closing costs. The offer was accepted and I closed about a month and a half later. After living in the home for a year, I realized it was not the home I wanted. Trying to get to work in the morning proved to be a hassle due to tremendous growth in the area and the roads had not expanded enough to keep up with the growth. I also did not like the setup of the home. I decided then that I wanted another home closer to work. I continued to live in the home for about 3 yrs. I then found my current home and it was in a perfect location and exactly what I wanted. The house was new and they were asking a reasonable price. They were also "giving away" $10k in incentives. I could pay all my closing costs, pay my homeowners fees and then have money left over. Due to my poor lack of planning and having a bad habit of making poor financial decisions without thinking it over, I put in a contract on the home and put down $500 earnest money. I was smart enough to put in a contingency that if I did not rent my old house, I could get out of the contract w/o losing my earnest money.

Why did I choose to rent the home instead of selling it?
I took out a 125% mortgage to pay off my debt. I then owed more than the home was worth and could not sell the home without coming to the closing table with a large sum of money.

Am I cash flow positive?
I charge my tenants $1000/mo for rent. My mortgage is $1147.50. This includes an escrow account and $38/mo for my American Home Shield Warranty. I figure with the tax writeoff and the home slowly gaining in value, I am breaking even. Had I kept my original mortgage, the payment would be $903.00/month.

How are my tenants?
My tenants are great. Luckily, I did not get screwed in this deal. The tenant saw my sign I had in the front yard and called me to look at the property. She liked the property at first sight and wanted to rent it the same day. She was really nice and we talked for about 2 hours. I did not run a credit check on her because I wasn't exactly sure how to go about doing it. (I know, I know, I screwed up). I also did not check with her previous landlord. Don't ask me why. I did collect a security deposit and had her sign a lease. She seemed to be very honest and she told me " My credit is not good at all but I always pay my rent". Anyone else probably would have sent her on her way but I decided to give her a chance. My tenants have now been in the property for 16 months and she has never been late or had a check to bounce (knock on wood). She does not call me for any small maintenance issues. She keeps the property clean and I have not had any complaints from my former neighbors.

Do I plan to continue to be a landlord?
I'm not exactly sure. I guess it depends on how long I have these tenants. She has told me she is very happy living there and having me as a landlord. Her youngest son has 2 more years in school and she does not want to move until then. If I can keep her for 2 more years, I will then be in a position to sell the home or refinance to lower the payment.

Sorry this post is so long. If you have any other questions, feel free to email me at wannabefree30@gmail.com