Time to go…

I’ve enjoyed this time in Blogland but Reallife demands my return.

Our real estate investments are doing well, all the Brz’s are healthy and happy and JoJo continues his rampage throughout East Texas. Unfortunately, blogging requires much more time and attention than I can provide and still focus on growing our family and business.

This site will stay up until renewal time. You can reach me via email  or on the BiggerPockets forums (screenname: EyeSoreNoMore). Thankyou to all regular readers/comment-ers and best wishes in all your investing adventures.

Popularity: 4% [?]

Lots of folks are running scared these days. Economic indicators don’t look so hot, gas prices keep soaring, and the stability of our financial institutions is in  question. William Nickerson, author of, “How I Turned $1000 into a Million in Real Estate- in My Spare Time,” started his investing career during the Great Depression to the chorus of naysayers telling him it couldn’t be done. (Yes, I’m actually reading the book… in *my* spare time.)

Someone we know bought a small, 2-bedroom condo in the Houston area in the early ’80’s for 70K. He was able to rent it out at break-even rates and was quite pleased with hisself for his smart investment savvy. By ‘85, the value for his little rental had dropped to 30K. Market rate for rents dropped and our investor found himself on the wrong end of an alligator.

Want to guess what he did?

He bought 10 more

For more rumination on this subject, I’ve written an article for BiggerPockets titled, “Is the Time Right to Invest in Real Estate? Chicken Little Vs. PollyAnna.”

Popularity: 30% [?]

UPDATE #1

New Plan:

We’ve learned the house is owned by a woman in her 90’s who refuses to budge on her price. Some creative thinking is in order:

Clue #1: Lady in her 90’s is not likely to tote the note, unless we could come up with something that would get her paid off within 3-5 years.

Clue #2: Research suggests we *might* get $600/month rent.

Clue #3: Taxes and insurance estimated at $1500/year.

Clue #4: The house probably needs at least $5000 in work just for starters (primarily roof and exterior paint)

Mythical Offer #1: 20K now, no payments on balance,  balloon note of 20K in 2 years. This would allow time to get new financing after the seasoning period of one year.

Mythical Offer #2: 10K down, 5 years at 5% interest, payments of $566. Estimated rent: $600/month. Rent will not cover expenses as taxes and insurance run about $1500/year.

Mythical Offer #3: Guess I’m tired, because mythical offer #3 appears to be on vacation.

Conclusion: While 40K is a fair retail price, we can’t pay retail and make enough profit to keep moving forward. If the mrs. wanted to become the next Resale Shop Diva of Bohunkville, this might be an excellent move. Just not sure we can make this work with an inflexible seller.

UDATE #2

Yardwork, Spring and Stuff

*Love* this time of year…

This trumpet vine…

…now looks like this. (Note new topsoil spread artistically about the premises.)

This hydrangea…

…now looks like this.

And these grapevines…

…finally look like this. (Grapevines are notoriously slow getting to business.)

Popularity: 12% [?]

Here’s a house we drove by today:

Asking price: 40K

2 bedroom/ 1 and a half baths/ no garage 

MLS Description:

1910’s antique house, sheetrocked, electrical and plumbing updated, in downtown area, good roof, exterior is in good original condition, corner lot with plenty paved parking, great for business location or residential.

More pix:

House is on the corner with a wrap-around porch.

Not much yard, but nice trees.

Great storage closet

Living room

Kitchen– tiny, tiny

Bathroom

This little place is in a mixed commercial/residential area where many of the homes have been turned into antique/resale shops.  It appears to be in very good condition and has tons of curb appeal.

DD3 and I stopped in at the resale shop next door and were mobbed by small children and puppies. This lady says she’s trying to buy the house, but Surprise! can’t get financing. She’s a young mother trying to run her own business but the place she’s in is too small with little to no parking. She’s wanting to rent out booths to others to subsidize her income from the sale of used furniture and doodads and only has space for one other person now.

Here’s What I’m Thinking…

If we could negotiate a cash price (30K or less) we could owner finance to Ms. Resale. Terms might look something like this:

Purchase price: 30K

Selling price: 60K

Downpayment: 5% ($3000)

Interest: 9.99%

3o years: 360 equal payments of $499/month

or

20 years: 240 equal payments of $550

With a little fixup, the house could appraise for 70K and loans in that range are easier to find. This might give Ms. Resale a bit of time to clean up her credit and pretty up the house.

Thoughts? Discussion? On a purely practical level, any suggestions on structuring a loan like this? 

Popularity: 13% [?]

We’re snowed under around here taking care of tookie-tail stuff. It’s that time of year for new beginnings and self reflection and spring cleaning, both real and metaphorical. Every year we do the following (in no particular order):

*Get the taxes together for our CPA. Reevaluate tax position and make changes for next year. We’re not getting as much back this year because we made so much lovely positive cashflow. Yes, I know… such a shame

*Go over the household budget and stop up any leakages. This week, a call to the cell phone company reduced the bill by $20/month ($240/year!) This was no small accomplishment as the bill was written in hieroglyphics which also  turned out to be the operator’s native tongue. Thirty+ minutes on hold plus an equally frustrating amount of time with a customer service rep finally revealed $5/month insurance on phones worth less than Zippo and a $10/month ‘Multi-media Bundle Package’ for a phone who’s owner doesn’t know how to use the camera, much less the multi-media’s. Sadly, the mister will no longer be able to randomly text his posse, but we all must sacrifice for the greater good.

*Look at the big picture for any major financial issues. We’re in the midst of a re-fi of our personal residence which should save us $200/month. (IF we can ever get this puppy to the closing table. For some odd reason, the mortgage companies are a tad bit skittish these days…) Also, the 401K got A Serious Lecture as well as A Firm Talking To. If Mr. K doesn’t straighten up and start behaving more like his big brother (the rent houses), he just may well find himself unfunded.

*Going over all business practices, reorganizing, re-evaluating, etc. This year, the mrs. resolves to finally learn to run those stupid Excel spreadsheets (sorta) and convert the finances from Stone Age to QuickBooks (snarky laugh inserted here.)

Meanwhile, Back at the Ranch…

At which point, our attention turns to mundane thingies such as lawn care and chickens, neither of which are actually getting much. The chickens are not here, nor are they ordered because the mister has not fixed their coop. The mrs. is not overly sad because chickens stink. And she once calculated that those lovely yard eggs are costing about $8/dozen.

Nonetheless, the mister insists upon the smelly things because they (I kid you not) spread cow poop about in a decidedly poultry-like fashion that makes the mister happier than Friday Night fried chicken. (The mrs. has failed to mention the lack of chickens as she thinks the younger Brz’s can spread poop just fine with decidedly less reek-age. They also do not stand on the back porch beneath her bedroom window at 5 a.m. and crow like strangled cats in heat.)

JoJo does not crow like a strangled cat. He does, however, bang his food bowl against the siding and shove his sandy nose against the window screen to see if the mister has arisen.

More stuff on background checks very soon…

Popularity: 13% [?]

As some know, The Background Check Manual is free here on this website. It’s also available in worddoc or .pdf format via email if you’d rather have the entire e-book in one spot for reference purposes. The manual contains tons of information on identity verification, public records retrieval, etc. and includes links to state websites and sex offender registries. The manual is free. We only ask that you do not copy or share the document in any form. If you know anyone who’s interested, please send them here.

There’s a very important point to remember:

• The manual was not *written* for landlords.
• It can be *adapted* for landlords. Big Difference~

The manual was originally written for small business owners, nonprofit organizations such as churches and charity groups  and youth organizations like softball and soccer leagues. The primary purpose for these groups is to screen out undesirables, felons and abusers who target and prey upon the young, weak and elderly by seeking out positions of authority.

Think wolves amongst sheep.

Funny Thing Happened on the Way to The Rental Business…

As landlords, our goals are quite different. We want to rent to responsible adults who will respect our property and pay the rent. Period. Running every possible civil and/or criminal record costs too stinkin’ much and takes way too much time away from fun stuff like compulsively checking MLS and Craisglist.

• Remember, we’re granting permission for someone else to occupy our property.
• We’re not moving in together.

When the mister and I bought our first rental, the lessons learned from all those months running public records paid off bigtime. I was able to adapt the background check manual to suit our new situation. Now, when an application hits my desk, I can run a credit report, verify identity, check all personal and business references, and check criminal and sex offender databases in 20 minutes or less (unless I hit a wall of answering machines instead of real live people, in which case, calls get forwarded to the home phone and the mrs. can go back to baking brownies and refinishing furniture.)

The Part Where the Mrs. Stops Beating About the Bushes and Gets to the Point Already…

So here’s the deal.

• I chose to offer the background check manual as-is just in case someone, somewhere might want to start a background check program for their softball league or volunteer fire department. 
• The manul has tons of information totally unnecessary to the landlord doing a routine screening.
• This blog is geared toward real estate investment, not softball leagues.
• Therefore the vast majority of readers are landlords, not softball players 
• Therefore, therefore, the manual is confusing and unusable to the vast majority of the readers of this blog.
• (Heavy sigh…)

Therefore thrice, I’m going to do my best to clear up any confusion over the next few days. I’ll be referring back to the manual, so if you want a copy of the document in question, send an email with ‘Background Check Manual’ in the subject line. The manual has tons of information that explains the process of public record retrieval and identity verification and even makes social security numbers mildly interesting.

The manual is available on this site under the Tenant Screening tab at the top of the page.

Popularity: 14% [?]

Whilest away thinking Deep Thoughts and being all Zen and Stuff with The New Plan, one of our tenants moved out. Things went  fairly well until we arrived on the premises for cleaning and make-ready.

We were greeted with this cheery sight:

Amongst Big-Shot real estate investors, this is what’s commonly known as ’A Clue’ as in ‘Something Here is Seriously Remiss and the Landlord Needs to Get One.’

And peaking out amongst the branches of the flowering plum on this lovely spring morning…

Let’s get in close to fully appreciate the composition and detail of our artist in residence…

De-e-e-e-p breaths.

Repeat after me… ‘it could’ve been worse, it could’ve been worse…’

 By the Way, Exactly How Much *Was* That Deposit?

Much emoting ensued. Many hands waved about in a pointless, yet oddly satisfying manner. Panic maneuvers began, stalled, began again as the landlord in attendance realized that spray paint on the exterior might indicate unseen interior damages. At which point, Hand-Wringing with Muttering Sauce commenced whilest keys were fumbled, dropped, inserted in the wrong lock, etc.

After a long and detailed search of the inside (which thankfully yielded only a couple of dog-chewed miniblinds and scratches to the interior doors), the Brz cell phone bill took a hit as calls flew back and forth. It was decided that Mrs. Brz would call the tenant while the mister worked on lowering his blood pressure. This is an important point to this painfully long saga as the mrs possesses certain skillz which escape the mister, namely the ability to detach completely from The Situation At Hand and speak in a monotone, yet professional manner which sounds suspiciously like a telemarketer.

Waiting 4 hours before making the call doesn’t hurt either.

Much Ado About Something

There’s a happy ending to this tale of woe. The tenant took full responsibility and had the little artist out scrubbing pronto. Bricks and fence were cleaned to our satisfaction (I’m told a graffiti solvent was eventually employed.) And, after subtractions for cleaning and doggie damage, the former tenant even received a portion of her security deposit.

So… the tenant was relieved, the landlord was relieved and the little Brz’s were joyous because they didn’t have to scrub anything.

And we have yet another great story to embellish when we congregate around the driveway fire next fall.

Popularity: 15% [?]

One of the scariest pathways through the grownup world of financial responsibility involves the phenomena of lateral thinking. The conscious mind flies from A to B to C to The Inevitable Conclusion.

It goes something like this:

• Gas prices are up
• That’s almost $200 extra per month on an already stuffed budget
• Perhaps I can cut somewhere else?
• The cell phone bill’s almost $150 per month… how did that happen?
• Wait a minute… how did we get a $3000 balance on Mastercard?
• The company’s threatening layoffs so no raise this year.
• If we eat beans and rice every day and fast on Sundays we’ll save $75 on groceries.
• We haven’t put a penny in the kids college fund for over a year.
• Etc.

Lateral thinking is frightening. It choo-choos head-long down the track of logic and crashes into the brick wall of blind panic. The inevitable conclusion of lateral thinking is this:

There is only one solution to your problem.

And Now for Something Completely Different

Divergent thinking operates on a multi-dimensional plane. It goes from point A, careens into point B and flies off into space like a Chinese Firecracker, lighting up the sky on New Year’s Eve.

Divergent thinking goes something like this:

• Gas prices are up…
• That’s almost $200 extra per month…
• Perhaps this is an opportunity… a kick in the pants to get moving…
• I can start a business. Everyone loved that Mustang grape jelly we made last year…
• What about selling online?..
• Or rent houses… so many foreclosures… where’s my financial calculator? Maybe we can increase our monthly income thataway…
• I could check into substitute teaching. I *do* look good in khakis…
• Freelance writing! Mom says I’m funny. Dave Berry should watch his backside, I’m just saying…
• Etc.

And once you’re a bit further along the path to financial freedom:

• Gas prices are up…
• That’s almost $200 extra per month…
• That means someone, somewhere’s making a huge profit…
• I wonder if there’s an upside? Maybe I should check into buying those oil-stock thingies…
• Wonder how you buy those? Maybe I need to learn about that…
• Or we could raise the rent a few dollars a month to cover the added expenses… that’s what big-shot business people do…
• Wonder what else might be going up soon? Gold? Silver? Maybe its time to sell those coins we found in the sock drawer… how much would that bring in? Enough to start an online business? Or a down payment on something?..
• Company’s threatening layoffs… maybe its time to expand the rental business…
• Etc.

The Sweet Smell of Freedom…

Divergent thinking is liberating. It flies through space and time and soars into unknown and exciting territory. Divergent thinking is boundless. Anything is possible. Circumstances may later alter its trajectory, but upon lift-off , divergent thinking frees the mind, opens doors of opportunity and understands the truth:

There are multiple solutions to your problem.

Divergent thinking is a skill that requires practice. It must be fed through education, knowledge and the company of other divergent thinkers. It grows, expands, flexes, leaps. Sometimes it touches down lightly, realizing the idea probably isn’t worth the effort, only to lift off again into another sky-high chrysanthemum outburst of boundless possibility.

It Is Time

• A. To learn: Start by reading “The Richest Man in Babylon” (see JoJo Recommends)
• B. To feed: Find other divergent thinkers and enjoy their company. Divergent thinkers can be found in books, blogs, and forums if none prance about your neighborhood
• C. To grow: Practice, practice, practice. When you find yourself drowning, let your mind take a leap. Stop self-editing. Anything’s possible, no matter how silly. You can always regroup later.
• D. To remember: Start a journal. Write everything down. You’ll want to see the progress you’ve made on days when lateral thinking tries for a hostile takeover.

Popularity: 14% [?]

Rooting around online, I found more pictures of Novalis Vinyl Plank Flooring:

Novalis Vinyl Plank Flooring in Golden Oak.

A different installation, Novalis peel-n-stick vinyl plank flooring, also in Golden Oak.

Both of these were posted recently on the GardenWeb Flooring Forum which is a terrific place to research consumer experiences with all types of flooring and building products. The ease of installation combined with $1/sq ft price point makes this a front runner for rent houses and rehabs.

And here’s a photo of Trafficmaster Allure, also from the GardenWeb Flooring Forum:

Random reports of scratching and peeling edges for Trafficmaster Allure keep cropping up online, but the floating floor/edge-to-edge technology has promise, particularly for problem subfloors. Hopefully, Trafficmaster will get the kinks worked out sooner rather than later.

We’ll keep watching

For more indepth information on these two floors, check here.

Popularity: 27% [?]

Sometimes I’m afraid.

(Big shock, no doubt)

• I’m afraid of snakes
• I’m afraid of heights

But looking over the big checklist, many childhood fears are no longer an issue.

• I’m not afraid of dogs
• I’m not afraid of the dark
• I’m not afraid of doctors
• …or needles
• …or hospitals
• I’m not afraid of death
• I’m not afraid of the future

A chance conversation clued me in the other day that many adults never overcome their childhood fears. I always thought growing up meant growing out of things, but apparently, that’s just not so. For her, the boogieman is just as real today as he was on her 4th birthday when the monster under her bad came out for a visit. Watching a steady stream of those cable shows where people walk around old houses with flashlights to eerie music, stand in a draft and ‘feel’ something probably doesn’t help.

Most fears develop through trauma and are overcome through confrontation, however innocuous. I lost my fear of dogs when the mister kept  bringing them home, my fear of the dark by getting up and sitting outside after midnight, my fear of doctors and needles during nursing school, my fear of death by learning to trust Someone Else, my fear of the future by living through hard times. (Mrs. B has no intention of jumping out of airplanes or taking up snake handling. Therefore, it’s doubtful the list will be eradicated until she sprouts wings and flies to Ireland.)

 Who’s Afraid?

Fear cripples, distorts, reshapes our view of the world. Fear makes everything ugly. Adrenaline kicks in, our attention sharpens. A thousand pleasant circumstances can dance around the periphery, but the object of our fear is all we see. Someone with a crippling fear of snakes takes a walk in the woods and suffers palpitations until returning to the car. They didn’t enjoy the violets by the edge of the trail, or the birds twittering about or the waterfall sparkling in the sunshine. (Ask me how I know…)

And the Moral of This Story

As beginning investors, we regularly face:

• Fear of taking risks
• Fear of failure
• Fear of loss
• Fear of the unknown

We’re afraid for a very good reason…

Because we’re ignorant.

We don’t understand basic business principles or financial literacy or compound interest or  plumbing repair. We have no idea what renovations really cost or what tenants might accomplish with a can of spray paint (pictures to follow) or how silly we’ll look at the family picnic when Uncle Seymour drills us on rates of return.

Knowledge is Power

There is no substitute for an education. If yours is lacking, start today, right this minute. Invest a hundred bucks and buy a financial calculator and a stack of books (See JoJo Recommends above.) Get yourself a tool box and a set of Time Life Home Repair series (or the equivalent thereof… ask Terry. He knows tools and stuff.) Run around the block waving your hands like a girlie-man whilest squealing, ‘I *am* smart enough to read a financial calculator handbook! I *can* learn to run an amortization spreadsheet!’ (And take photos so we can all enjoy.)

Fear is overcome through knowledge. 

• not hype
• not rhetoric
• not motivational cheerleading

..no matter how fancy the guru’s PowerPoint presentation happens to be.

A blind leap of faith off the cliff of ignorance, hoping for a cushy landing on a healthy bank balance is beyond silly. And yet, the chants of ‘Just Do It!’ ring from every quarter of the real estate investment world.

Please, please don’t listen.

For more on our method of self education for all things financial/real estate, see the article here.

Popularity: 15% [?]

A  few years back, some friends of ours described an inexpensive, solid pine floor installed in a home they visited in East Texas. We never had a chance to see this mythical floor in person, but the mister didn’t need no stinkin’ first hand experience to come up with his own version.

The upstairs gameroom floor is complete:

Our good friends, the Sisks, came by to help.

Floor boards installed before stain and polyurethane.

Taken from the same angle, Golden Oak stain (Miniwax) and 5 coats of satin, water based polyurethane.

For complete instructions, check here.

Popularity: 18% [?]

My friend, Becky Schultea, over at Just Bee and Me, is a very happy woman. One of the main reasons for her recent spurt of all things joyful is this guy right here:

John Schultea is the sort of guy you like right away.  He’s kind and loving and treats Becky like the princess we’ve all known and loved for the past 30 years. I met him during their courtship and believe you me, it didn’t take a rocket scientist to realize Becky had found herself a keeper. Watching those two swirl about the dance floor was one of those surreal moments that make you believe butterfly kisses aren’t so sappy after all.

We’ve been missing John and Becky. They’re too much fun. Sources hinted at a Schultea invasion before the end of this month, a prospect that had the mister and I wringing our hands with gleeful anticipation.

On Easter Sunday, John took a spill rounding third, heading into home during a family softball game, landing on his left hand  and sustaining what’s officially known as a boo-boo. Unfortunately this boo-boo involved surgery and Vicodin.

Get well soon, Johnny! You’re much loved and in our prayers for a speedy recovery

Popularity: 15% [?]

The New Plan means a change in our criteria. Specifically we’re able to look for homes further away from our target area for rental properties.

This week, these homes showed up on MLS.

Asking price: $31,500

3 bedrooms, 1 and 1/2 baths, 2 car garage

Initial impression: very sad looking little place on 1/2 acre in a growing area that would probably rent well if it didn’t sell. Interior photos show a few rooms in the middle of renovation (studs without sheetrock) which doesn’t scare us (much). Believe it or not, in this zip code, that hideous garage would be considered an asset. Even with minimal rehab, this place could sell with owner financing for $70K+.

Asking price: $34,000

4/2/2

Initial impression: This has been on the market awhile and has dropped from 54K in the last six months. The neighborhood’s okay, the lot’s huge, the interior stinks. MLS has pictures of nice built-ins in bedrooms and living areas but no pictures of the kitchen or bathrooms– wonder why (she said, tongue firmly planted in cheek). With owner financing, this would probably sell for 75-80K. If structural repairs aren’t *too* extensive, this might be an excellent candidate for the New Plan.

Asking price: 45K

2/1/0

Initial impression: A highly cropped photo like this is a bad sign– can’t imagine what the front of this house actually looks like. The neighborhood is good and it’s near the house above so we’ll drive by just for grins.

Asking price: 65K

3/2/3 carport

Initial impression: This was a steal and has already sold.  The area is set for rapid appreciation and would sell for over 120K after repairs, easy. The listing said the home was a one person estate wanting a quick sale. Too bad…

Popularity: 20% [?]

Here’s a little house we toured recently:

 Foreclosure, 3/1/0, asking price: $34,900

• nice enough neighborhood
• small fenced yard,
• no garage or storage shed
• recent carpet
• no holes in sheetrock or doors
• no missing trim.
• signs of low-cost upgrades and work
• almost new kitchen cabinets and counters (lowest quality, but new and functional)
•  new bathroom sink
• nice utility closet with washer/dryer hookups

 On first glance, the house is cute as a button. A coat of paint and on the market she goes.

The only bathroom was actually better than the picture– lots of solid wood cabinets. Needs a good scrubbing, caulk and paint.

The kitchen showed recent work and lots of attention to detail. My guess? Someone without a lot of cash tried their best to turn this place into a home.

The house has serious structural issues stemming from additions to the back bedroom and the garage. Fortunately, the mister and I viewed this house on rainy day which probably saved us several weeks of offering, counter-offering and inspections before having to back out. A leak at the front door clued us off to possible water issues. A little checking around and we found water leaking into the walls and draining behind the sheetrock in 4 separate locations. The mister sniffed about (literally) and found black mold–the ugly stuff.

I’m not afraid of mold, but wouldn’t sell a house without fixing the problem, which would involve removing almost all sheetrock from exterior walls as well as reframing the roof.

Conclusion: Even if the bank would accept an offer of 20-25K, the cost of fixing structural issues means this place is not a candidate for our new owner financing venture.

Popularity: 20% [?]

Other than  real estate, home decorating is probably nearest and dearest to my chicken-fried heart (right after the mister… and the little Brz’s…and possibly JoJo… oh, never mind.)

Much too late in life, I came to realize that beauty and order in our home environment directly correlates to positive mental outlook and increased productivity. Which, of course, is an excellent excuse to raid the budget for an occasional trip to Tuesday Morning. The mister maintains neutrality over this mid-life epiphany which is probably best for his mental health and outlook.

Atticmag is a delightful website with an active forum of (mostly) ladies who discuss the fine points of paint colors and area rugs. Last summer, the owner asked for a series of articles on the Magnolia House rehab. The final article posted just yesterday and has tons of pictures showing before/after shots. Regulars will probably recognize some from this blog but the article format over there is much easier to navigate.

The editor of Atticmag, Jane Frieman, is a cyber-friend who resides in New York City.  I’ve forgiven her for that.  In case you haven’t heard, NYC is a mythical place where business women walk about  something called ’Manhattan’ in footwear called ’stilletos’ drinking champagne at all hours from fine crystal carted about in Gucci handbags constructed specifically for that purpose. Southerners speak of it only in whispers, generally to frighten the children into eating their brussel sprouts.

(If you don’t mind your mama, you’ll have to move to New York City when you grow up… they say a one-bedroom apartment costs millions of dollars and you have to take an underground train just to see the only tree in Brooklyn…)

*shiver*

Definitely not Brooklyn~

Popularity: 23% [?]

The mister and I married  on a hot July afternoon in the summer of ’80. Soon thereafter, our area slid into the ugliest recession ever to hit this part of Texas. If you’re old enough to remember the Savings and Loan Scandal, you might know first hand what that decade was like.

Houston was a virtual ghost town of empty skyscrapers.  Strip centers became empty shells as business after business failed. Every neighborhood was dotted with empty homes that stayed that way for years. For cheap fun, the mister and I would sit in the backyard at night and shoot rats off the telephone line as they ran back and forth between abandoned houses.

Our Story Begins…

By the time I graduated from nursing school, the dream of owning our own place had begun to recede further and further into the distance. During those early years, we worked hard and saved and dreamed and prayed. We wanted a little house with a yard for a dog and flowerbeds for petunias and an extra room for a baby.  I remember obsessively calling FSBO ads, talking to real estate agents and watching the ever-worsening market.

Back in the olden days, a body needed established credit and a down payment. We had neither. We couldn’t get credit because we didn’t *have* credit, a hamster-wheel conundrum that endlessly frustrated our plans. I’ll never forget the day we danced like banshees because the local department store had agreed to sell us a new mattress on time.  We made those $65/month payments one by one, then started applying for a credit card. When our Mastercard arrived, we sat on the bed staring at it like the Holy Grail, then tucked it away in a fireproof box for safe keeping.

Remembering the Bad Old Days

Folks tend to forget that once upon a time, interest rates for homes were in the double digits. Even if you managed to save enough for a down payment (usually a full 20 percent) the sky-high interest rates meant most young couples were completely priced out of the market. Very, very few could afford the monthly note no matter how small the house. The only open path to affordable payments meant assuming an older FHA loan and paying a large chunk of cash for someone else’s equity.

We’d just about given up when we heard a rumor that someone from our church was loaning money to young couples like us to help them get a start. I can’t imagine how we swallowed our pride long enough to go for a visit, but eventually we found ourselves in the living room of Dave and Kay Hartman. When we arrived, Dave told us they’d prayed together before we came and would loan us $7000…

Interest free.

Hard to Believe…

At the time, I couldn’t fathom having enough money to write a $7000 check to virtual strangers with nothing but a promise of repayment and a handshake. And who in their right mind would even want to? But Dave and Kay embodied the very definition of saint– the sort that’s rare as it is genuine. They were folks who saw a need and provided a solution just because they could. Through their dozens of loans, the Hartmans sowed seeds of generosity and kindness into the heart of the next generation.  

God bless ‘em.

With their help, we bought our first home, paying $11,000 for the equity and assuming the balance of a 14% FHA loan on a $48,500 purchase price.  It was quite a deal at the time. Our little piece of the American Dream was 3 bedrooms, 2 baths crammed into 900 square feet. We were beyond ecstatic.

Things change.

I’d all but forgotten those years of struggle and longing, of wanting my own place to remodel and paint and plant. But about a year ago, we started getting calls in the office from folks who saw our ads, wanting to know if we had homes for sale and wondering if we might owner finance. Lately, those calls have become more frequent, more urgent. In their voices, I hear the same, familiar chorus. We’ve always felt that someday we’d offer homes for sale, but I’m thinking the time may be now.

So Here’s Where We’re At…

Honest to goodness, I have no idea just how this is going to work, but this path needs exploration. Maybe it doesn’t make the best economic sense, but not all things can be balanced on a spreadsheet. After compulsively running the numbers over the last few weeks, even at the worst case scenario, we should do okay. The potential is there to do much better than okay, but it’s not something we can count on considering the current situation, both national and local.

Our old plan involved buying 20 houses by the time the mister retires with half mortgage-free. That would’ve given us a very healthy retirement income.  We have some cash now earmarked for down payments and rehab money. A change of direction would mean that this portion of our business would go on hold and the cash we have now would be invested in The New Plan.

Here’s a very basic outline that I hope to expand upon in future blog posts:

• We’ll start by buying homes in the 20K range. In our area, this is possible although not common. At that price point, we’re talking 2/1/1 fixers with ‘potential.’
• Rehab would have to be kept to a minimum. This would be a *huge* departure from previous experience. We’d try to keep the total cash in the deal to 30K or less.
• Sell for at least twice that amount. Here, a 2/1/1 that’s habitable, even if ugly and in need of some repairs can easily sell for 60K-70K. The price would need to be high enough to make a decent profit, but not so high that the owners couldn’t re-fi in a few years.
• Owner finance. We’re talking a straight deal with low down (perhaps increased payments for the first year to increase the down payment) but no lease-to-own , wraps or other fancy stuff. Just a  20 -30 year fixed interest mortgage. Current Texas law makes the fancy shenanigans almost impossible anyway and our restrictive investor environment means that a huge number of Texas working class families are once again being priced right out of the market.
•  Charge a higher than average interest rate. It would need to be high enough to encourage buyers to work on their credit and re-fi in 2-3 years.
• Encourage the new owners to build equity through home improvements.
• Keep all income in the same pot. No drawing anything from this venture for possibly 10+ years, allowing the payments to accumulate to continue buying and owner financing more homes.

Final Thoughts

Right now, people are afraid. Economically it looks like we’re really in for it, maybe much worse than the ‘80’s. No one knows for sure, but indicators look bad. Very Bad.

The mister and I aren’t really worried. We’re doing fine thanks, and truthfully, we know how to profit during the coming hard times. But is that really what’s most important? Is our own comfort and prosperity really all that matters? Believe me, I’m no socialist and I have absolutely no compunction against wealth, mine or anyone else’s for that matter.

And as much as I hate to agree with Jimmy Carter on anything, home ownership is one of the foundational principles of our way of life. Our ancestors came here for land and freedom. I don’t like what I see coming economically in the years ahead. I don’t like the idea of far-away investors with deep pockets coming to my town and buying up the empty homes. I don’t like the idea of what this place will become if the dookie really hits the fan.  And I *really* don’t like to think what my community will be like if a huge segment of working Americans lose hope of ever owning their own place

So maybe if the mister and I buy two or three homes and owner finance, it won’t make much of a difference. But what if other investors chose to follow this model? What if real estate investors from all over joined together to do something to save our neighborhoods, our towns, our communities? What if we could convince a few of our better-off neighbors to do the same, even if they’d never considered REI before? What if we could convince them to loan out that 50K they’ve got tucked away in the bank making 3% and improve their return to 10% or more? What if we could show people that by helping each other, we can also help ourselves?

 What if?

Okay-I know this is sketchy, but it’s a bit hard to cram weeks of rumination into one blog entry and I just didn’t want to throw this out until we’d spent plenty of time thinking things through and felt certain we were heading this direction.  

The floor is now open for discussion.

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Someone Who Shall Remain Nameless brought home some uninvited germ-y house guests and, as of this writing, 3 out of 4 Brz’s are feeling mighty rotten. As there seemed no point in keeping the mister awake as one of my lungs tries to make a break for independence, I thought I’d entertain the troops with a few pictures of the completed tables.

The leather is totally ruined by this point.

Once the leather was removed, I took a palm sander to the tops to remove the glue residue and the old, surrounding finish

Here, DD3 is demonstrating her technique for getting into the grooves.

Sanding completed, top wiped with mineral spirits– no stain yet. The mister says the table is mahogany veneer  over poplar.

And after 2 coats of red oak stain (Miniwax) and 4 coats of water based satin polyurethane. The poplar showing through in the grooves didn’t take the stain as well as the rest of the piece. The tables now have a bit more casual look which suits our house just fine.

So– all’s well and all that. I’m off to prop myself on the couch and try to catch a few winks

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A few follow-up pictures:

Leather top all ruined and stuff following the leather dye application.  I tried a deglosser and dye for leather shoes and handbags. Unfortunately, once started there was no way to take it all back despite the ick. 

Very sad…

Rescue procedures are in the works so All Is Not Lost (just in case anyone was worried :)  ) The mister suggested ripping the leather off completely and refinishing the tops, a process that’s begun but not yet completed. Pictures to follow.

Good friends,Duane and Josh Sisk helping with the gameroom floor. More info on the mister’s pine floor laying skillz here.

And this is what 3 fried chickens, yeast rolls and cream-style gravy looks like before consumption.

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Guess what the mister’s giving me for my birthday? (Besides the pretty flowers on the buffett )

 He’s upstairs at this very moment finishing the gameroom. How cool is that? Plus friends are coming over to help and learn to install one of the mister’s semi-famous pine floors.

 I don’t tell too many people around here, but back in ‘99 I almost went on to Glory a bit prematurely. A routine surgery resulted in a ruptured bowel, sepsis and more pain than giving birth to all 4 little Brz’s combined. I spent way too many days in the hospital and many, many months recovering, then recovering from the recovery. My oldest, only 14 at the time (bless her heart), took over all household resposibilities  while I fought to get back to some sort of normal. The day I was able to stand at the sink to rinse my own glass was a major victory.

And six months or so after surgery, when I was able to actually cook a simple meal once again, I stood over the stove and cried like a baby, overwhelmed at the privilege  of once again taking my position of service to my family– something taken for granted for way too long. I’d never realized how very precious this gift of working together really is– chopping the onions with the children in the kitchen or folding a load of laundry while the mister whooped the kids at dominos yet again.

So nowadays, birthdays mean something very different than they once did. Each extra year is a gift~ another 365 days of  cooking meals and balancing the checkbook… the tiny bits of service that add up to years overflowing with memories.

The mister suggested we order pizza for the work crew, but today I’ll be frying 3 chickens using the  the Brz super secret squirrel family recipe, baking up yeast rolls and trying to rescue the poor little mahogany tables– can’t imagine a nicer day.

I think the Hobbits have it right on this one~

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(I think I’ve ruined my mahogany tables.)

The leather dye was actually a thick, paint-type thing and now they look like a pair of old saddle shoes… only without the nostalgic factor or the tiniest element of cute.

Pictures to follow–

Sniff.

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