3 bed / 1 bath Brick Ranch with Basement & 2-Car Garage
As we talked about earlier in the week, we spent the good part of this past Saturday putting together the numbers on a rehab in Waterford, Michigan, and the numbers looked good. The property shown in the picture above is a great little 3 bed / 1 bath brick ranch with a full basement and 2-car garage that really just needs some updating. The house is solid from top to bottom with no structural issues and the roof is great. Everything is telling us this is a great little property, and so we submitted the offer on Saturday night.
Since then we’ve been back and forth with the seller, and right now we’re at a bit of a stalemate. Originally we had planned to put the property under contract with a financing contingency because we were planning to fund the deal through a hard money lender. With the analysis we have put together I am confident that we could obtain the funding, but I cannot be 100% certain, so we need the financing contingency. This is a major issue for the seller, and they are requesting a $5000 deposit with no contingencies on the offer. In addition to this, they are asking that we close in 14 days.
Unfortunately, we’re not in a position to put the property under contract right now, but if we are able to locate private funding, we could easily snatch this deal up and be off and running with the rehab.
Right now we’ve completed a full analysis of the property and we’re reviewing this analysis with a few private lenders. We don’t have the funding lined up just yet, so if you are interested in partnering with us on this deal, we would be happy to discuss the full details with you as well. For now, here is a summary of the numbers:
Last week we told you about our plans for Real Estate Investing in Pontiac, and over the weekend we spent a good amount of time getting to know this market. So, how did we do that? Well, quite frankly we got in the car and we started driving around, and boy were we surprised! For those of you that know Michigan, and particularly Pontiac, please put an image in your head of what the average house in Pontiac looks like. I pictured seeing neighborhoods filled with run-down homes, with boarded up or broken windows, and lots of overgrown weeds and tall grass. Houses like this:
Well we did find houses like that, and in fact that picture was one of the houses we saw. But like I said we were surprised…we were surprised because we also found houses like this:
In fact, we saw whole neighborhoods filled with houses like this. Now, I’m not going to sugarcoat things. We did find areas of Pontiac that were exactly what we expected, but the big takeaway was that there really are some great areas of Pontiac to invest in.
So, having all this first hand knowledge is great, but it’s really easy to forget the areas we drove around in, so we spent a lot of time documenting the various areas we drove through. Here’s how we did it:
We systematically drove through neighborhoods covering many parts of Pontiac.
As we drove around, we noted all of the vacant properties and the homes that were for sale. For each of these homes we took the address, phone number (if listed), recorded comments about the house, and took a photograph.
After we got home, we put organized all of this information into a spreadsheet
So, this was helpful, but it still didn’t give us a clear indication of where the good areas of Pontiac were. We essentially had a list of properties and comments about them, but it was hard to really put it all together. So how could we make better use of this information to make it immediately clear where the good areas of Pontiac were?
Well, the answer was to put the information on a map. Now, we had approximately 75 different properties that we documented, so it was going to be pretty tedious to map each of them, and I figured there had to be a web application out there that would map multiple properties at once. Well, as it turns out there is. I found a great little website called BatchGeo.com. This website allows you to take your list of addresses, copy them into the website, and it maps them all at once. And, as if that wasn’t helpful enough, you can also add categories of information (i.e. our comments about the houses) that will show up on the map when you click on each map points. So, after using this site, we ended up with a map that looked like this:
This worked out perfect great! We now have a map that we can really start to analyze. But it got even better when I noticed something. See that little button that says “Google Earth KML”. If you click this button it allows you to save a file of the plotted addresses that is readable by Google Earth. If you haven’t heard of Google Earth, click on the link and download the software. It’s free, and I think it’s one of the coolest pieces of software that Google has put out.
So I saved the file, and then loaded it into Google Earth and it worked! All the addresses were plotted perfectly in Google Earth. This was a big step forward because now we have a map that we can continually update as we learn more and more about the Pontiac market. The other great thing is that Google Earth has lots of cool features that allow you to customize your maps. So, to help us visualize where the good areas were, we started to look at our notes about each property on the map, and we were able to see the patterns of where the good areas were. So using Google Earth we started to draw red, yellow and green zones on the map using the “Polygon” feature. This feature allows you to outline areas, and you can color-code these areas with a transparent color. So here is what our current map looks like with all of the zones we have researched:
Note: the actual map has the zones color coded red / yellow / green to indicated the bad / questionable / good areas of Pontiac.
This was an excellent exercise for us because in a relatively short amount of time, we were able to learn a great deal about the Pontiac market. Plus, we now have a great tool that we can use anytime we come across a new property. We can just map the property in Google Earth, and we’ll know immediately whether we want to consider investing in the property.
Welcome back. First off, I would like to thank everyone for all the kind thoughts on our drive for $60,000 in 60 days. We’re going to continue our drive towards financial freedom, and with that we plan to update this blog about 1-2 times per week. We will continue to provide information on what we’re doing and insights into the things we have learned or are learning about real estate investing. We encourage everyone to provide feedback and really make this a great community of real estate investors.
So, for today, we’re going to talk about a habit we have gotten into that helps tremendously to keep us focused on our real estate investing business. Each Sunday night Kelly and I sit down for a few minutes and we brainstorm about what we need to do for the upcoming week. We normally start by reviewing what we accomplished the previous week and then talk about what we need to complete for the next week to stay on track. Through this process we are able to set our goals for the week, or “mini-goals” as we call them. These mini-goals are the things that we really need to accomplish for the week to keep the ball moving forward. For example, last week our mini-goals were:
Get the utilities turned on at the West Bloomfield Property
Setup appointments & meet with contractors
Obtain pre-approval for funding on the West Bloomfield Property
Set a closing date for the Pontiac Property
Once we determine the goals for the week, we then break down each of the goals into simple tasks that will help us accomplish these goals. For instance, we broke the mini-goals into the following tasks:
Call electric company – Todd
Call gas company – Todd
Go to West Bloomfield Township water department – Kelly
Get recommendations for contractors – Todd
Set appointments with contractors – Todd
Set appointment with home inspector – Kelly
Send credibility kit to hard money lenders – Todd
Phone conference / meet with hard money lenders – Todd
Meet with Pontiac property hard money lender – Kelly
To manage these mini-goals and keep them at center stage, we write them down on a big dry-erase board in our kitchen. This board really helps keep Kelly and I organized and on the same page because we can update it throughout the week with things we have completed, or add additional things that come up throughout the week.
With this list of mini-goals and tasks, we were able to systematically accomplish each of our goals last week. All it took was to focus on the tasks at hand, and we were easily able to complete these goals. I cannot tell you how much this has really helped in keeping us on track in our real estate investing. It is something that is really simple, but it just takes a little discipline to do on a consistent basis. We are happy to report that we accomplished all of our mini-goals last week, and this week our dry-erase board looks like this:
We are already on track to Close on Lydia, get contractor bids and obtain more properties like Lydia…maybe we’ll have to add more goals for this week…we’ll let you know what happens
Today is Day 34 in our drive for $60,000 in 60 days through real estate investing. This morning we met with the hard money lender that we are working with to fund our deal in Pontiac. We had a great meeting, and based upon our conversation, it looks like we are going to be able to get financing for 60% of the deal. Right now he needs to go back and do a comparative market analysis on the property through a third party company and if the numbers check out the deal will be a go. Based upon our own market analysis, we think the property is worth more than what we are paying, so we do not anticipate any issues.
He also informed us that they have a large number of properties available that are already pre-authorized for funding. We will definitely be looking at this further because this could be a great source of new deals for us. Of course it will all depend on the numbers.
After our meeting this morning, we spent the rest of the day at my softball league’s annual pig roast. Our whole family was there along with a lot of friends and we all had a great time. Reflecting on our day today, it is clear to me that these are the kind of days we want to have more of in the future. We made progress towards completing a deal, and we had a great time with family and friends….so rather than talk more about real estate, we are just going to share some of the pictures from the pig roast today…
3 bed / 1 bath Brick Ranch with Basement & 2-Car Garage
