Posts Tagged ‘ financial education ’

Day 60 – How Did We Do?

Well, well, well, it’s day 60 in our drive for 60,000 in 60 days.  We’ve had a lot of fun over the last 60 days pursuing our goal, and I’m sure the big question everyone has out there…did we make it?

NO!

But, we did make it almost halfway to our goal earning $27,816 in the last 60 days.  We’re super excited about what we’ve accomplished even though we didn’t make it to our goal.  But here’s the thing…the money isn’t what’s important.  Just like last year, these past 60 days have been life changing in many ways.  We’ve developed relationships with a number of people through the deals we’ve been pursuing, and those relationships are going to be worth much much more in the future.

So, we’ll end our drive for 60,000 in 60 days this year with a challenge to everyone out there.  We want to see you put on your own challenge.  Feel free to copy our goal or come up with one that suits you, but we want to see some action out there.  In your pursuits we’ll be happy to assist in any way that we can, and we’d even be happy to help you start blogging about your journey.

So get out there and get things going!

Until next time…

Todd & Kelly

Day 45 – This is Why You Buy Title Insurance

Well today is day 45 in our drive for $60,000 in 60 days, and we had a little bit of an interesting situation that came up on one of the properties we’re selling.  We received the title search back from the title company and the following line item appeared on the title report”

Payment Agreement and Lien in favor of Charter Township of Waterford dated May 1, 1975 and recorded June 12, 1975…

My first reaction was…what the heck is this!  We had purchased the property in March of 2009, and this never came up on the title report back then, so I immediately responded to the title company asking what this was.

They did in fact send me a recorded document showing that in 1975 the township of Waterford levied a special assessment against the property for the installation of sewers.  The total assessment was $1,840, and furthermore it specified that an interest rate of 6.5% would be levied on the lien.  So being an engineer with a great story problem in front of me, I quickly calculated what the total amount due would be if this lien had in fact gone unpaid all of these years.  It turns out the balance would be well over $17,000!!!

I began to smile…yes, I began to smile, because I knew that we were protected from this sort of thing because we had in fact purchased title insurance when we bought the property back in 2009. 

As it turns out, Kelly took a trip down to the Waterford Township offices, and as expected the title company had missed the recorded document discharging the lien against the property.  The assessment was actually paid off in 1975, so there was no issue.  However, had there been an issue, our title insurance would have saved us the $17,000.

The moral of the story here is never buy a property without title insurance!

More to come…

Day 42 – Details of Our Latest Property Sale

Well today is Day 42 in our drive for $60,000 in 60 days.  We’re heading towards closing on our latest property sale, and today I just want to go over some of the numbers on the property.

This property was actually the first investment property we ever purchased back in 2009, so it’s a little sentimental that we’re parting ways with it.  The property has performed greatly for us – it hasn’t seen 1 day of vacancy since our original tenant moved in, and the tenants are currently purchasing it on a lease option.  Over the 2.5 years we’ve owned the property we’ve averaged a 17% return, so it’s been a great property, and now we’re going to move on and re-invest those funds.

The details on this sale are fairly simple.  We have a sales price set at $51,000, and we currently owe approximately $33,000 on the property.  After transfer taxes, rent credit transfers, closing costs, and payoff of the debt service we expect to clear about $13,500 on this property.

So, this brings our total to date up to $27,815.86.

More to come…

Day 35 – We’re 100% Occupied!

As we discussed earlier this month a couple vacancies in our properties really killed our cashflow.  We were still cash flow positive, but our net was much lower than it could have been if we had tenants in all of our properties.  Well, we’re happy to announce that we’ve filled both of our vacancies with very good tenants, and we’ll be showing a much better number this month.

For the first property, we were able to obtain a rent rate about $50 higher than we anticipated, so this was very good news.  This is a credit to our property manager who had 10 showings setup on the same date literally a few days after we purchased the property.  We’ve completed the rehab on the property just in time, and the tenant has moved in as of last Friday.

For the other property, the rent rate wasn’t quite as good.  We accepted a rate about $35 per month lower than anticipated, but our decision was based on the financials.  We could have held out for another tenant, but the property has been on the market for about 45 days at this price.  We’ve already had 2 weeks of vacancy, so the prospect of longer vacancy would continue to eat at the profits from this rental.  So, looking at the numbers we think this was the correct decision.  Over the next year, we’re going to collect $35 less than anticipated on this property which totals $420 for the year.   This equates to little more than 1/2 of a month of rent.  Since the prospects were not good that we would have the vacancy filled in the next 2 weeks, we accepted the tenant at the lower rate accepting the loss but avoiding additional losses.

So, now we’re on to our next property…

More to come…

Day 19 – SOLD!

So yesterday we told you that we had completed our Michigan Cash Flow Property Tour and that we hadn’t sold a single property.  Well, about an hour after I published that blog post, one of the investors who had been in town over the past couple weeks phoned me on the way to the airport and we arranged for him to purchase one of our properties.  So, now we’re well on the way towards our goal. 

We purchased this property at the end of March, and here are the list of costs we’ve incurred for the property:

  • -$15,500 Purchase Cost
  • -$2,500 Financing
  • -$2000 Closing Costs (Buy & Sell)
  • -$15,000 Rehab, & Holding Costs
  • -$900 Tenanting Fees
  • +$1,800 Rent Collected

Total Cost - $34,100

Sales Price – $45,000

Profit – $10,900

That’s right where we wanted to be with this property, so we’re very pleased.

This puts us a big step forward in our goal, and we have now earned $12,000 towards our goal of $60,000 in 60 days.

More to come…

We’re Late, But That’s a Good Thing

It’s been a couple weeks since our last post We’ve Developed Our Business Plan to Take to the Bank and quite frankly we’re a little behind schedule.  As Kelly always tells me, everything happens for a reason.  This past week at the Renegade Detroit Investors Club meeting Bob Norton was the speaker, and during his presentation he talked about one of his team members Bill Schmidt.  Evidently Bill has been in the banking industry for over 30 years, and he has just retired.  However, he has begun consulting for investors who are looking to go to banks for money.  Bob gave out Bill’s phone number during the talk, and of course I gave Bill a call this week.

So, as of now we are planning to sit down with Bill next week to go over our plans and get his guidance on how we should proceed.  So, we’ve been delayed, but I’m glad we were because I think we’ll be much more prepared after speaking to Bill.

Stay tuned!

We Need to Clarify A Few Things…

In our latest blog post – 2010 Was a Good Year and We Have Big Plans for 2011 we talked about some of the mistakes and successes we had in 2010.  The discussion of our mistakes generated some conversation with us and one of our mentors and we really need to clarify our thoughts a little bit.  In particular we are speaking about the following comments which we orginally said were mistakes:

We spent money on real estate classes.  After attending a real estate seminar, we bought some real estate classes, and in retrospect it was really a mistake.  The classes have been good, but we have learned so much more in just networking with people and learning from what others are doing. 

We’ve taken on too much debt.  Some of the debt we’ve taken on has been from doing the deals we’ve done, but we have also taken on debt paying for some of the real estate classes we’ve taken.  In retrospect this money would have been better spent on property.

In retrospect, these things were probably not mistakes, and here’s why…

Before we purchased these real estate classes, we were comfortable.  We were comfortable going about our daily lives commuting back and forth to work and living life below our potential.  As we were reminded, these classes provided a few things for us.  First and foremost, we spent a lot of money on these classes, which instantly created a high level of motivation for us to succeed in our real estate investing business.  I’d like to think we didn’t need this motivation, but when I look back I have to admit that our real estate investing really went into overdrive after we purchased these classes.

In addition to providing motivation, these classes did something else that has probably had one of the biggest influences on our success.  You see, Kelly and I haven’t always had the same views about real estate.  I had been interested in real estate since early in 2009 after reading Rich Dad, Poor Dad, but Kelly was skeptical.  In fact she was more than skeptical.  When I told here I wanted to purchase a rental property she told me I was crazy (except she wasn’t that nice about it).  After wearing her down over a few months, I finally was able to convince her to purchase our first rental property in the spring of 2009, but she definitely wasn’t fully on board.  It certainly has helped that this rental property has been successful, but even after we got the property rehabbed and rented she was still skeptical. 

However, when I took Kelly to our first class and we met Lee Escobar, I think our lives were changed.  Kelly saw the light that I had already been exposed to, and it was at that very first class that we decided we were going to jump into the real estate game together.  These classes opened Kelly’s eyes to the potential of real estate and we were finally on the same page.

Ever since that weekend we’ve been having a blast.  We’ve fallen down many times since that weekend, but we’ve continued to get up.  We’ve met so many great people, we’ve learned a whole bunch, we’re having the time of our lives.

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