House #9 and "Flip Flopping" Banks!

This business is full of surprises...you might recall that my search for the next investment property had led me to get this house under contract. Well, after doing a thorough inspection and calculating the rehab costs I determined that the price I had the house under contract for was too high. So I decided to tell the bank that I needed to lower my offer price (by $10,000) instead of asking for repairs (which they wouldn't do anyway). 

I knew this basically meant that I would not get this house because they have had multiple offers on it and the house had been under contract with other buyers before.

Needless to say their reply was quick and swift...NO. The seller will not lower the price. We had multiple offers on this house and is sold AS IS, blah, blah, blah...

So I asked them to terminate the contract and return my $5,000 earnest money check. I did not hear a peep from them in 3 days (these people only work through email, argh!) and then they came back to me and said they would lower the price by $5k. My answer was no, it needed to be $10k lower. Another 3 days went by and all of a sudden I get an email saying Congratulations, the seller has agreed to your purchase price…what!!!

The Elusive House #9...

Lots of action this past week but not a whole lot of results...


Let's see... I had told you about the two houses I was getting very close to purchasing over the last month. One house was going to be a rental the other one I was debating whether to rehab and resell it or keep it as a rental. 

On the rental house I spent quite a bit of time really crunching the numbers to see if it would make a goo investment which is after all the purpose of it all. In order to do this I try to project the expenses that I will incur as the owner. These include:

• Vacancy - I assume that in between tenants I will loose one month of rent per year for 10 years. This works out to be 8.3% of total annual income. 
• Maintenance and Repairs - I assume $1,000 per year. 
• Taxes and Insurance
• Mortgage payment - I plan to buy this with a 30 year fixed mortgage at about 5% interest rate, that requires 20% down payment
• Administrative costs - $250 per year
• Property Management - this is an important one that I missed at the beginning and my friend J Scott from 123Flip reminded me about. Although I don't intend to hire a PM there is a reasonable probability that I might in the future, especially if my rental portofolio increases so I might as well consider it. This comes to 10% of annual property income.
• Capital Improvements - yes the house has been recently rehabbed but still it is an old house and there were items that were not new. So over the next 5-10 years I would have to spend money to fix/replace some of these items like windows, plumbing, electrical, doors, fixtures, drainage, HVAC, etc.

Financial Literacy Problem or Personal Responsibility Problem?

Ok so I read this article on USA Today about how this gal is soooo lost about her finances and doesn't know where to start, blah, blah, blah... and my first thought is... what!!

Why doesn't she use the ipad she is holding in her hand to navigate to one of the 10 million websites out there that go into endless detail about your money, personal finance, investing, budgeting, etc. 

There has never been more information available on how to handle your money, grow it and keep it than there is now. I mean, if you have internet access you can learn ANYTHING you want/need to be able to handle your finances.