The project is about 90% complete after 6 weeks. While the goal was to have it done right around now, we’ve gotten a lot of rain over the past few weeks, so the exterior renovations have been held up a bit.

Basically, on the exterior, we have replaced the roof, replaced all the siding, replaced most of the soffit/fascia, removed some dead trees, rebuilt the front and back decks, and replaced the garage doors. All that’s left is exterior paint and installation of the new gutters.

On the interior, most of the work is completed, with the exception of the finishing details — appliances, new switches/outlets/registers, duct cleaning, paint touch-up, and some final trim work.

Between opening up the kitchen, expanding and finishing the basement, and building a large back deck, this house should be tremendously appealing to our buyer market.

I’m hoping to be completed, staged and ready to go on the market by next weekend…here are some before and after pictures of some of the major work that was completed:

FRONT – BEFORE & AFTER

FRONT DECK – BEFORE & AFTER

KITCHEN – BEFORE & AFTER

BASEMENT – BEFORE & AFTER

BACK DECK – BEFORE & AFTER

In fact, if you’ve been following my site for the past 18 months, you’ll know that as of yet, I’ve NEVER recommended a single outside product to my readers.

But, every once in a while, though, I find someone selling real estate learning materials that are reasonably priced and tremendously valuable. When that happens, I’m happy to promote them here on the site.

Such is the case with the Flip This REO! eBook that teaches all the basics (and some advanced stuff) on wholesaling REOs.

It was written by an investing colleague of mine — Stephani Davis — who wholesales REOs for a living in Tampa, FL. Let me explain why I’m willing to recommend this book to my readers who are interested in getting into wholesaling, and specifically are interested in wholesaling REOs:

1. Stephani Is Really Doing It: Most so-called experts who peddling seminars and systems aren’t in the real estate business; they’re in the “guru” business. They know how to sell products, but they generally don’t know how to buy and sell real estate. Stephani was a bartender three years ago who taught herself the business of wholesaling, and after a year of struggling and refining her techniques has built a full-time business doing it. She makes very little money selling her eBook…and makes most of her money actually investing.
2. REOs Are Different: For those people who just want to wholesale properties purchased from private sellers, I would say that you don’t really need a book on the topic. Sure, a good book on marketing, negotiating, etc, would be useful, but wholesaling regular properties is pretty straight-forward. Wholesaling REOs is more complicated, as the sellers (banks) would prefer you not to wholesale their properties…so they make it a bit more difficult.
3. I’ve Learned From The Book: If I thought it was just as easy to learn how to wholesale REOs on your own, I’d be the first to tell you. I’m not a fan of paying for learning materials if you don’t have to. But, despite the fact that I specialize in buying REO properties, when I first read Steph’s Flip This REO! eBook, I learned a whole lot of things about investing in REO properties that I never knew. I was both surprised and impressed.
4. There’s a Money-Back Guarantee: I would never recommend any product that didn’t promise a refund if you weren’t satisfied. While I think the eBook is fantastic, if you buy it and disagree, you can return it. That’s the way it should be.
5. I Earn A Commission: If you read my blog regularly, you know that I don’t spend a dozen hours a week writing this for the purpose of making money. But, for the sake of full disclosure, let me tell you that if you click on the link above or below to be taken to the eBook, and then purchase it, I will get a commission. That said, there are a LOT of products that I could try to sell you that would generate a LOT more money in commissions, but I’m not willing to sell out for quick cash. I’m promoting this product because it’s good, and in my opinion, worth every penny it costs (and more).

So, if you’re interested in learning how to wholesale REO properties, check out Steph’s eBook:

Flip This REO! eBook

Additionally, the credit has been expanded to including some current home-owners who are buying a new home, as well. Specifically, anyone who has owned his/her own home for at least 5 years and is purchasing a new home is eligible to receive up to $6500 in tax credits.

For those interested, more details are in this news release…

I’m very curious to see the impact this extension has on the market. Over the past two months, we’ve seen a huge surge in activity, both in terms of selling our houses and trying to buy new houses. We’ve sold all but one of the houses we have on the market, and we’ve had difficulty buying new houses due to all the competition from owner occupants looking to take advantage of the credit.

I assume that things will slow down over the winter, but given the extension expire in April, I have a feeling there will be another buying frenzy in Spring for those who missed the deadline this time around.

We’ll certainly be trying to stock up on properties between now and then, and hopefully we’ll be able to capitalize on next tax credit deadline when all the buyers are out looking to buy their new homes…

It’s been several weeks since we submitted any offers, but as I mentioned the other day, we are in the process of going after about a half-dozen houses this week. Two of the offers that we submitted were on REO properties owned by Fannie Mae (the large mortgage lender). On both of these properties, we received calls from the agent saying that Fannie Mae was not yet accepting offers from investors.

After a bit more research, here’s what I found out about this new “First Look” program that Fannie Mae is instituting (this is directly from Fannie Mae literature):

“During the first 15 days a property is listed for sale, only offers from owner-occupants, public entities or their designated partners will be considered. Offers from investors can be submitted, but they won’t be considered until after the initial 15 days.”

Here is a bit more info from Fannie Mae…

It was a pleasant surprise to find that there were a lot of good properties on the market, including some that don’t seem to be in high demand. My wife and I spent the day writing up offers, and it looks like we’ll be making six offers over the next 24 hours.

With the tax credit getting ready to expire (it will probably be renewed but hasn’t been yet), and with winter coming up (a slow real estate season), we’re being pretty conservative with our offers and keeping them low. Hopefully we’ll get one or two counter-offers that we can work with, and perhaps get at least one of these properties under contract this week.

With The Poor House getting close to completion, we’re going to need some more work to do in the coming weeks…

Unfortunately, after not hearing back from the agent for another 24 hours, my wife called her (from my phone, as she wasn’t picking up calls from my wife’s phone), and finally got her on the other line. The woman made a bunch of excuses about having an emergency dentist appointment, not being able to get in touch with her buyers, etc. In the end, the takeaway was that our counter-offer wasn’t going to be responded to, and that particular deal was dead.

Btw, as my wife reminded me, this is actually the third offer we had received on this property. Offer #2 came almost immediately after Offer #1 fell through, but we were fairly convinced that the buyers weren’t financially qualified, and chose to reject their offer outright.

So, we’re now waiting for some lucky buyer to submit Offer #4, and hopefully that will be the one that sticks…

This realization came this morning when I figured out a way to get my carpet and vinyl flooring for about 20% cheaper — and a HIGHER quality — than I previously could!

For the past 10 projects or so, my carpet and vinyl installation has been done by the carpet warehouse that’s been supplying the materials. This local store was willing to give us great carpet/vinyl prices as long as we used their installers — who were also reasonably priced, but not overly skilled. While the prices were good, it seemed like each job came with its own set of frustrations — on one job, the trim work was horrible; on another, the floor wasn’t leveled beneath the vinyl; and on another, the carpet wasn’t well stretched. But, because the materials prices were so good, we continued to use those contractors.

It took another investor that I met with yesterday to remind me that I live — LITERALLY — an hour and a half from the place where much of the country’s carpet is made. Dalton, GA is carpet and textiles manufacturing town about 90 miles north of Atlanta; they have dozens upon dozens of carpet manufacturers, distributors, wholesalers, and retailers, all offering tremendous selection at ridiculously low prices.

The investor I was speaking with yesterday mentioned that he worked with a warehouse in Dalton that provided not only great selection and prices on carpet, but also great service (they would overnight samples, deliver any purchases for a small fee, etc). So, this morning, my wife and I drove up there. We were amazed!

We found the same carpet we had been using — a low- to mid-level plush — for $4.99 per square yard; we had been paying $6.99 per square yard for the same stuff! Additionally, for $4.99 per square yard, we were able to get top-quality vinyl sheeting; in fact, we likely would have been paying over $10 per square yard for that same vinyl from our previous supplier! While the prices I had been getting were very decent, these prices were just unbelievable.

The fact that this world of low-priced flooring was just 90 minutes from my house and I had completely overlooked it for the past year was just an indication that I had been getting lazy in my search for ever-better materials and contractors.

Now that I have a low-cost supplier of flooring material, I can go back to using the great installers I previously worked with. Given the cost of materials and their cost of labor, I expect to save about 20% on carpet/vinyl flooring moving forward. While this might only add up to about $300-500 per house, given that we’ll hopefully do 15 houses this year means we could end up saving more than $7000 a year on flooring…well worth not being lazy…

On the phone, the closing attorney mentioned that he and his wife had walked to a local garage sale, and upon speaking with the woman running it, he learned that the owner (the woman’s mother) had recently passed-away. They were selling whatever items they could, and then planned to eventually sell the house. The attorney asked how much they’d be asking, and when he found out that it was a very reasonable price, he called me.

To date, every investment property that we’ve purchased has been an REO property (bank-owned foreclosure), but I’m certainly not opposed to dealing with sellers directly, especially in a situation where I can help them as much as they can help us. So, if this woman really needed to sell the house, it had the potential to be a win/win for both of us.

My wife and I (with baby in tow) did the 30 minute drive up to the house. It’s in an upscale part of town, where houses typically sell for a good bit more than what we are accustomed to buying and selling for. The house was a very nice, 50’s style ranch with a big lot, and the first thing we noticed was a whole bunch of torn-out carpet on the front lawn.

We spoke with the woman running the garage sale for about an hour. Apparently, her mother had lived in the house for many years, and had passed away over the summer. The recent floods in Atlanta had caused a good bit of water damage to the house, and the woman and her daughter had spent many hours tearing out the wet carpet, cutting out some wet drywall, and doing their best to prevent any further damage to the property. That explained the carpet on the front lawn.

We let her know that we were investors and that we had heard she was considering selling the house. She said that she wasn’t ready to sell just yet, but seemed interested in having a potential cash buyer; she mentioned that she had had a couple bids from contractors to remodel the house, and that they had all come in above $50K, much more than she wanted to spend. She let us look around the property, and gave us a bit more information regarding its history and condition.

In the end, we let her know that we were very interested in the property if and when she was ready to sell (we got the feeling she was ready to “let go” of the property just yet). I gave her my card, and she said that she’d definitely give us a call when she was ready to sell, probably in the next month or two.

We’ll see what happens…

The offer was much lower than our first offer, but is still reasonable and still would allow us to make our minimum profit target. The only issue is that after getting the offer, the agent suddenly became difficult to communicate with.

Specifically, we received the offer on Thursday evening. We sent back a counter-offer on Friday morning, asking for more earnest money and a quick appraisal (just in case we had more problems). Given that these were are only stipulations on the offer, we expected a quick acceptance.

Come Friday night, we hadn’t heard anything, so my wife called the agent, who acted annoyed that we were bothering her. She said she’d talk to her clients over the weekend and get back to us. As of Monday, we still hadn’t heard back from her, so my wife called her again. This time, she said she would talk to her clients later in the day and get back to us.

It’s now late Tuesday night, and we still haven’t heard anything. I don’t know if that means the counter-offer isn’t going to be accepted or if the agent/buyers are just dragging their feet for some unknown reason. Either way, we’re still marketing and showing the property to other buyers, so we’re not slowing down just because of this situation.

I’ll let you know when we hear something more…

Things are moving along very quickly on this one (most things, at least). We’ve made two big decisions on this one to really appeal to buyers:

• We’ve decided to build a large beck deck (about 225 sq ft) to highlight the large, level backyard, and will be installing a nice out-swing French Door leading from the living area to the deck.
• We’ve decided to cut down part of the wall that enclosed the kitchen to open it up to the living room. We will be putting in an L-shaped bar-top and extending the cabinets a bit to open and expand the kitchen.

As for the interior rehab status, demo is complete, the waterproofing is completed, the downstairs room has been rebuilt (including new framing, sheetrock and a drop ceiling), the new garage doors are in, the walls have been patched and repaired, the painting is complete, the new doors are prepped and painted, and the new windows have gone in. Next week, we will install the cabinets, countertops, lighting fixtures, plumbing fixtures, and the French Doors to the back deck. We will also service the HVAC, repair the hot water heater, and have the ducts cleaned. This will just leave the flooring and final details, which we should have done the following week.

On the exterior, landscaping has been completed, the new roof is on, the siding has been pulled off, the bad framing has been replaced, the front and back decks have been torn down, and the new back deck is almost completed. My only complaint is that the siding replacement is well into the second week, and only about 50% of the job has been completed. Additionally, until the siding is completed, the new soffit and fascia can’t go up, and the painters can’t start the exterior painting.

We expect this one to be completed in two weeks, and as of today, we’re within our original budget.

Here are some pictures of taken earlier this week:

Back Deck is Almost Complete

Kitchen is Ready for Cabinets/Countertops

Renovated Basement

More Renovated Basement

Windows Have Been Replaced

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