Post script. The floors. The house.

Well here is the finished product on our latest house. Check er out!






























































































































I promised you in the previous post that I found those lovely floors under that carpet. Heres the finshing of them. For a real estate investor wood floors means more value per square foot. Appraisers will tell you that they cant give you credit for them unless they see them. Well here they are. This probably increased the value another $5-10k,



Initial belt sander with medium grit.


















Look at that grain

















Some of the old paint just wouldnt die. Needs a hand sander to get into some of the grooves.

















Rich medium stain and sealer 2 coats.

Updates--Recession?? What recession?

Well we have the property I mentioned in April 21 2009 under contract. Once it closes I will update you on the outcome. A hint the profit will be around 35k and the rehab cost about 4k.




The 4 bedroom home I mentioned April 9, 2009 has a tenant in there paying $650 a month. So after the 19k I spent in it I figured it will take 38-40 months to pay it off. Then its all free money!!!! Free and clear!



The last property Id like to mention is the one I discussed on the 14th. Id like to show you what we have done and give some insight as to how some rehab is done and maybe some pleasant surprises discovered along the way.


Step 1 Retire the 1950 door with the diamond window....gag! I could have left the door with natural wood but I wanted it to POP from the street. We painted this a medium blue. The back side however we polyurethaned it to maintain the wood grain look and accentuate the surprise we found inside.



















Step 2 Replace the side door as shown here with a new slab door. Also we though long and hard about the siding. The previous owner tried to just hide it with hardipanel. But the new owners and buyers would constantly wonder "Whats under there?" Lap siding is in my opinion a classic timeless look so .....



side wall--before























after























Here are some more sections we took out and replaced with real wood siding.




Front of home--before





















after




















side of home before






















after---the sill was rotted and had to be rebuilt.






















Porch in rear --before; filled with mostly rotten trim pieces.



Pieces were replaced when in doubt.





















after






















And now for the best part: What would cause a man to pull up perfectly good carpet?

Ha ha you ask.






















A suspicion and then pay dirt....pristine wood floors the previous owner was too lazy to strip and refinish. Look at that color. More of the outcome and the finished home within a couple of days.

De-Leveraging---The New Math

Ok gang. All my real estate buddies are saying the same thing. "Ive got heartburn from 2006.", "Im screwed.", "How can I sell this house thats 20k above what its worth? Id love to fire sell it".



My solution? Buy more. Buy more at todays prices. And buy low just like you always have.



The logic for this is very similar to dollar cost averaging with stocks. Buy a stock for $100 that drops to $10. You lost $90 on paper. Specifically its on paper. You dont really lose until you sell. It may go up in value. This is a very important principal when you position your exit point for sale.



Ok so check this out. You buy a stock for $100 that now is worth $10, $90 less than what you paid for it. If you buy 1 more stock at $10, you have 2 stocks worth $110 in cash. Your overall loss is only $45 from $90. If they sold at $55 you would breakeven. Ah but not yet. The price is still only worth $10. So you buy another stock for $10 and now you have 3 stocks at $120 that have a breakeven at $40. The change rate gets diminshed as we approach $10; so with two more stocks bought at $10 we have $150 we have a break even at $30. What a big difference from $90! The loss is now reduced $70 to $20 from $90 if the price were to stay the same price of $10.



What a dramatic turnaround. A $90 loss reduced to $20 if the stock stayed exactly the same.



Now folks we dont buy things because they stay the same. We buy them because they go up in value. Isn't it easier for a price to get from $10 to $30 than it is to $90. LOL. Not a trick question dont answer that one.



So with real estate we do the same thing. Now unlike stocks, real estate is a more inefficient market. We don't have market makers(stock jocks who collaborate on what things are worth) over price. We have the open market of buyers and sellers.



We buy houses at a discount and leverage bad situations to our numerical advantage. We leverage distressed properties that need repairs or properties that banks wont finance in their current state. They entice us to buy because of the distress. We dont buy a $100k house with $20k in work for $80k. Most would rather buy that same house for $100k and NOT do the work. The market agrees. We pay $60k or $50k for that $100k house to do the $20k work to get $20k+ sweat equity.



So back to our math problem imagine buying a $30 stock for $10. And now the math becomes clearer. We create our exit by continuing to do what we do. Buy and sell houses. Buy low and sell higher. It may not be at 2006 prices, but the profit made will give you the antacid to digest the heartburn of prices dropping and stale inventory.



Get back in tha' saddle and ride!!!!



Your bud in the business,



Wes

Oh my God Im getting RABID!!!!

Foaming at the mouth over these steals. $58.9k for this one solid 120k sales over 60 days currently in this neighborhood. Going to get MY stimulus check right here. LOL.













Heres the back view.

Nice downstairs bath. No rehab needed.

Kitchen intact. No theft here.

Living room view. Looks like tenants just moved out.

Only repairs in the house. WDO and exterior siding coming off the house.

Rip out replace work. Stud needs to be scabbed too.

This could be cut and capped 1.5 feet and be totally fine for inspection.

Another (S)-deal

4312 Packard Dr-Sales price $44000; repairs $7500 After repair value(conservative) $90k

Rental income projection $800-900 a month. This is an 1100 Sq ft 3/1 Cash flow is $400/mo approximately.

Needs a 2.5 ton package unit(Package unit means it has the inside and outside unit together---saves space but costs more money) Ducts going to the outside of the house is your sign....

Siding needs a complete rip off and replace. First a word on siding. Dont vinyl over crap. If its crap we will find it. Your buyer will find it and it will kill your exit and price.....GUAR-U-NTEED!!!; The question is "t-111 or hardipanel?"(cement siding). The latter requires special skill and tools for installation. If done by an amateur it is brittle and can be easily damaged post sale and a liability for you. If you got basic labor do t-111. If not hardi panel all the way. They have some nice shapes. You can do panels or if you wnat to be fancy do lap siding.(more $$$)

Yuke dry rot...

Old sash windows....need good carpenters to restore. Need screens, shaving to rework and reglazing. Duct tape is not glazing.

Exterior Doors need replacing also. Thats the extent of the bad news. Looks can be deceiving.

look at this KITCHEN!!!!!!!! That saves 5k in rehab right there.

And the bathroom....minor damage to the vanity base cabinet. Fortunatly they run $150 to replace. Tile above the tub surround. Slate floors!!!

It even has berber on the floors....Whew Rehab is tiring. LOL!!

The view in da hood!!! Nice stucco house across the way.

Big backyard. Cant wait to see the survey.

Next door Neighbor.

Street view..

My latest project.....putting my money where my mouth is.

4059 Owen Avenue. 4 bdrm/1 bth Northside Jacksonville.

Acqusition price $14500; rehab $3700 Closing costs $600; Total investment $18800;

Rehabbed value in todays market: 50k

Rental market $800 a month; $9600 a year

Yr 1 Expense: $188 interest only payment(12% interest), $83 taxes; $41 insurance ttl expenses $3756 yr 1

Lets have a look at it.........

Wonderful graffiti art
2 coats of kilz on this one.

Taking off 3/8" plywood and getting 5/8 down and cement backer board and ceramic tile. Looking GOOD in the kitchen.

left a perfectly good AC compressor but took everything else....common expectation to find in REO properties.

The second coming

Friends, I'm an intuitive businessman. I make decisions based on hunch. I also do pay attention to trends that give me a feel for what is to come.

So with that in mind Im going to layout why I think the second wave in real estate boom is to come. Now this is specific to Florida, so if you have a concern about your area look me up in facebook under Wes Savage, Jacksonville Fl network and I will answer specifics regarding your area.

Why do I think things are about to change? Well for the record we have homes that can be rented out and paid for in a year and a half via rent. By my investor calculations thats a 72% rate of return. Hows your stock portfolio doing? Ive got 40 in the area right now in low income areas for under 10k. Ive got 100-110 in the 10k to 20k price range and Ive got 120-130 in the 20-30k area. I have properties in upper income areas 70% of current value because the public have turned their backs on Real Estate and things implode when others do so. Ive sold 5 homes in the lower areas this week and Im working on a buyer list. there is also many people ready to put their money to work in lending hard asset loans.(again).

What else:
---Building starts are below demand for the second year in a row. So builder inventory is shrinking. More specifics on this later.

Stock markets have rallied in the last couple of weeks as the Geithner plan is revealed.... resolution trust corporation(RTC) style liquidation part deux. Investors and the government will make 20-30% on their money. Dont sweat the deficit required to do this. The goverment is becoming a silent partner to those who know how to move and get things performing again. Folks the banks have already marked their mortgage holdings down 80%. The protfolio however is 85-95% performing. Lets do some quick math. 6% on 100k is $6000(6% ROI). The street as discounted all mortgage CDOS to 20% on the dollar. So that 100k mortgage is now valued at 20k . Whats $6000 coming in on a mortgage bought for 20k? 30% 30%!!!!!!!!!!!!!! the government has to pay back debt at 4.94%. Damn thats extortion. I hate people who dont understand the government will make a killing!!!! They will pay back the debt in 3-4years and keep getting the income stream for the next 26 years!!!(all those 30 year mortgages)

Feel confident about our country yet?

-----Mortgage applications are up 38% from a week ago according to the MBA(Mortgage Bankers Association). If this continues mortgage ops folks will start HIRING to handle the onslaught. Any unemployed mortgage professionals out there? LOL I need a job too. LOL. Jacksonville had Everbank a regional lender hire 200 new people for loan operatrions.

Ive talked to 20 of my contacts this week to wake them up as to how cheap things are. Heres what Im hearing...."mother f*******g kidding?", "No way?", "My god". These people knew what they were paying for 2 years ago.....kid in a candy store now.!!!

More to follow. Im not listening to doom and gloom now. By the time people start figuring out the bad news is over its too late the masterminds are out off the porch on the hunt. DONT MISS OUT!!!!!!!!!! Trust me beg borrow andsteal to get 50k out there and you could be pocketing 100-200k in just 3 years.

More as to strategy to follow.

Your servant,

Wes