Almost a month ago, I finally closed on Property 5. I was gonna write about it soon afterwards, but family stuff got in the way. It’s so difficult to concentrate on anything when dealing with family matters, but let's forget about that and get to some good news for once.
As far as mortgage processes go, this one was mostly standard. I really liked how I was able to get whatever information the bank wanted as fast as possible thanks to Todoist. I’m becoming better and better at getting things done on time. An hour before closing, the seller wanted to change things up. He wanted to keep the security deposits that totaled around $2,400. After calling bluff to get the offer accepted in the first place, I decided to call bluff again. The seller came back to give me only $900 of the $2,400. I wanted to call his bluff again, but I had a trip to Brooklyn to get to right after the closing. I didn’t want to put this deal off any longer by walking out, so I decided to take the hit and agree. Looking back, I really should have bluffed again and not reward such scummy behavior, but I just wanted it over with and the seller was counting on that. Other notes from the closing:
The Plan For Property 5
One of the biggest reasons why it took me so long to become mildly successful at real estate is due to how poorly I handle a new purchase. You see, after I’d buy a property, I would usually keep the tenants at their rents and collect the money. The plan was to save that money to use for renovation once they leave. But that never happens. I’d usually end up with a massive headache dealing with low rents and no profit, leading to me using my own money to pay for renovations that usually end up at around $5,000 per unit. But Property 4 changed all of that. With Property 4, I paid to get the place completely renovated, moved in a good tenant, and then enjoyed the profits with regular maintenance costs. I mean, can you imagine how much easier my life would have been had I done this with my other properties... especially Property 3?! It’s the right way to handle a new purchase, and it’s how I’m going to handle Property 5.
Apartment #1 (One Bedroom)
Current Rent: $400
Desired Rent: $500
This is the one apartment that I don’t plan on doing anything with. The place is in the best condition and the tenant, Richard, has been there for a long time. He clearly takes care of the apartment, but also keeps watch of the place. But the main reason why I wanna leave this place alone is that the configuration of the apartment is very strange and unattractive to prospective tenants. In order to get to the bedroom, one has to go from the living room THROUGH the bathroom. It’s so freaking weird, man. Trying to rent it out would be a nightmare, and I’d probably have to discount the rent anyway. But I’m not dealing with $400 rent, so I’ll try to get him to pay an extra $100.
Apartment #2 (Two Bedroom)
Current Rent: $500
Desired Rent: $750
This apartment is a mess. There’s junk everywhere and the guy living there has a bad track record with the previous owner. How bad? He owed the previous landlord $6,000!! That’s a year’s worth of rent! Tom is the perfect display of how pathetic the previous landlord was. He owed a year’s worth of rent, his apartment was with lots of stored trash, yet Tom was STILL THERE! Seeing that Tom is conditioned to being a bad tenant, I get the feeling he’ll try the same with me. So I’ll throw him out along with the rest of his trash and get it rented for $250 more. Of all the apartments, I like the structure of this apartment the most.
Apartment #3 (One Bedroom)
Current Rent: $525
Desired Rent: $600 - $650
This is honestly a pretty decent apartment, with a small living room and a huge bedroom. The tenant is a young girl, like 20, and pays $200 while assistance pays the rest. To be fair, I like her. She seems responsible for her age and I really like looking at her ass. But I really don’t want assistance tenants of any kind, and her age concerns me. She brings over some guy who looks like an idiot, so I’m not sure he’s not gonna cause issues. So I’ll be throwing her out as well.
Apartment #4 (Two Bedroom)
Current Rent: $550
Desired Rent: $750*
The first time I walked into this apartment, I smelled the strong scent of weed. That alone let me know that I’m throwing this tenant out. The apartment is nice, but the 2nd bedroom is small. Once I get him out, I’ll see if that bedroom can be extended into the kitchen or living room.
Attic Apartment
As I mentioned earlier, I’ll be converting the massive attic into my personal apartment. I’d like it to be a two-bedroom apartment but I have to keep in mind that, unlike a basement apartment, an attic apartment can only hold a certain amount of weight. I want a bathroom with both a stand-up shower and a Jacuzzi tub. The kitchen must have a single or double wall oven, as well as an island w/stove top. The electricity for that apartment will be connected to Apartment #4. So I’ll have to list the apartment as utilities included, which is why the desired rent has an asterisk. My hope is to get Apartment #4 rented for $900, but it’ll be tough with that small ass bedroom. Hopefully I can expand it and get a good price going.
Garage
I’m removing the home meter and connecting it to Apartment #3. I won’t have to list it as utilities included since the increase in electricity will be small. The home meter electricity is also connected to the garage, and that’s a big deal. Later down the line, I plan to buy an electric car. With that, I’ll actually be able to eliminate gas stations from my life and “fill up” for free in the garage. It would be a sweet perk, but that’s a couple years away. I’m simply planning for the future.
And that’s that. I finally have my Property 5 that I can use as a place to live while still collecting good money. It also feels very good to know that the $608 mortgage payment for Property 4 will still clear around $200 per month thanks to the renovation and Latisha’s awesome tenancy. It wasn’t perfect, but I got the properties I needed. Now comes the task of renovating Property 5’s apartments to make sure that my paycheck retirement is as smooth as can be.
P.S.: Just to reiterate, it’s been really hard to focus on this blog which is why it's taking longer to write and publish posts. My new family responsibilities with Alan depress the living shit out of me, so it takes longer to motivate myself to write anything. Thankfully I'm slowly getting his ridiculous finances in order. I’d like to write May’s Property Earnings and Food reports tomorrow, but it’ll most likely be done next weekend.
As far as mortgage processes go, this one was mostly standard. I really liked how I was able to get whatever information the bank wanted as fast as possible thanks to Todoist. I’m becoming better and better at getting things done on time. An hour before closing, the seller wanted to change things up. He wanted to keep the security deposits that totaled around $2,400. After calling bluff to get the offer accepted in the first place, I decided to call bluff again. The seller came back to give me only $900 of the $2,400. I wanted to call his bluff again, but I had a trip to Brooklyn to get to right after the closing. I didn’t want to put this deal off any longer by walking out, so I decided to take the hit and agree. Looking back, I really should have bluffed again and not reward such scummy behavior, but I just wanted it over with and the seller was counting on that. Other notes from the closing:
- I received $43,000 from the refinance of Property 4 after closing costs. The purchase of Property 5 came out to $36,000 after closing costs. After deductions for rents and other seller liabilities, I stood to make around $12,000.
- NY State had a lien against Property 4 for the money I owe in taxes, which was close to $3,000. Once I paid that, I would get the remainder which is a little over $9,000.
- The mortgages are gonna be $608 for Property 4 and $1,085 for Property 5.
- I found out that most of the tenants were already behind on payment, one of whom hadn’t paid rent in a year. I inherited some real shit tenants.
- Marvin Wassle and the other lawyers were perplexed as to why the mortgage company made everything so complicated, going as far as to ask me, "Where did you find these guys?" The company holds way too much money back for tax payments and such, so Marvin warned me to keep track of what I'm owed. I get the feeling that getting what I'm owed is gonna be a pain.
- My insurance agent got me a very good deal, combining the insurance of Properties #4 and #5 for about $2,800 a year. Considering the fact that I never had insurance on Property 4 in the first place, and the insurance for Property #3 is over $3,000, I'm very happy with this deal. It's one of the reasons why my monthly payments are lower than I expected.
The Plan For Property 5
One of the biggest reasons why it took me so long to become mildly successful at real estate is due to how poorly I handle a new purchase. You see, after I’d buy a property, I would usually keep the tenants at their rents and collect the money. The plan was to save that money to use for renovation once they leave. But that never happens. I’d usually end up with a massive headache dealing with low rents and no profit, leading to me using my own money to pay for renovations that usually end up at around $5,000 per unit. But Property 4 changed all of that. With Property 4, I paid to get the place completely renovated, moved in a good tenant, and then enjoyed the profits with regular maintenance costs. I mean, can you imagine how much easier my life would have been had I done this with my other properties... especially Property 3?! It’s the right way to handle a new purchase, and it’s how I’m going to handle Property 5.
Apartment #1 (One Bedroom)
Current Rent: $400
Desired Rent: $500
This is the one apartment that I don’t plan on doing anything with. The place is in the best condition and the tenant, Richard, has been there for a long time. He clearly takes care of the apartment, but also keeps watch of the place. But the main reason why I wanna leave this place alone is that the configuration of the apartment is very strange and unattractive to prospective tenants. In order to get to the bedroom, one has to go from the living room THROUGH the bathroom. It’s so freaking weird, man. Trying to rent it out would be a nightmare, and I’d probably have to discount the rent anyway. But I’m not dealing with $400 rent, so I’ll try to get him to pay an extra $100.
Apartment #2 (Two Bedroom)
Current Rent: $500
Desired Rent: $750
This apartment is a mess. There’s junk everywhere and the guy living there has a bad track record with the previous owner. How bad? He owed the previous landlord $6,000!! That’s a year’s worth of rent! Tom is the perfect display of how pathetic the previous landlord was. He owed a year’s worth of rent, his apartment was with lots of stored trash, yet Tom was STILL THERE! Seeing that Tom is conditioned to being a bad tenant, I get the feeling he’ll try the same with me. So I’ll throw him out along with the rest of his trash and get it rented for $250 more. Of all the apartments, I like the structure of this apartment the most.
Apartment #3 (One Bedroom)
Current Rent: $525
Desired Rent: $600 - $650
This is honestly a pretty decent apartment, with a small living room and a huge bedroom. The tenant is a young girl, like 20, and pays $200 while assistance pays the rest. To be fair, I like her. She seems responsible for her age and I really like looking at her ass. But I really don’t want assistance tenants of any kind, and her age concerns me. She brings over some guy who looks like an idiot, so I’m not sure he’s not gonna cause issues. So I’ll be throwing her out as well.
Apartment #4 (Two Bedroom)
Current Rent: $550
Desired Rent: $750*
The first time I walked into this apartment, I smelled the strong scent of weed. That alone let me know that I’m throwing this tenant out. The apartment is nice, but the 2nd bedroom is small. Once I get him out, I’ll see if that bedroom can be extended into the kitchen or living room.
Attic Apartment
As I mentioned earlier, I’ll be converting the massive attic into my personal apartment. I’d like it to be a two-bedroom apartment but I have to keep in mind that, unlike a basement apartment, an attic apartment can only hold a certain amount of weight. I want a bathroom with both a stand-up shower and a Jacuzzi tub. The kitchen must have a single or double wall oven, as well as an island w/stove top. The electricity for that apartment will be connected to Apartment #4. So I’ll have to list the apartment as utilities included, which is why the desired rent has an asterisk. My hope is to get Apartment #4 rented for $900, but it’ll be tough with that small ass bedroom. Hopefully I can expand it and get a good price going.
Garage
I’m removing the home meter and connecting it to Apartment #3. I won’t have to list it as utilities included since the increase in electricity will be small. The home meter electricity is also connected to the garage, and that’s a big deal. Later down the line, I plan to buy an electric car. With that, I’ll actually be able to eliminate gas stations from my life and “fill up” for free in the garage. It would be a sweet perk, but that’s a couple years away. I’m simply planning for the future.
And that’s that. I finally have my Property 5 that I can use as a place to live while still collecting good money. It also feels very good to know that the $608 mortgage payment for Property 4 will still clear around $200 per month thanks to the renovation and Latisha’s awesome tenancy. It wasn’t perfect, but I got the properties I needed. Now comes the task of renovating Property 5’s apartments to make sure that my paycheck retirement is as smooth as can be.
P.S.: Just to reiterate, it’s been really hard to focus on this blog which is why it's taking longer to write and publish posts. My new family responsibilities with Alan depress the living shit out of me, so it takes longer to motivate myself to write anything. Thankfully I'm slowly getting his ridiculous finances in order. I’d like to write May’s Property Earnings and Food reports tomorrow, but it’ll most likely be done next weekend.
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