This Call Was Transcribed From A September 8th 2017 Group Coaching Call After Tasha Finished Her 8 Week Program. Click Here To See If This Is Right For Your Business!
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(Tasha): I closed on my first property September 30th, down in Florida. That property was a bit higher, it was $58,000 and I got back about $5000 in concessions, recoveries and things that need to be taken care of with the house. This house however had already been remodeled for the most part. I had my dad go check the house out in addition to the inspector, to do a little bit more to climb in places where the inspector would probably be like “I am not doing that”, to make sure that the renovation wasn’t just botched. There was a couple of things that weren’t really good with the renovations, but before I bought I knew they weren’t good, and they said they would need to be addressed after I bought the property, which is what helped get the concession. And then it also helped me budget better for what my rental budget should be post purchase.
(Lisa): What were those items that were significant enough to get the seller to concede and lower the price?
(Tasha): So he said that the treatment for the house, it’s a wood frame and it’s in Florida, which is one of those things that I prefer not to do. I prefer brick properties in Florida, the block houses. Just because one the hurricanes, and two being the wet and moisture. It’s a little bit more maintenance overhead for wood frame floors in Florida. He stated that he had repaired several of the footing, and some of the other stuff with the house, and come to find out, he only did like the footings that were on the surface. Like right near the surface. But there was a lot where the word that supported there underneath, it was where the inspector would not have went most likely. That stuff was pretty old, and it actually had significant damage, so the [00:02:27.16] to [00:02:28.21] the house, and to do this stuff you need treatment for termites, and then the wood repair. He conceded on that.
(Lisa): OK. That’s a good one.
(Tasha): Yeah. So the other thing that he did, was the dry wall, he did some patching but he didn’t the replace the drywall that had been damaged from moisture. My dad identified several areas where there was bad drywall in the house, and so conceded to recover that cost as well. Everything else, he did new flooring, the windows were replaced, the porch was redone, the [00:03:20.11], all that stuff was done well. It’s a pretty decent sized lot as well. It’s a good area, and this is the property that I had an intent on buying, but I was trying to help my sister out. So it had to be near a best route. It needed to be close to a grocery store, and it needed to be within budget, and it didn’t need to have too many renovations. So a lot of stipulations, and it took a little while to find it, but it worked out. She’s moving in this weekend.
(Lisa): Oh.
(Tasha): So the mortgage on the place, it is $343 a month. The market rate for rent is $850. However, I am only charging here $600.
(Lisa): That’s family.
(Tasha): Correct. I am only charging her $600.
(Lisa): Is she responsible for repairs and updating, and keeping it up?
(Tasha): Yes. For keeping the yard up, and I got the lease, I have my lease. I may fill out an application, a lease, a checklist, and all of that stuff. Then the stipulation no smoking, everything is documented.
(Lisa): You have the videos and pictures, and the walk through list of what it looked like when she came in there? To be used when she walks out?
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(Tasha): Yes. And then I have receipts for all the work that was done, as well as documented the days that was done. I have a tracker for the travel. Everything that has been done with the house has been tracked and documented. And recorded. So, she moves in basically this weekend. There is a few touch tips, where a showerhead was missing. The attic access wasn’t closed. So there’s stuff being done this week Friday, because the house was fumigated. I am really going through it and having the cleaners give it a good wipe down. Then she’ll get the keys on Saturday. So my mortgage is $340, so it’s still over $250 in cash flow for the property.
(Lisa): Even I want to set some of that for reserves.
(Tasha): All of it go for reserves.
(Lisa): Exactly. Just for now.
(Tasha): Yeah. For now, all of it is going for reserves. I don’t plan on like touching any of that. I don’t have to. There isn’t any need honestly.
(Lisa): Exactly.
(Tasha): Yeah. This is going into an account. So the other property, I sold on the 12th of this month, in [Intentionally Left Blank]. I went through $35,000 to $40,000 to get this house. Then I closed on it for $39,900. The seller, it had some moisture, it had termites, and it had footing issues as well. But the seller, cause I had a conventional loan, […] and showed a certified notice of completion for those […] to maybe […] which was the one who did the mortgage for me. So they fixed all of that and got the house for $39,900 in a place that is $79,900.
(Lisa): Amazing. That is awesome.
(Tasha): Yeah, and it is a 3-in-1. The kitchen and the bathroom, all the cabinets definitely need to come out. It’s a tiny kitchen. It is like a 10×9 or 10×8 kitchen. The bathroom kind of small too, but I am going to take out the toilet and the light and all that stuff and replace it, minimal cost as far as I am concerned. It’s not big stuff. Its stuff to do, but it is just not that big of a deal. I don’t see that. One thing that I found out recently though, is the plumbing, so I knew there were some issues with the plumbing when I ran the water. The pressure wasn’t that great, and it is an older house. It is like 1942 I believe, and when I looked into the little space for the bathroom where the pipes are, I saw a bit of mishmash in the piping. It’s galvanized, and then there was some copper. So, when I wasn’t 100% sure whether that was throughout, but I found out that it was, and I may need to go ahead and. I don’t have issues with the tenants over the long-period, so I may end up needing to re-plumb for meter to the house. So that changes my budget for rent over the house which was going to be $8500. And with the plumbing having to be done, that is going to change up the prioritization of exactly what I fix in the house first. Initially, we were going to replace the windows, because they were like old windows. Now that is kind of more so on the backburner, because we still need to do the kitchen. We definitely have to do the bathroom. The whole house needs to be painted. Because the owner that had it before just […] everywhere, and kept painting on top of paint, that paint job is going to be pretty significant. There’s some sanding down that needs to happen so it looks nice, and doesn’t look like just a hot mess. So got the painting done through the whole house. The outside is minimal and the inside is minimal. I have quotes for pretty much everything except the plumbing. I got one quote. That guy is a nice dude and everything. He kind of turned me off and everything, because he focused on the fact that it was copper, and it was galvanized. He was trying to persuade me that “You don’t want to just pack it”. I get you now, I experienced that kind of living as a renter way back. Sure enough it pops leaps, and you’re currently fixing drywall and patching holes, and it’s just a hot mess. But definitely want to get the plumbing fixed, but he talked about replacing it with copper, and his estimate for me through the house and going through the kitchen and bathroom was $10,000. I know that there are alternative types of typing, such as the PVC. They have that red and blue stuff, which is cheaper.
(Lisa): The pex, yeah. That’s what everyone uses. It works pretty steady, and people don’t want to steal it.
(Tasha): Right, and it’s just as good. But he didn’t even talk about that. He talked about the most expensive side, which was copper. That is all I am getting offered, and I was just like “I want to get some other estimates”.
(Lisa): Yes, first estimate. That is all that was.
(Tasha): Yeah. Because I was like “Uhh, I know there are other options. I don’t know if you’re just not comfortable with the other material, or what are you just…”. My thoughts are saying that he just wants to get the money.
(Lisa): Yeah. Sometimes they size you up, and they’re like “This might be an easy mark.”
(Tasha): Yeah I know.
(Lisa): I know you’re not, but he did it.
(Tasha): So I have my deposit planned out. I actually budgeted it out for everything. If I could do everything that needed to be done in the house, I wrote it down. I did an estimate for it, which is way over my budget. But what it does is that it lets me see overall what needs to be done, and then from there prioritize those things that me and my husband are doing. He is responsible for the fix up part. I am the “back pack and get it closed” out person. So this way you can prioritize “OK, kitchen, bathroom, plumbing, the age that the painting, and then there are some minor repairs on the siding.” Those things have to be done. Then, the other things will have to adjust according to what is best in the budget, and the time that we’re trying to meet. We’re not a rush to hurry up and get tenants in, although I am paying attention to the cost and benefit of paying a monthly mortgage versus paying a contractor to do certain work. But we know we’re coming off on the holidays. We both work fulltime. We know we’re doing some of the work ourselves, but we’re trying to be realistic about balancing what we do, and then what we contract out. Our goal is to have it listed by January. Mid-January at the latest, and hopefully a tenant in place no later in March.
(Lisa): And you might look at those estimates and everything. Are you doing it yourself, or hire out a contractor?
(Tasha): A little bit of a mix. We’re going it ourselves, and then some of it we’re going to contract out. OK. I do plan to get a property manager for that property. That will be the first one. So I guess that was $39,000. The mortgage on it is a shorter-term, so it is about the same mortgage as the house in Florida, even though that one…
(Lisa): Why did you do a shorter term? With longer-term, you can always pay more, but it doesn’t show up as a larger payment on your credit?
(Tasha): The reason I did the shorter term was because it was navy federal [credit union]. They didn’t want me to do a longer-term, especially being the first one, and I did state it was for an investment. They were like “Well you could just put that as an…” I was like no. We’re not going to be lying on anything. I take […] and I have to work, so no. It was like an investment property, and they were like “OK, we could do this for 15 years,” because if I did the longer one, it would have been better. Because the mortgage would have been $200. So it is $350, 15 years, and the rent is $950 to $1100. This is the range for that area.
(Lisa): Good, and if you put a good renovation you could get a higher one. If you do this, it will attract people who are willing to pay more for it.
(Tasha): Correct. Then also the area that I got in, I was doing the research, it was going through revitalization. It is close down by the water in downtown…
(Lisa): Perfect! That’s what you want to hear! People ask me, “How do you find the revitalization areas?” I am like “Well if you keep doing the sub30k thing, and you got to the least crime-rate areas, that has geographic indicators such as a waterfront, urban geography dictates of having a forced appreciation”. So I am glad to hear that.
(Tasha): So they’ve built parks down by the waterfront. A lot of it is currently being redone. They’re rerouting traffic in the area. New shopping places might be close by and stuff. So you can see. It is still obviously some streets that are like “Uhh”. (lol)
(Lisa): Good, more and more.
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(Tasha): That is the intent. So this house I owe $28,000 because I think that’s the one that required 25%. The house down in Florida required only 15%. My girlfriend became a real estate agent and up and married a broker, so it worked out. They kind of hooked me up with the house in Florida. But the one who put […] navy federal [credit union], and I wanted to do it with them because I’ve been doing it with them forever. When it comes to all of my other types of loans, it has been pretty easy. So I wanted to continue that relationship, and I found that for investment, I have another friend who I did that with them. Maybe as we’ve done more investments, several of them have become a bit more conducive or better which giving them the loans and the better attributes for their loans, the more properties they’ve done. So it is convenient. I didn’t have to provide a whole lot of documentation, because I am already banking now, which was nice.
(Lisa): This is navy federal you’re talking about, right? I love them.
(Tasha): Yes, and I love them but I hate their mortgage program. I got to say though that this experience was better than the last 2 experiences I had with them, with primary home residence mortgages. So I had a really good loan office. She was like really responsive, and she even came to the closing. She went above and beyond. Even when it passed to the next person which takes care of the mortgage for closing, she still stayed engaged, and it was just really good. So I expect with that property, the cash flow is going to be really good on that. The same thing, I won’t pocket anything. Everything will just go into an account and accrue. I don’t need the money.
(Lisa): But that’s decent. As you don’t touch it, and $400-$600 depending on how everything pans out a month just accumulating, is just amazing. Especially in a neighborhood where you’re like “You know, I’m getting comfortable here. It’s not as crazy as people think it is.” This is a good success story. I love it. Thank you Tasha.
(Tasha): Thank you. I definitely used your techniques.
(Lisa): Isn’t it great? I like that you could see there was revitalization, and you’re the only one who knows this market, because I tell people, don’t tell anyone your market. But, it is great that you can see that there is opportunity, and within 6 months you’re ready, and you get another one in the same area, and another one. Hopefully within a few years, before anyone finds out about it, you can start building a profile just anchored by that first one. You know the streets are a little bit like “ugh”. Maybe you don’t buy on that street. You buy a little close to it, to keep your cost low for now. You don’t have to go straight to the bad street to get in.
(Tasha): Exactly. And the street that I am on is a really good street. When I did the crime check, like you said there was crime everywhere. Some of the rougher crime, there’s like a public housing that is 8-10 blocks away close to the highway. But I talk with the neighbor, and you can tell really nice homes, then there will be like “Woo, what the hell happened there?” What she said is, and she verified what I thought was that this neighborhood, they are older people or people who have lived for their whole lives. She said she lived there her whole life, and what happened is that renters and investors came in and rented. She said the lady that had the place next to her, she owned several properties in that area, 10 or 12. The lady is known for doing whatever is minimal, then she rents it and doesn’t maintain it unless it is really bad and require legal action.
(Lisa): I hate landlords like that. God, they make our jobs so hard, don’t they?
(Tasha): Yeah, because I told her that I will not do that. I gave her some information about the rental renovation I plan to do, and she was like “Thank God.” I said “We will be good to our tenants, because I don’t want someone coming in here and chaining up my work”. So there’s going to be definitely some vetting with the tenants.
(Lisa): You know what? I hate when some people come to our neighborhoods and treat it with that level, Just the level of disrespect, you know?
(Tasha): Yeah. I grew up in that neighborhood too, not that specific one but ones like that. Just because you don’t have tons of money doesn’t mean you want to live in squalor. You want nice property, so she was like “This is just a blessing”. Because this house has been through hell, and I am glad there’s someone that wants to take care of it.
(Lisa): When I started this sub30k thing, I noticed that a lot of these people going to these neighborhoods, it’s our community. Us going to our communities now, I helped you and others and 100s of others at this point, going back into our own communities to not only clean it up. But also to profit and invest in it. Like I said, on the inside its profit, but it is a beautiful cycle. Instead of waiting for someone else to do it, right now people are having the knowledge and power to do it themselves. There’s a lot of comfort, and they can relate to the people in the neighborhoods. I think there’s a good place to be right now.
(Tasha): So other thing […] is a house in Florida. That neighborhood isn’t as nice as even the one in [Intentionally left blank]. But it is not as bad either as Florida. I think there are areas for me in Florida that look bad, because it is Florida. A part of it is that people don’t get into the weeding and the grass grows really fast because of all the rain. It’s just a tropical area, so when a house isn’t maintained down there, to me it is way worse than a lot of other places. So the house that I bought looks like it has been uninhabited for a long time, and so I call Code Enforcement since I didn’t see any signs up on the house or anything like that. So they went ahead and put a sign up. They gave notice, because like in a minimum, if they don’t put somebody in the house, they need to make sure that it is secure. You need to keep the grass low because you are impacting my investment. The lady, I explained to her what my intent was what I was doing since we got talking generically, and she was like “You know what? I am going to send you the homes they’re selling where if you pay off the taxes they sell you the house?” She’s like “I am going to send you those for a couple of areas where I know that we have some community development plans. Because we need more people like you to buy these products”.
(Lisa): You see what I mean when I say we should give back to our own community? People recognize it. They recognize you Tasha.
(Tasha): I am like “That’s great! That’s less work I’ve got to do to figure out what’s available.”
(Lisa): Yeah, because someone is willing to invest in her community. And not just anyone. Not just slumlord. You know what I mean?
(Tasha): Yeah. So it has worked out really well.
(Lisa): Hey, you had one more testimonial for me. Can you do that?
(Tasha): Yes I can.
(Lisa): I don’t want people to think these testimonials are fake. They are not.
(Tasha): Nope, they are not.
(Lisa): Good, I’ll follow up with you about that. I’ll just follow up and send you an email, but I am very happy it went so well for you, and that you were very able to quickly, and those very ugly houses, those frogs you had to kiss didn’t turn you away. Because a lot of people would be like “Ugh, forget this”.
End of Group Coaching Call.
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