Stir Crazy

So last weekend Dad and I found a house as we were walking around a neighborhood we liked. I took note of the address to look up the tax records, and lo and behold the house was listed and expired about a year ago. My hopes started going up, and over the past week I have become obsessed with this house.

Every time we have been interested in a house in the past there has always been something insurmountable. The price is too high, or the houses in our price range have a steep driveway, are next to a freeway or railroad tracks, are on a small lot, have no room for a garage, etc. I really want the next house we move into to be a long term house that we can grow into, but I also am desperate to get out of our tiny house in our crappy neighborhood. This house seemed like the perfect solution. It would be affordable, it’s not updated but it’s the mid-century style we want, and it’s on a large level lot with a 2 car garage.

There is, however, a glaring insurmountable issue. The woman who lives there isn’t motivated to move. She’s very old and according to the prior listing agent couldn’t find a place she wanted to go.

The problem with us waiting is that Dad would have to qualify for the loan. We are about 60k upside down on our primary residence so we can’t sell.  I cannot qualify for both mortgages. Currently, Dad would have no problem qualifying with his salary. However, last week we agreed that he would quit on the 16th of this month to make some headway in his own business. We have enough savings to last a few months while he gets off the ground. However, once he’s self-employed it will take 2 years of history before he qualifies again for a loan. So basically we have to move now or we’re stuck in this house for another 2 years.

We’ll see if any developments happen with this house over the next few days. Dad is willing to not quit if we can move towards closing on this house, but that seems unlikely. If the owner wants to move in 6 months, we’ll either have to pass up the deal or get really creative. Arg.

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February Equity Numbers

Numbers as of 2/1/2012

Total Cash $65,000.00

Total Real Estate $270,000.00 (140k Primary Residence, 60k Rental 1, 70k Rental 2)

Total Retirement $12,300.00 (Vanguard Roth IRA)

Total Mortgages $201,000.00 (Primary Residence, upside down 176k, Rental 1 35k)

Total Other Debt $15,600.00 (Student Loan)

Total Equity $130,700.00

The Deal’s Off

So, the house that I almost pissed my pants over when I bid on it has gone defunct. We were supposed to close in December, they have asked us to extend till February 10. There was also some vandalism from some very irritating idiots. Good job stealing the copper lines from the AC condensors to the heating units and not taking the condensors themselves or pulling apart the units to get the scrap from there!

My partner and I after much consideration terminated the deal. It was just getting too difficult, too time consuming, and there was another lower comp that came up in the neighborhood that might have affected our appraised value.

Sometimes you just have to walk away and move on to the next one. If you have a manager, once the property is rented it becomes almost completely passive. Getting there, however, can be anything but.

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2012 – Best Year Ever?

December was a crazy month. There were the holidays of course, B’s first Christmas, New Year’s Eve, a trip to CA to visit Dad’s family.

My brokerage let me know they were closing on December 31 so I have had to scramble to get into a new brokerage and get my listings transferred. I’m a firm believer that everything happens for a reason, though. My new broker has a much larger vision. The firm does bulk deals and new construction, a far cry from the 30k properties I currently sell. While things are in the beginning stages, I feel confident that my business is going in a new, better, more lucrative direction.

This brings me to my New Year’s Resolutions:

-Buy 4 rentals

-Complete one multimillion dollar transaction

-Stay physically active

That’s it. Nothing else. Of course, each of those large goals involve a lot of little ones, but I figure that’s pretty straightforward and sufficiently ambitious.

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January Equity Numbers

Numbers as of 1/1/2012

Total Cash $66,400.00

Total Real Estate $270,000.00 (140k Primary Residence, 60k Rental 1, 70k Rental 2)

Total Retirement $11,200.00 (Vanguard Roth IRA)

Total Mortgages $202,000.00 (Primary Residence, upside down 177k, Rental 1 35k)

Total Other Debt $15,700.00 (Student Loan)

Total Equity $129,900.00

December Equity Numbers

Numbers as of 12/01/2011

Total Cash $62,000.00

Total Real Estate $270,000.00 (140k Primary Residence, 60k Rental 1, 70k Rental 2)

Total Retirement $11,200.00 (Vanguard Roth IRA)

Total Mortgages $202,000.00 (Primary Residence, upside down 177k, Rental 1 35k)

Total Other Debt $15,700.00 (Student Loan)

Total Equity $125,500.00

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Pet Peeve – When People Say “I need more write-offs!”

This just doesn’t make any financial sense. Why do you need more write-offs? To me, this is just a fancy way of saying that you need to find things to buy that you don’t really need that happen to be tax-deductible.

It’s like when one of my good friends told me I need to buy a bigger house with a larger mortgage for the larger write-off. Let’s say my mortgage write off now is $1000 per month (basically saving me $300 per month on taxes). She thought I should get a $3000 per month mortgage so I’d have a bigger write-off. Ok, so I’d save another $600 per month on taxes but spend an extra $2000, essentially still spending $1400 MORE per month!

Or another friend of mine who bought a new computer for business even though her old one was working fine because she NEEDED the write-off! Instead of saving $500 on taxes she could have had $2000 in her pocket.

Yes, my numbers are simplistic. Yes, you should take all the write-offs the government allows. But you should NEVER buy something simply because it’s a write-off! It makes no financial sense.

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