Category Archives: Family Dollars

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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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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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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Learn It Here – DO NOT Make Large Financial Decisions Without Your Spouse

Great. I’ve basically been in freak-out mode since Monday morning. There was an online auction for properties. I told Dad there was a property I was interested in but that it was going to be too expensive for us. I watched anyway. And guess what…I bid. And guess what…I got the property. For $72000 plus the buyer’s fee of $3600. I really didn’t think no one would out-bid me. I really didn’t. I only clicked the stupid button once.

Here’s a pic of the house:

So now I was stuck. I would have to cough up the down payment of $3700 and walk away, or try to figure out a way to buy the damn thing. Since I only have 40k in cash right now for property I would have to borrow the rest. The house is a good deal, not a screaming deal but a good one. Here’s the numbers:

Comps in immediate neighborhood

Last sale 126k (with basement mine is on a slab with slightly larger square footage)

Current pending contract in subdivision 115k under contract in one day

Mine needs about 10k in paint, carpet and appliances to look great. So:

  • Purchase Price $75,600.00
  • Fix up cost $10,000.00
  • Sales price $115,000.00
  • Closing costs/broker fees $7000
  • Total upside potential $22,000

The problem was I didn’t discuss this with Dad before I did it. I felt horrible. I’ll admit it I peed in my pants a little when the auctioneer said my number won. Dad was upset, but said he trusts me. This is my business. I know I can do it and make a profit, I just shouldn’t have done it this way. I’ve learned my lesson and will never, never do anything like this again.

Also, flipping was never in my plan. I just want to buy properties under 50k and rent them long term.

In the end  a real estate agent friend of mine agreed to go in on it with me 50/50. We’ll both put in half the cash and split the profit when it sells. Personally I can’t wait for the day.

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Is Our Daughter A P&L Sheet?

That’s what Dad asked me this morning when I said that I thought I might want to increase the number of days B’s in daycare. Currently she goes MWF from 8 to 3:30. As she’s gotten older it’s become increasingly difficult to work on TTh when she’s here. She requires a ton of attention, which I love giving her, but there is no way for me to get good solid work done.

Currently we pay $570 per month for daycare. It would increase to about $1000 if we were to put her in 5 days per week, assuming they could even accommodate her. I told Dad I could easily make more than that with the extra time I spend working. I was more justifying the extra cost by saying I could make up for it, but it does sound a little like trading quality time for money. Isn’t this what every parent does who sticks their kid in daycare?

Dad didn’t seem to be super against it, but I think he’s sad that I feel such a strong need to get ahead quickly. I keep telling myself we’re sacrificing now for later gain, but when does it end? Am I really going to be OK when I have 10 rentals? Or will I need 20? And when I get there will it still not be enough?

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Financial Freak-Out

So I’ll admit, I do occasionally have a melt down about finances. Generally I feel very in control, but about every other month it happens and I start questioning our entire way of living, our budget, our financial strategy. Needless to say this makes the evening unpleasant for Dad when he gets home from a long day of work.

Here’s our current issue. This month’s budget, surprise surfreakinprise, is out of control – close to $7500 – and that doesn’t include fees I have to pay for my real estate business which will run about $1000 this month. Usually I have a cushion in my business account and our checking account that prevents me from becoming a shivering, quaking mess sitting on the couch staring at the wall and snapping at whatever happens to come in my path.

However, my business has a problem. I sell foreclosures exclusively. I don’t have clients where I go to their house and tell them how pretty it is, nor do I drive buyers around looking at pretty houses. Most of the properties I sell are priced under 50k and are damaged and ugly. My largest client currently makes up 100% of my inventory, and I have 10 properties under contract waiting to close for a total of around 25k in commissions. The problem  is they all have the same title issue and can’t close. There is no timeline, some of them have been on hold for over 90 days. They could be on hold until next year. Which means I don’t have an income until January.

If you do the simple math, it’s impossible to live off of Dad’s salary which, after taxes, is $5500 per month. We do have savings, but I SOOOO don’t want to tap into them! I know most people would think that $5500 should EASILY cover us, after all our mortgage is only $1350 and we only have the one little baby. But after all is said and done we really spend a lot. And Christmas is coming.

I’m dying to buy another house to make more passive income, but it’s hard to buy assets when you’re scared of the monthly nut.

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Does Less TV = More $$$?

I don’t know the answer, but I don’t think less TV can hurt. We often eat in front of the TV even though I don’t think it’s right. Sometimes after a long day, and I’m sure others can relate, it’s just easier to check out than talk over your meal. One of my goals as a parent is to always have dinner together at the table if possible. I did when I was a kid and it helped create a great family bond.

Growing up we didn’t have TV much. My dad put it in storage for years, then when he brought it out we were allowed to watch The Simpsons together on Thursday nights and have 2 hours on the weekends. That was it.

In any case, Dad and I had a no TV week last week. We actually ate at the table and talked about our day and plans. I thought that it would make more time for us to work on side projects. As far as straight money making is concerned, we didn’t necessarily get more done (i.e., work on businesses or brainstorm or budget).  We actually stayed at the table chatting about random stuff most nights until we were ready to go to bed! However, our overall sense of well-being definitely improved, and that’s always helpful.

We have continued this trend this week. Although it doesn’t seem to have a direct impact on the amount of work we get done, it sure gives us a bunch of warm fuzzies, which is just as important.

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