The One that got Away?

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I’ve finally jumped through all of the hoops needed to do real estate showings. I have my real estate license; I have MLS access; I have an account on the website to schedule showings; and I have the app on my phone that will open the lockboxes. Whew. I had set up three showings a few weeks back before I realized I needed an in-person appointment to get my phone app certified and installed. I finally set up my first real showing for Saturday morning after searching for places on Thursday and driving by it. Within hours, the duplex was in contract. It had only been on the market for three days.

Mr. PFL and I still aren’t exactly sure where to move or what kind of place to buy (mulit-family, single-family and condo are all on the table). We have some very general parameters, but I think it is going to be a “you know it when you see it” type of situation. We also have plenty of access to cash through our home equity lines, so that can give us leverage when we do make an offer.

The best part about this process, in my opinion, is that I’m not too concerned that we will make a bad mistake. I guess I don’t believe in a “forever” home anymore, if I even did in the first place. We will do our best to make a wise investment. Then, even if we don’t want to live there, we can sell or rent it out. This provides an amazing amount of freedom. We don’t need to settle, and we don’t need to stress about “the one that got away.”

Real Estate License - Check

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After spending most of the day Friday studying, and barely passing all of my practice tests, I took the real estate salesperson license test today and absolutely crushed it! My license should be activated by the end of the week. I can’t wait to dig into the MLS to find us a new place to live. I’ll also be able to formulate a much better idea of what our current house might sell for based on some more recent comps. I’m so glad I passed!

Real Estate Education

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A semi-annoying ad followed me through Facebook for the last week or two. It had a picture of Christina from Flip or Flop on HGTV. After signing up for my real estate license classes earlier this week, I signed up to attend a free seminar. I knew that there would be a “catch” or that they would try to sell me something, but I thought I might learn something about flipping houses. So I went. And they did try to get me to sign up for their 3-day class for close to $2,000. They have a company called Success Path. The main benefits, in my opinion, for paying to do the 3-day class were 1) gaining knowledge about a wide range of real estate opportunities and 2) having access to their “preferred lenders” that allegedly will give you up to $500,000 per flip without a credit check.

As I continue to pay for my law degree (a.k.a my student loans), I see the value in spending a few bucks, instead of tens of thousands, on education in a new field. The travel agent class was super cheap; I got my TEFL certification with a Groupon; and I should be able to get my real estate license for less than $1,000. All of these are a minuscule investment compared to a total of eight years of college. And, I’m in the position that, even if I don’t ever make any money from these endeavors, the investment hasn’t hurt our bottom line.

There were quite a few people that signed up for the 3-day class (due to the deep-discount to sign up that day, as opposed to waiting), but there were also a lot of people that didn’t. I do feel that it was worth my time, even though it was basically an extended sales pitch, in that I learned some new things, including that: 1) REO’s (bank-owned properties) are generally great for flips; 2) they believe Central Ohio is in position for a big run-up in real estate prices in the next 3-5 years; 3) adding a rehab-estimate clause as a contingency in an offer is essential for a flip, and; 4) their system teaches never to flip a house unless you’ll clear at least 20% or $20,000, whichever is greater.

One of the factors they stressed, that I firmly believe in, is having Multiple Streams of Income (MSI’s). Part of the 3-day class is to teach basic principles of investing in rental properties. One of the disappointing parts of the seminar for me is that they never once mentioned taxes. While giving examples of the profit on flips, they never cautioned us about how much of it won’t actually make it into our pockets. I know I overly obsess about the issue of taxes, but it is a reality, and it can have a significant impact on the bottom line.

Can I claim that this was a life-altering experience? Absolutely not. But, maybe it was for someone else that attended the seminar. Maybe they are starting their own journey to financial independence.

Hawaii-Bound Through Downsizing?

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I, through our real estate LLC, made an offer on a single-family home about five miles from where we currently live, in the same city. It all started when I was getting my hair done last Tuesday. My stylist and his partner purchased a duplex back in December and it is just a couple of blocks from this new potential property. When I’m in the salon, we love talking about real estate and small-business ownership. I’m so proud of my stylist for purchasing a duplex for his first property. We’ve discussed, at length, the benefits of owning and renting real estate. So, last week, he was telling me about this great little house that is for sale in his new neighborhood. We looked it up online. I sent an email request to the seller’s agent (I have two real estate agents that I use, but thought I’d try no agent this time). I met the seller’s agent at the property on Thursday afternoon. Mr. PFL and I drove by on Saturday evening so he could get a feel for the neighborhood and location. And, today, I emailed a cash offer of $60,000 on a list price of $110,000. We’ll see what they say.

Now, this offer really isn’t as ridiculous as it might seem at first. The home was built in 1925 and updated sometime in the 1970’s or 1980’s and never again. The electric was probably replaced about the same time. The furnace and air conditioner are newer. The outside looks great, with siding and a newer roof. But, there is wood paneling in most of the rooms. Light blue laminate counter tops. A brick surround, and carpet, in the upstairs bathroom. Basically, every single room needs work and to be updated. The $110,000 list price is totally fair, and probably under market value, if the house had been updated in the last ten years. It might even fetch $125,000 or so. But there is no way it is worth $110,000 in the current condition. It is being marketed as move-in ready, but I wouldn’t even want to advertise for renters in the current state. The house is part of a probate estate, too. Thus, my offer of $60,000.

If we get this house for $60,000, we could spend the next few months fixing it up. I think we are both ready for another renovation project and manual labor can be good for the soul. We can utilize all of our skills, and learn some new ones, like refinishing the wood floors. We could then either sell it, rent it out, or rent it to ourselves. If we decide to live there, we will need to do some serious downsizing, which we want to do anyway. We would also be in a better position to get a roommate in this smaller house than our current one as the main floor has a private bedroom/bath and the second floor has two bedrooms and one bath. We wouldn’t even be on the same floor as our roommate. We’d need to add a bathroom to our current home to have that flexibility. We would also feel better about selling our current home, I think, because we would still have a home, with plenty of storage, and in a neat part of town.

And, this week, at least, Mr. PFL and I are convinced that we can downsize, sell our current house, gets some cash, and then move to Hawaii. So, I’m keeping my fingers crossed that they will accept or make a counter-offer that we can entertain.

UPDATE as of 4:25 p.m.: The lowest price the seller will accept is $100,000, so no deal for now. I’ll keep an eye on it; she might change her mind in a few months.

UPDATE on 3/18/2915: The listing price was reduced to $105,000 yesterday.

Birthday Wishes

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I’d like to wish Mr. PFL a very happy birthday! I hope and wish that it is the last one he has to suffer through with a full-time job. As we continue discussing and planning, I feel more and more confident that, by this time next year, we will be ready to remove the golden handcuffs and live a good life without the need for full-time employment. We’ve both begun to realize that the longer we work, the more money we will have saved, and then, technically, the more we would be able to do in the future (really ground-breaking stuff, I know). But, we also wonder: when is enough, enough? We should have monthly income that covers our expenses; we can always try to get jobs if we need them; we could start a new business; and, we have over $1 million dollars! Why torture ourselves more? Why?

Mr. PFL and I don’t really do formal gift-giving for our birthdays or Christmas anymore; I looked up duplexes that we could buy for cash with the plan to downsize out of our current house. If the weather holds up, there is one I’m planning to look at. I hope Mr. PFL likes my gift of working towards freedom from employment. 😉

House Offer

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We had the showing on our house yesterday. My friend (agent) called last night to relay the oral offer of $500,000. While it is comforting to know that we have appropriately valued our house, this isn’t an offer we are ready to accept, especially because they want to move by the end of March. If they had offered $600,000, it would have been worth a conversation.

House Showing Sunday

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As of now, someone is coming to look at our house on Sunday morning to see if they want to buy it. I mentioned about a week ago that we’ve been telling more people about our plan to move to Hawaii. One of our friends is getting started as a real estate agent and approached me this week about doing this showing. The inventory in our neighborhood is very low and it is where the potential buyers would like to live. Worst case scenario: We have a clean house on Sunday. Best case scenario: They make an offer we can’t refuse. Sometimes the universe works in mysterious ways.

I Really Fixed a Furnace

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Back in December, I thought I had fixed a furnace. Turns out, I didn’t and we now have a new furnace at the Condo.

I noticed that the heat at one of the vacant units at BD (the 6-unit) wasn’t working last week. We ordered a new part online and it arrived yesterday. Once I got the old part off, I realized immediately why it stopped working:

Notice those tail feathers? Yep, that’s a dead bird. The fan couldn’t rotate. I put the new part in and the furnace turned right on. I’m feeling very confident about this one.

I also had time to get the dirty unit into mostly clean shape in time for a showing today. The prospective tenant seemed interested and took an application. I’ve also lined up another showing for this evening. I’m hopeful both of the vacant units will be rented by the end of the month.

Properties Update

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The Condo: The tenants seem satisfied with the new furnace. They texted today about the water heater still giving them trouble. Well, it turns out there are TWO thermostats on the water heater, so I turned the second one up (I’d turned the first one up a couple months ago). Oops. Hope that fixes the issue.

BD - the 6-unit: Mr. PFL and I have a potential tenant for one of the units. I’m still working on getting the other unit clean. At least the bathtub drains and the fridge looks new inside. Unfortunately, the furnace for the dirty unit isn’t working (I think the draft inducer motor is out on this one, too), so we need to get that fixed. I guess it is a good thing we don’t have a tenant in there now. BTW - If you make an appointment for a showing, it is polite to call, text, or email if you aren’t going to make it. I only list on craigslist, so everyone at least has an email address. I’d estimate no-calls, no-shows are running at just under 50% of my showings. I really appreciate when people do let me know if they can’t make it.

Hawaii: I had a phone conference with a real estate agent last week. She sent some links for potential properties and a contact for the credit union to discuss financing. I’ve been researching LLC formation and other ancillary issues today. Last night, the cable box was acting funny when I finally sat down to watch TV, so I jumped onto YouTube. I spent over an hour watching videos that started with a search for coffee farming in Hawaii and this simple video. Mr. PFL and I have been a lot more open discussing our plans to move to Hawaii with our friends and family; the overwhelming reaction has been disbelief. People can’t wrap their heads around the concept that we might actually be able to move and not work full-time jobs. I can’t blame them - it is still hard for me to accept most of the time. On a side note: last week was one of my top five most unpleasant weeks of work ever. I am ready to leave lawyering far behind.

Application Sent

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I just sent an email to casting for HGTV’s Hawaii Life. This feels like an actual forward step. I tried to apply for Destination America’s Buying Hawaii, but I can’t figure out how to do it. Oh well.

Mr. PFL and I have talked, and talked, and talked. Like until the wee hours of the morning. I think we have agreed on the following:

1) We should move to Hawaii.

2) We don’t know how to make it happen, exactly.

We have gone back and forth and up and down trying to decide what to do about our current house. We both realize that, if we sell right now, there is no way we would ever be able to buy back the same or similar place in the future. Once it is gone, it is gone. One of our local weathermen used to live two houses down; he had a big retirement party on the air before he moved to Florida with his partner. He was back less than two years later, working at a different local station, and owns a house less than a mile away (OMG! I just watched the video about his return!). This is my fear! But, at the same time, our house is attached to a substantial monthly payment. Thus, we go round and round in circles.

We are discussing every possible option that might be available, including: renting it out on a lease; getting roommates; selling; upgrading (adding a bathroom) and then deciding; listing it as a vacation/short-term/executive rental; and using it as a movie set (I literally just thought of that one).

I just spent a little time searching for roommates online. Okay, a lot of time. I think we could rent our two spare bedrooms for between $500 and $1,000 each. I also tried to find a full-service property management company on HomeAway.com (parent company to VRBO, etc.), but they don’t have a trusted company in our area. So, I’d need to find a person or company to trust that would deal with the short-term renters; I now understand why most of the listings in our area were for guest houses and carriage houses, but not full homes - somebody’s got to be here.

I wish there was a right, easy, no-risk decision. And that we hit the lottery. 😉